MANZ RETAIL P.LTD, MUMBAI V. DCIT 8(2), MUMBAI

ITA 3470/MUM/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3638 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 15-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAKUUANA GN LD
• Assessee Lawyers: DINKLE HARIA LD
• Keywords: Business income; Opportunity of being heard; Earning of tax free income; Proportionate interest; Difference of opinion; Tax effect
• Section: 271(1)(c); 143(3); 14A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI PAWAN SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.1824/MUM/2017 ( / ASSESSMENT YEAR: 2007-08) ./ I.T.A. NO.4179/MUM/2017 ( / ASSESSMENT YEAR: 2008-09) ./ I.T.A. NO.4180/MUM/2017 ( / ASSESSMENT YEAR: 2009-10) ./ I.T.A. NO.2051/MUM/2015 ( / ASSESSMENT YEAR: 2011-12) DCIT - 10(2)(2) ROOM NO. 209 2 ND FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI-400 020. / VS. MANZ RETAIL PVT. LTD. KNOWLEDGE HOUSE OFF. JOGESHWARI-VIKHROLI LINK ROAD SHAYM NAGAR, JOGESHWARI(E) MUMBAI-400 060. ./ ./PAN/GIR NO. AAACM-1978-J ( /APPELLANT ) : ( / RESPONDENT ) & ./ I.T.A. NO.868/MUM/2017 ( / ASSESSMENT YEAR: 2007-08) ./ I.T.A. NO.3470/MUM/2014 ( / ASSESSMENT YEAR: 2008-09) ./ I.T.A. NO.3471/MUM/2014 ( / ASSESSMENT YEAR: 2009-10) ./ I.T.A. NO.3472/MUM/2014 ( / ASSESSMENT YEAR: 2010-11) ./ I.T.A. NO.1827/MUM/2015 ( / ASSESSMENT YEAR: 2011-12) 2 MANZ RETAIL PVT. LTD. KNOWLEDGE HOUSE OFF. JOGESHWARI-VIKHROLI LINK ROAD SHAYM NAGAR, JOGESHWARI(E) MUMBAI-400 060. / VS. DCIT - 10(2)(2) ROOM NO. 209 2 ND FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI-400 020. ./ ./PAN/GIR NO. AAACM-1978-J ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : MS. DINKLE HARIA- LD. AR REVENUE BY : SHRI MAKUUANA GN- LD.DR ! '# / DATE OF HEARING : 19/02/2019 ! '# / DATE OF PRONOUNCEMENT : 26/02/2019 / O R D E R PER BENCH 1. THE ABOVE BUNCH OF APPEALS BY ASSESSEE AS WELL A S REVENUE FOR DIFFERENT ASSESSMENT YEARS [AY] MAY BE TABULATED IN THE FOLLOWING MANNER FOR EASE OF REFERENCE: - NO. ITA NO. APPEAL BY A.Y. SECTION 1. 868/MUM/2017 ASSESSEE 2007-08 143(3) 2. 1824/MUM/2017 REVENUE 2007-08 143(3) 3. 3470/MUM/2014 ASSESSEE 2008-09 143(3) 4. 4179/MUM/2017 REVENUE 2008-09 271(1)(C) 5. 3471/MUM/2014 ASSESSEE 2009-10 143(3) 6. 4180/MUM/2017 REVENUE 2009-10 271(1)(C) 7. 3472/MUM/2014 ASSESSEE 2010-11 143(3) 8. 1827/MUM/2015 ASSESSEE 2011-12 143(3) 9. 2051/MUM/2015 REVENUE 2011-12 143(3) WE TAKE UP CROSS APPEALS FOR AY 2007-08 AS THE LEAD YEAR FOR ADJUDICATION OF THE MATTERS. 