JHALAWAR KENDRIYA SAHKARI BANK LTD., JHALAWAR V. ASSISTANT COMMISSIONER OF INCOME TAX, Kota

ITA 349/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1452 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 14-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH DHK
• Keywords: Principle of natural justice; Earning of tax free income; Bad and doubtful debts
• Section: 14A; 37; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 349/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 JHALAWAR KENDRIYA SAHAKARI BANK LTD., OPPOSITE SURYA MANDIR, MAIN MARKET, JHALARAPATAN, DISTT.- JHALAWAR-326023. CUKE VS. A.C.I.T., CIRCLE-1, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAATJ 2424 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 341/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 A.C.I.T., CIRCLE-1, KOTA. CUKE VS. M/S JHALAWAR KENDRIYA SAHAKARI BANK LTD., SAHAKAR BHAWAN, N.H. 12, JHALAWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAATJ 2424 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VINOD GUPTA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SMT. NEENA JEPH (ADDL.CIT-DR) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 29/08/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 07/09/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 13/12/2017 OF LD. CIT(A), KOTA FOR THE A.Y. 2014-15 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: ITA 349 & 341/JP/2018_ JHALAWAR KENDRIYA SAHAKARI BANK LTD. VS ACIT 2 1. IMPUGNED ORDER PASSED U/S 250/143(3) IS BAD IN LAW AND ON FACTS BEING AGAINST THE PRINCIPLE OF NATURAL JUSTICE AND FOR MANY MORE OTHER REASONS. 2. UNDER THE FACTS AND CIRCUMSTANCES, LD. A.O. HAS ERRED BY DISALLOWING PROVISION ON THE BASIS OF AGREEMENT OF ARREARS OF R S. 15,00,000/-, FURTHER, CIT(A) ERRED BY SUSTAINING THE SAME. THE D ISALLOWANCE SUSTAINED IS UNJUSTIFIED, ILLEGAL OR EXCESSIVE. 3. UNDER THE FACTS AND CIRCUMSTANCES, LD. A.O. HAS ERRED BY DISALLOWING PROVISION FOR BAD AND DOUBTFUL DEBTS OF RS. 95,597/ - CONSIDERED IT AS EXCESS, FURTHER, CIT(A) ERRED BY SUSTAINING THE SAM E. THE DISALLOWANCE SUSTAINED IS UNJUSTIFIED, ILLEGAL OR E XCESSIVE. 4. UNDER THE FACTS AND CIRCUMSTANCES, THE LD. A.O. HAS ERRED BY INITIATING PENALTY PROCEEDING UNDER SECTION 271(1)( C) OF THE INCOME TAX ACT, 1961. 5. THAT THE APPELLANT CRAVES YOUR INDULGENCE TO ADD , AMEND OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF H EARING. 2. AT THE TIME OF HEARING, THE LD AR OF THE ASSESSE E HAS STATED AT BAR THAT THE ASSESSEE DOES NOT PRESS GROUNDS NO. 1 AND 3 OF THE APPEAL AND THE SAME MAY BE DISMISSED AS NOT PRESSED. THE LD DR HAS RAISED NO OBJECTION IF GROUNDS NO. 1 AND 3 OF THE APPEAL ARE DISMISSED AS NOT PRESSED. ACCORDINGLY, GROUNDS NO. 1 AND 3 OF THE AP PEAL ARE DISMISSED BEING NOT PRESSED. 3. GROUND NO. 2 OF THE APPEAL IS REGARDING THE DISA LLOWANCE OF PROVISION FOR WAGES. THE ASSESSEE IS A COOPERATIVE BA NK CONSTITUTED UNDER RAJASTHAN CO-OPERATIVE SOCIETY ACT, 2001. THE ASSESS EE FILED ITS RETURN OF INCOME ON 29/11/2014 DECLARING TOTAL INCOME OF RS. 3,32,25,920/-. DURING ITA 349 & 341/JP/2018_ JHALAWAR KENDRIYA SAHAKARI BANK LTD. VS ACIT 3 THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER NOTE D THAT THE ASSESSEE HAS MADE CLAIM OF RS. 15,00,000/- LACS AS PROVISION FOR AGREEMENT IN ARREARS WHICH IS AN INVESTMENT AND NOT THE ACTUAL PA YMENT TO ITS EMPLOYEES. THE ASSESSING OFFICER WAS OF THE VIEW THAT ONLY ACTUAL AMOUNT PAID TOWARDS AGREEMENT ARREAR IS AN ALLOWABLE DEDUCTI ON AND NO ANY PROVISION TO MEET SUCH FUTURE LIABILITY, ACCORDINGL Y, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF RS. 15,00,000/- LACS AND ADD ED TO THE INCOME OF THE ASSESSEE. 4. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSI NG OFFICER BEFORE THE LD. CIT(A), HOWEVER, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON SIMILAR GROUNDS. 5. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSEE IS A DISTRICT LEVEL COOPERATIVE BANK AND R EVISED THE WAGES AND SALARY OF THE STAFFS IN ACCORDANCE WITH THE RANAWAT A WARD GIVEN IN 1965 UNDER THE PROVISIONS OF INDUSTRIAL DISPUTES ACT, EF FECTIVE FOR FIVE YEARS. SINCE THE REVISION OF WAGES IS APPROVED BY THE STATE GOVERNMENT AND THEREFORE AFTER THE EXPIRY OF EARLIER AGREEMENT, TH E ASSESSEE HAS TO MAKE THE PROVISION FOR THE REVISED SALARY AND WAGES TILL THE FINAL APPROVAL FROM THE FINANCE DEPARTMENT OF STATE GOVERNMENT IS GRANT ED AND THEN THE REGISTRAR OF COOPERATIVE BANKS TO IMPLEMENT THE SAM E. THE LD AR HAS ITA 349 & 341/JP/2018_ JHALAWAR KENDRIYA SAHAKARI BANK LTD. VS ACIT 4 SUBMITTED THAT THE APPROVAL COMES SUBSEQUENTLY BUT WITH EFFECT FROM THE EARLIER DATE AND THEREFORE THE LIABILITY IS A CERTA IN LIABILITY, THOUGH, CRYSTALLIZED ONLY ON APPROVAL GRANTED BY THE GOVERN MENT. HE HAS SUBMITTED THAT THE IDENTICAL ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN ASSESSEES OWN FOR THE A.Y. 2008-09 AND 2009-10. HEN CE, THE ISSUE IS NOW COVERED BY THE DECISION OF THIS TRIBUNAL AS WELL A S THE DECISIONS OF HON'BLE HIGH COURT. 6. ON THE OTHER HAND, THE LD DR HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT SINCE THE ASSES SEE HAS MADE A PROVISION ON ACCOUNT OF SALARY AND WAGES AND THE CLA IM IS NOT BASED ON ACTUAL PAYMENT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS DULY EXPLAINED THAT THE LAST WAGE REVISION WAS DONE FOR THE PERIOD 01/01/2009 TO 31/12 /2013 AND THEREAFTER THE WAGES REVISION WAS DUE FROM 01/01/2014 TILL 31/3/2015, THUS THE ASSESSEE HAD MADE PROVISIONS OF REVISED WAG ES FOR THE PERIOD FROM 01/01/2014 TO 31/3/2014 I.E. 3 MONTHS OF THE F INANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. THE PROVISIO N HAS BEEN MADE BY THE ASSESSEE FOR THREE MONTHS OF REVISED WAGES WHICH FINALLY TO BE APPROVED BY THE GOVERNMENT W.E.F. 01/01/2014. ONCE T HE REVISION OF ITA 349 & 341/JP/2018_ JHALAWAR KENDRIYA SAHAKARI BANK LTD. VS ACIT 5 WAGES HAS TO BE W.E.F. 01/01/2014 AND THERE CANNOT BE ANY GAP BETWEEN EXPIRY OF THE LAST REVISION AND THE NEW REVISED WAGES THEN THE SAID LIABILITY TO PAY THE REVISED WAGES IS AN ACTUAL AND ASCERTAIN LIABILITY FOR THE PERIOD 01/01/2014 TO 31/3/2014 THOUGH, THE QUANTIFI CATION AND CRYSTALLIZATION OF THE AMOUNT COMES LATER ON WHEN TH E REVISION IS APPROVED BY THE STATE GOVERNMENT. THE TRIBUNAL IN AS SESSEES OWN CASE FOR THE A.Y. 2008-09 IN ITA NO. 1032/JP/2011 VIDE O RDER DATED 14/08/2014 HAS CONSIDERED AND HELD IN PARA 17 AS UN DER: 17. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. WE PROCEED TO DEC IDE THE GROUNDS RAISED BY THE ASSESSEE AS UNDER:- APROPOS GROUND NO. 2 IN RESPECT OF GROUP GRATUITY SCHEME POLICY FROM TIME TO TIME THEREOF WAS PAID TO LIC. THE DISALLOWA NCE HAS BEEN MADE BY LOWER AUTHORITIES HOLDING THAT THE NECESSARY REGIST RATION OF SCHEME WAS NOT OBTAINED BY THE ASSESSEE, IN OUR CONSIDERED VIE W, THE CONTROVERSY STANDS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE B Y THE HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF CIT VS. TEXTO OL CO. LTD. 263 CTR 257 (SC) WHEREIN THE SIMILAR PAYMENT MADE BY THE AS SESSEE DIRECTLY TO LIC FOR GROUP GRATUITY FUND WAS HELD TO BE ALLOWABL E DEDUCTION U/S 36(1)(V) OF THE ACT. THIS DECISION HAS BEEN FOLLOWE D BY THE DELHI BENCH OF ITAT IN THE CASE OF KEIHIN PENALFA LTD. VS. ACIT VI DE ITA NO. 4309/DEL./2011 (SUPRA), TO WHICH ONE US (LEARNED J .M.) IS A PARTY. IN VIEW THEREOF, WE ARE INCLINED TO HOLD THAT THE ASSE SSEE IS ENTITLED TO DEDUCTION OF PAYMENT OF GRATUITY TO THE LIC. ACCORD INGLY, GROUND NO. 2 OF THE ASSESSEE IS ALLOWED. ITA 349 & 341/JP/2018_ JHALAWAR KENDRIYA SAHAKARI BANK LTD. VS ACIT 6 APROPOS GROUND NO. 3, THERE IS NO DISPUTE ON THE F ACTS THAT THE AMOUNT OF PAYMENT OF ARREARS OF SALARY IN QUESTION WAS MAD E CONSEQUENT TO THE 13 TH WAGE SETTLEMENT WITH ALL THE STAKE HOLDERS. THE GE NUINENESS OF THE PAYMENT IS NOT CHALLENGED. THE ASSESSEE IS GOVERNED BY REGULATORY LAWS OF RAJASTHAN COOPERATIVE SOCIETIES ACT. THE ASSESSE ES LIABILITIES TOWARDS WAGE REVISION HAVING ACCRUED AND CRYSLATISED BY WAY OF AGREED SETTLEMENT, THE SAME IS AN ALLOWABLE BUSINESS EXPEN DITURE AS PER INCOME TAX ACT. THE AS-I AND II FURTHER SUPPORTS THE ACCOU NTING DONE BY