3 CROSS APPEALS FOR AY 2007-08, ITA NO. 868/MUM/2017 & ITA 1824/MUM/2017 2.1 FACTS IN BRIEF ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ENTITY HAS BEEN ASSESSED IN SCRUTINY ASSESSMENT U/S 143(3) ON 29/12/2009 BY LD. ADDITIONAL LD. COMMISSIONER OF INCOME TAX-RANGE 8(2 ), MUMBAI [AO] WHEREIN THE INCOME HAS BEEN DETERMINED AT RS.726.80 LACS AFTER CERTAIN ADDITIONS / DISALLOWANCES AS AGAINST RETURN ED INCOME OF RS.543.08 LACS FILED BY THE ASSESSEE ON 30/10/2007. THE DISALLOWANCE U/S14A AND THE TREATMENT OF CERTAIN SHORT-TERM CAPITAL GAINS [STCG] EARNED BY THE ASSESSEE IS SUBJECT MATTER OF CROSS-A PPEALS BEFORE US. 2.2 DURING ASSESSMENT PROCEEDINGS, ITS TRANSPIRED T HAT THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.55.35 LACS. IT WAS OBSERVED THAT THE ASSESSEE OBTAINED TERM LOANS FROM THREE INSTITU TIONS AGGREGATING TO RS.110.27 CRORES OUT OF WHICH TERM LOAN TAKEN FROM IL&FS FOR RS.30.27 CRORES WAS TAKEN TO MEET GROUP FUNDS REQUIREMENTS W HEREAS LOAN TAKEN FROM STANDARD CHARTERED & INVESTMENTS LIMITED FOR RS.60 CRORES WAS TAKEN TO SUBSCRIBE TO RIGHT ISSUE OF PANTALOONS RETAIL (I) LTD. WHEREAS LOAN OF RS.20 CRORE TAKEN FROM SICOM WAS USED TO SUBSCRIBE TO SHARES OF VARIOUS MALL MANAGEMENT COMPANIES. THE AFORESAID FACTORS LED THE LD. AO TO BELIEVE THAT THE LOANS WERE TAKEN TO ACQU IRE THE SHARES OF THE GROUP COMPANIES AND NOT FOR FINANCING ITS CURRENT B USINESS ACTIVITIES AND THEREFORE INTEREST OF RS.25.14 LACS DEBITED TO THE PROFIT & LOSS ACCOUNT COULD NOT BE ALLOWED TO THE ASSESSEE AS REVENUE EXP ENDITURE AND DISALLOWANCE U/S 14A WAS REQUIRED TO BE COMPUTED IN TERMS OF RULE 8D. ALTHOUGH, THE ASSESSEE SUBMITTED THAT RULE 8D WAS N OT APPLICABLE FOR THE IMPUGNED AY, HOWEVER, THE SAME WAS REJECTED BY LD. AO. FINALLY, 4 APPLYING THE PROVISIONS OF RULE 8D, THE AGGREGATE D ISALLOWANCE WAS WORKED OUT TO BE RS.68.22 LACS WHICH COMPRISED-OFF OF INTEREST DISALLOWANCE U/R 8D(2)(II) FOR RS.24.41 LACS AND EX PENSE DISALLOWANCE U/R 8D(2)(III) FOR RS.43.81 LACS. HOWEVER, THE AGGR EGATE DISALLOWANCE WAS RESTRICTED TO RS.55.35 LACS, BEING EXEMPT INCOM E EARNED BY THE ASSESSEE DURING IMPUGNED AY. 2.3 THE SECOND ADDITION STEM FROM THE FACT THAT THE ASSESSEE REFLECTED SHORT-TERM CAPITAL GAINS [STCG] OF RS.543.08 LACS FROM SALE OF SHARES. HOWEVER, UPON PERSONAL OF TRANSACTION DETAI LS, IT TRANSPIRED THAT THE ASSESSEE DEALT WITH AS MANY AS 39 SCRIPS AND TH E GROSS VALUE OF TRANSACTIONS WAS MORE THAN RS.100 CRORES. THE LD. A O OPINED THAT THE PURCHASE AND SALE OF SHARES WAS REGULAR FEATURE OF ASSESSEES ACTIVITIES AND THE ASSESSEE, HAD REGULARLY, QUITE SYSTEMATICAL LY AND IN A VERY ORGANIZED MANNER, ENGAGED ITSELF IN PURCHASE AND SA LE OF SHARES AND THEREFORE, THE RESULTANT INCOME WAS TO BE ASSESSED AS BUSINESS INCOME. IT WAS ALSO NOTED THAT THE ASSESSEE HAS TOTAL FUNDS OF RS.124.66 CRORES AT ITS DISPOSAL IN THE SHAPE OF SHARE CAPITAL, SHARE APPLICATION MONEY, RESERVES AND SURPLUS, SECURED/UNSECURED LOANS OUT OF WHICH IT HAD CLOSING INVESTMENTS IN SHARES FOR RS.108.29 CRORES WHEREAS THE REMAINING AMOUNT WAS LOCKED UP IN FIXED ASSETS AND CAPITAL WORK-IN- PROGRESS. IN OTHER WORDS, IT WAS OBSERVED THAT APPROX. 87% O F ENTIRE FUNDS MOBILIZED BY THE ASSESSEE INCLUDING THE BORRO WED FUNDS WERE UTILIZED TO MAKE INVESTMENT IN SHARES OF GROUP COMP ANIES AS WELL AS FOR THE PURPOSE OF PURCHASE AND SALE OF OTHER SHARES FO R EARNING PROFITS DURING THE YEAR. FINALLY, AFTER CONSIDERING VARIOUS JUDICIAL PRONOUNCEMENTS AS CITED IN THE QUANTUM ASSESSMENT O RDER, LD. AO 5 CAME TO A CONCLUSION THAT THE AFORESAID INCOME WAS TO BE TREATED AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS AS REFLECTED BY THE ASSESSEE. THE DIFFERENCE IN TREATMENT ASSUMES IMPORTANCE IN V IEW OF THE FACT THAT THE INCOME UNDER THE HEAD CAPITAL GAINS ATTRACT CONCESSIONAL RATE OF TAX VIS--VIS BUSINESS INCOME. 3. AGGRIEVED, THE ASSESSEE AGITATED BOTH THE ADDITI ONS WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 30/12/2016 WHEREIN FIRST APPELLATE AUTHORITY CONFIRMED THE DIS ALLOWANCE U/S 14A RELYING UPON ITS OWN DECISION IN ASSESSEES OWN CAS E FOR IMMEDIATELY PRECEDING AY 2006-07. SIMILARLY, RELYING UPON THE S AME DECISION, IT WAS CONCLUDED THAT DELIVERY-BASED TRANSACTIONS CARRIED OUT BY THE ASSESSEE WERE TO BE ASSESSED UNDER THE HEAD CAPITAL GAINS. AGGRIEVED THE ASSESSEE AS WELL AS THE REVENUE IS IN FURTHER APPEA L BEFORE US. 4. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. DISALLOWANCE U/S. 14A 1.1 THE LD. CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN MAKING DISALLOWANCE U/S. 14A OF THE ACT OF RS. 55,35,051/- TOWARDS ALLEGED EXPENDITURE INCURRED FOR EARNING DIVIDEND INCOME. 1.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRC UMSTANCES OF THE CASE, AND IN LAW, THE CASE OF THE APPELLANT WAS NOT COVERED UNDER SEC TION 14A OF THE ACT AND, IN ANY CASE, NO DISALLOWANCE WAS CALLED FOR UNDER THIS SEC TION. 1.3 WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITT ED THAT ASSUMING - BUT NOT ADMITTING - THAT SOME DISALLOWANCE WAS REQUIRED TO BE MADE UNDE R SECTION 14A OF THE ACT, THE CALCULATION OF THE DISALLOWANCE IS NOT IN ACCORDANC E WITH THE LAW, IS ARBITRARY AND IS EXCESSIVE . ON THE OTHER HAND, THE REVENUES GROUNDS READ AS UN DER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THE INCOME FROM SALE OF SHARES OF RS.5,43,0 8,089/- AS INCOME FROM SHORT TERM CAPITAL GAIN AS AGAINST INCOME FROM BUSINESS ASSESS ED BY THE ASSESSING OFFICE WITHOUT APPRECIATING THE FACT THAT THOUGH THE ASSESSEE HAD ACTUALLY HOLDING THE SHARES AS INVESTMENT IN ITS BALANCE SHEET BUT THE FACT REMAIN ED THAT THE ENTIRE MOTIVE AND THE DESIGN OF THE TRANSACTION WAS TO TRADE IN SHARES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THE INCOME FROM SALE OF SHARES OF RS.5,43,0 8,089/- AS INCOME FROM SHORT TERM CAPITAL GAIN AS AGAINST INCOME FROM BUSINESS ASSESS ED BY THE ASSESSING OFFICE WITHOUT APPRECIATING THE FACT THAT THE QUANTUM OF INVESTMEN T AND ITS COMPARISON TO OWN FUNDS OF THE 6 ASSESSEE AND THE FACT THAT THE INVESTMENT IN SHARES WAS SOURCED FROM THE BORROWED FUNDS CLEARLY ESTABLISH THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING IN SHARES AND NOT IN INVESTMENT ACTIVITY. 5. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [AR], MS. DINKLE HARIA, AT THE OUTSET, DREW OUR ATTENTION TO THE ORDER OF T HIS TRIBUNAL RENDERED IN CROSS-APPEALS FOR AY 2006-07, ITA NO.76 36/MUM/2016 & ITA NO.1013/MUM/2017 ORDER DATED 25/09/2018 AND PLE ADED THAT SIMILAR VIEW MAY BE TAKEN IN THE MATTER. THE LD. DR FAIRLY CONCEDED THIS FACT. 6.1 WE HAVE CAREFULLY HEARD THE ARRIVAL SUBMISSIONS AND PERUSED RELEVANT MATERIAL ON RECORD INCLUDING THE CITED DEC ISION RENDERED BY THE TRIBUNAL IN CROSS-APPEALS FOR AY 2006-07. AS NOTED IN THE SAID ORDER AS WELL AS SETTLED BY VARIOUS JUDICIAL PRONOUNCEMENTS, WE CONQUER WITH THE VIEW THAT RULE 8D HAD NO RETROSPECTIVE APPLICATION AND COULD APPLY O NLY FROM AY 2008-09 AND THEREFORE, THE COMPUTATIONS MAD E BY LD. AO IN TERMS OF RULE 8D COULD NOT BE SUSTAINED. 6.2 SO FAR AS THE TREATMENT OF GAINS ON PURCHASE AN D SALE OF SHARES IS CONCERNED, WE FIND THAT THE MATTER HAS BEEN RESTORE D BACK BY THE TRIBUNAL IN THE CITED ORDER IN THE FOLLOWING MANNER : - 17.1 WE ARE OF THE CONSIDERED VIEW THAT THE SUBSTAN TIAL NATURE OF TRANSACTIONS, THE MANNER OF MAINTAINING BOOKS OF ACCOUNT, THE MAGNITU DE OF PURCHASES AND SALES AND THE RATIO BETWEEN PURCHASES AND SALES AND THE HOLDI NG WOULD FURNISH A GOOD GUIDE TO DETERMINE THE NATURE OF TRANSACTIONS. ALSO, ORDI NARILY THE PURCHASE AND SALE OF SHARES WITH THE MOTIVE OF EARNING A PROFIT, WOULD R ESULT IN THE TRANSACTION BEING IN THE NATURE OF TRADE/ADVENTURE IN THE NATURE OF TRADE; B UT WHERE THE OBJECT OF THE INVESTMENT IN SHARES OF A COMPANY IS TO DERIVE INCO ME BY WAY OF DIVIDEND ETC. THEN THE PROFITS ACCRUING BY CHANGE IN SUCH INVESTMENT ( BY SALE OF SHARES) WILL YIELD CAPITAL GAIN AND NOT REVENUE RECEIPT. 17.2 IN VIEW OF THE ABOVE POSITION OF LAW, WE SET A SIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO TO MAK E A DE NOVO ORDER AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. WE DIRECT THE ASSESSEE TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO. THUS THE 1ST, 2ND AND 3RD GROUND OF APPEAL ARE ALLOWED FOR STATISTICAL PURPOS ES. 7 THE FIRST APPELLATE AUTHORITY HAS ADJUDICATED THE I SSUE IN TERMS OF ORDER FOR AY 2006-07. THEREFORE, WITHOUT DELVING MUCH DEE PER INTO THE ISSUE, THE MATTER STANDS RESTORED BACK TO THE FILE OF LD. AO ON SIMILAR LINES WITH SIMILAR DIRECTIONS. ACCORDINGLY, THE REVENUES APPE AL STANDS ALLOWED FOR STATISTICAL PURPOSES. 6.3 SO FAR AS THE DISALLOWANCE U/S 14A IS CONCERNED , LD. AR HAS CANVASSED THE POINT THAT IN TERMS OF CITED DECISION , THE ESTIMATION OF DISALLOWANCE SHOULD BE MADE @ 2% OF EXEMPT INCOME E ARNED BY THE ASSESSEE DURING IMPUGNED AY. HOWEVER, WE FIND THAT LD. AO HAS MADE DISALLOWANCE OF INTEREST AS WELL AS EXPENSES IN TER MS OF RULE 8D AFTER RECORDING CERTAIN FACTS THAT THE INTEREST-BEARING L OANS TAKEN BY THE ASSESSEE WERE USED TO MAKE THE INVESTMENTS IN SHARE S AND APPROX. 87% OF THE AVAILABLE FUNDS WERE APPLIED TOWARDS INV ESTMENT AT YEAR END. SECONDLY, THE ISSUE OF TREATMENT OF GAINS EARNED BY THE ASSESSEE SHALL HAVE A BEARING ON THIS ISSUE ALSO SINCE THE ALLOWAN CE OF INTEREST EXPENDITURE UNDER THE HEAD BUSINESS INCOME VIS--VIS CAPITAL GAINS WOULD BE DIFFERENT. THEREFORE, WE DEEM IT FIT TO RE STORE THIS MATTER ALSO BACK TO THE FILE OF LD. AO FOR FRESH RE-ADJUDICATIO N IN THE LIGHT OF TREATMENT GIVEN TO GAINS EARNED ON TRADING OF SHARES. NEEDLES S TO ADD THE REASONABLE OPPORTUNITY OF BEING HEARD SHALL BE GRAN TED TO THE ASSESSEE WHILE RE-ADJUDICATING THE ISSUES. ACCORDINGLY, THE ASSESSEES APPEAL ALSO STANDS ALLOWED FOR STATISTICAL PURPOSES. 6.4 IN NUTSHELL, THE CROSS APPEALS STAND ALLOWED FO R STATISTICAL PURPOSES. ASSESSEES APPEAL FOR AY 2008-09, ITA NO. 3470/MUM/ 2014 7.1 IN THIS AY, THE ASSESSEE HAS SIMILARLY BEEN ASS ESSED U/S 143(3) ON 30/11/2010 WHEREIN THE INCOME HAS BEEN DETERMINED A T RS.223.06 LACS 8 WITH SIMILAR DISALLOWANCES/ ADJUSTMENTS. IN THIS AY , THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.48.24 LACS, AGAINST WH ICH LD. AO WORKED OUT EXPENSE DISALLOWANCE U/R 8D(2)(III) OF RS.71.46 LACS, BEING 0.5% OF AVERAGE INVESTMENTS. THE SECOND ADJUSTMENT PERTAINS TO TREATMENT OF GAIN ON INVESTMENT FOR RS.87.20 LACS, WHICH HAS BEE N TREATED AS BUSINESS INCOME ON THE SAME ANALOGY / REASONING. THE LD. FIRST APPELLATE AUTHORITY HAS CONFIRMED THE STAND OF LD. AO, AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 7.2 UPON DUE CONSIDERATION, WE FIND THAT FACTS AND CIRCUMSTANCES BEING PARI-MATERIA THE SAME AS IN AY 2007-08 EXCEPT FOR THE FACT THAT THE PROVISIONS OF RULE 8D WERE APPLICABLE IN THIS AY, B OTH THE ISSUES STAND REMITTED BACK TO THE FILE OF LD. AO FOR FRESH ADJUD ICATION ON SIMILAR LINES. THE ASSESSEES APPEAL STAND ALLOWED FOR STATISTICAL PURPOSES. REVENUES APPEAL FOR AY 2008-09, ITA NO. 4179/MUM/2 017 8.1 BY WAY OF THIS APPEAL, THE REVENUE IS CHALLENGI NG THE ACTION OF FIRST APPELLATE AUTHORITY IN DELETING THE PENALTY U/S 271 (1)(C) FOR RS.29.64 LACS AS LEVIED BY LD. AO VIDE PENALTY ORDER DATED 25/03/ 2015. THE PERUSAL OF PENALTY ORDER REVEAL THAT THE ASSESSEE HAS BEEN SAD DLED WITH IMPUGNED PENALTY IN VIEW OF THE FACT THAT THE GAIN OF RS.87. 20 LACS REFLECTED AS CAPITAL GAINS WERE ASSESSED BY THE REVENUE AS BUSINESS INCOME. THE LD. FIRST APPELLATE AUTHORITY HAS DELETED THE SAME IN VIEW OF THE FACT THAT THE ASSESSEES CLAIM WAS BONA-FIDE AND NOT BASED ON ANY FRAUD OR BOGUS DOCUMENTS. FURTHER THE STATED ISSUE IN AYS 20 06-07 & 2007-08 WAS DECIDED IN ASSESSEES FAVOR BY FIRST APPELLATE AUTHORITY AND THEREFORE, THERE WAS A DIFFERENCE OF OPINION AS TO TREATMENT OF THE STATE 9 INCOME. RESULTANTLY, THE PENALTY WAS DELETED BY LD. CIT(A) AGAINST WHICH THE REVENUE IS IN FURTHER APPEAL BEFORE US. 8.2 UPON CAREFUL CONSIDERATION, WE FIND THAT PENALT Y HAS BEEN LEVIED BY LD. AO FOR MERE CHANGE OF HEAD OF INCOME WITHOUT TH ERE BEING ANY CHANGE IN QUANTUM OF INCOME OFFERED BY THE ASSESSEE . HOWEVER, THE BASIC CONDITION VIZ. FURNISHING OF INACCURATE PARTI CULARS / CONCEALMENT OF PARTICULARS OF INCOME SO AS TO ATTRACT THE PROVISIO NS OF SECTION 271(1)(C), IN THE PRESENT CASE, HAVE REMAINED UNFULFILLED AND THEREFORE, PENALTY WAS NOT JUSTIFIED AS RIGHTLY HELD BY FIRST APPELLATE AU THORITY. MORE SO, THIS ISSUE ALREADY STANDS RESTORED BACK TO THE FILE OF LD. AO. THEREFORE, NO INFIRMITY COULD BE FOUND IN THE SAME. RESULTANTLY, THE APPEAL STANDS DISMISSED. ASSESSEES APPEAL FOR AY 2009-10, ITA NO. 3471/MUM/ 2014 9.1 IN THIS AY, THE ASSESSEE HAS SIMILARLY BEEN ASS ESSED U/S 143(3) ON 16/08/2011 WHEREIN THE INCOME HAS BEEN DETERMINED A T RS.49.67 LACS WITH SIMILAR DISALLOWANCES/ ADJUSTMENTS. IN THIS AY , THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.62.57 LACS AND OFFERED SUO-MOTO DISALLOWANCE OF RS.0.37 LACS, AGAINST WHICH LD. AO WORKED OUT EXPENSE DISALLOWANCE U/R 8D(2)(III) OF RS.92.57 LACS, BEING 0.5% OF AVERAGE INVESTMENTS. THE SECOND ADJUSTMENT PERTAINS TO TREA TMENT OF LOSS ON INVESTMENT FOR RS.48.11 LACS, WHICH HAS BEEN TREATE D AS BUSINESS LOSS ON THE SAME ANALOGY / REASONING. THE LD. FIRST APPE LLATE AUTHORITY HAS CONFIRMED THE STAND OF LD. AO, AGAINST WHICH THE AS SESSEE IS IN FURTHER APPEAL BEFORE US. 9.2 UPON DUE CONSIDERATION, WE FIND THAT FACTS AND CIRCUMSTANCES BEING PARI-MATERIA THE SAME AS IN AY 2007-08 EXCEPT FOR THE FACT THAT THE PROVISIONS OF RULE 8D WERE APPLICABLE IN THIS AY, B OTH THE ISSUES STAND 10 REMITTED BACK TO THE FILE OF LD. AO FOR FRESH ADJUD ICATION ON SIMILAR LINES. THE ASSESSEES APPEAL STAND ALLOWED FOR STATISTICAL PURPOSES. REVENUES APPEAL FOR AY 2009-10, ITA NO. 4180/MUM/2 017 10. BY WAY OF THIS APPEAL, THE REVENUE IS CHALLENGI NG THE ACTION OF FIRST APPELLATE AUTHORITY IN DELETING THE PENALTY U/S 271 (1)(C) FOR RS.16.35 LACS. BOTH THE COUNSEL, AT THE OUTSET, CONVERGED ON THE POINT THAT THE TAX EFFECT OF THE REVENUES APPEAL WAS LESS THAN PRESCR IBED THRESHOLD LIMIT OF RS. 20 LACS IN TERMS OF CBDT CIRCULAR NO.3/2018 DAT ED 11/07/2018 AND THEREFORE, THE APPEAL WAS NOT MAINTAINABLE. IN VIEW OF THE STATED POSITION, THE APPEAL STANDS DISMISSED IN LIMINE, BEING NOT MAINTAINABLE . ASSESSEES APPEAL FOR AY 2010-11, ITA NO. 3472/MUM/ 2014 11.1 IN THIS AY, THE ASSESSEE HAS SIMILARLY BEEN AS SESSED U/S 143(3) ON 13/12/2012 WHEREIN THE LOSS HAS BEEN DETERMINED AT RS.23.76 LACS WITH SIMILAR DISALLOWANCES/ ADJUSTMENTS. IN THIS AY, THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.62.57 LACS, AGAINST WH ICH LD. AO WORKED OUT AGGREGATE DISALLOWANCE U/R 8D(2) FOR RS.85.99 L ACS WHICH COMPRISED-OFF OF INTEREST DISALLOWANCE U/R 8D(2)(II ) FOR RS.17.98 LACS AND EXPENSE DISALLOWANCE U/R 8D(2)(III) OF RS.68.01 LAC S, BEING 0.5% OF AVERAGE INVESTMENTS. THE SECOND ADJUSTMENT PERTAINS TO TREATMENT OF LOSS ON INVESTMENT FOR RS.99.93 LACS, WHICH HAS BEE N TREATED AS BUSINESS LOSS ON THE SAME ANALOGY / REASONING. THE LD. FIRST APPE LLATE AUTHORITY HAS CONFIRMED THE STAND OF LD. AO, AGAINS T WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 11.2 UPON DUE CONSIDERATION, WE FIND THAT FACTS AND CIRCUMSTANCES BEING PARI-MATERIA THE SAME AS IN AY 2007-08 EXCEPT FOR THE FACT THAT THE PROVISIONS OF RULE 8D WERE APPLICABLE IN THIS AY, B OTH THE ISSUES STAND 11 REMITTED BACK TO THE FILE OF LD. AO FOR FRESH ADJUD ICATION ON SIMILAR LINES. THE ASSESSEES APPEAL STAND ALLOWED FOR STATISTICAL PURPOSES. CROSS APPEALS FOR AY 2011-12, ITA NO.1827/MUM/2015 & ITA 2051/MUM/2015 12.1 IN THIS AY, THE ASSESSEE HAS SIMILARLY BEEN AS SESSED U/S 143(3) ON 28/12/2013 WHEREIN THE LOSS HAS BEEN DETERMINED AT RS.3.78 LACS WITH SIMILAR DISALLOWANCES/ ADJUSTMENTS. IN THIS AY, THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.9.17 LACS AND OFFERED SUO-MOTO DISALLOWANCE OF RS.130.60 LACS COMPRISING-OFF OF DI RECT EXPENSES FOR RS.0.69 LACS, PROPORTIONATE INTEREST EXPENSES FOR R S.89.34 LACS AND INDIRECT EXPENDITURE FOR RS.40.56 LACS. THE LD. AO WORKED OUT AGGREGATE DISALLOWANCE U/R 8D(2) FOR RS.204.43 LACS WHICH COMPRISED- OFF OF DIRECT EXPENDITURE FOR RS.0.54 LACS U/R 8D(2 )(I), INTEREST DISALLOWANCE U/R 8D(2)(II) FOR RS.163.32 LACS AND E XPENSE DISALLOWANCE U/R 8D(2)(III) OF RS.40.56 LACS AND ACCORDINGLY, AD DED THE DIFFERENTIAL AMOUNT OF RS.73.82 LACS TO THE INCOME OF THE ASSESS EE. THE SECOND ADJUSTMENT PERTAINS TO TREATMENT OF LOSS ON INVESTM ENT FOR RS.77.91 LACS, WHICH HAS BEEN TREATED AS BUSINESS LOSS ON THE SAME ANALOGY / REASONING. THE LD. FIRST APPELLATE AUTHORITY CONFIR MED DISALLOWANCE U/S 14A TO THE EXTENT OF RS.155.04 LACS WHEREAS UPHELD THE STAND OF LD. AO QUA TREATMENT OF LOSS ON INVESTMENTS. AGGRIEVED, THE AS SESSEE AS WELL AS REVENUE IS UNDER APPEAL BEFORE US. 12.2 UPON DUE CONSIDERATION, WE FIND THAT FACTS AND CIRCUMSTANCES BEING PARI-MATERIA THE SAME AS IN AY 2007-08 EXCEPT FOR THE FACT THAT THE PROVISIONS OF RULE 8D WERE APPLICABLE IN THIS AY, B OTH THE ISSUES STAND 12 REMITTED BACK TO THE FILE OF LD. AO FOR FRESH ADJUD ICATION ON SIMILAR LINES. THE CROSS APPEALS STAND ALLOWED FOR STATISTICAL PUR POSES. CONCLUSION 13. ALL THE APPEALS STAND DISPOSED-OFF IN THE FOLLO WING MANNER: - NO. ITA NO. APPEAL BY A.Y. SECTION RESULT 1. 868/MUM/2017 ASSESSEE 2007-08 143(3) ALLOWED FO R STATISTICAL PURPOSES 2. 1824/MUM/2017 REVENUE 2007-08 143(3) ALLOWED FOR STATISTICAL PURP OSES 3. 3470/MUM/2014 ASSESSEE 2008-09 143(3) ALLOWED FOR STATISTICAL PUR POSES 4. 4179/MUM/2017 REVENUE 2008-09 271(1)(C) DISMISSED 5. 3471/MUM/2014 ASSESSEE 2009-10 143(3) ALLOWED FOR STATISTICAL PUR POSES 6. 4180/MUM/2017 REVENUE 2009-10 271(1)(C) DISMISSED 7. 3472/MUM/2014 ASSESSEE 2010-11 143(3) ALLOWED FOR STATISTICAL PU RPOSES 8. 1827/MUM/2015 ASSESSEE 2011-12 143(3) ALLOWED FOR STATISTICAL PU RPOSES 9. 2051/MUM/2015 REVENUE 2011-12 143(3) ALLOWED FOR STATISTICAL PUR POSES ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH FEBRUARY, 2019. SD/- SD/- (PAWAN SINGH) (MAN OJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 26/02/2019 SR. PS : PRATIMA SHAKYAWAR/SR.PS: JAISY VARGHESE / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT 3. $$% ( ) / THE CIT(A) 4. $$% / CIT CONCERNED 5. & ''() , $) , / DR, ITAT, MUMBAI 6. ' +,- / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.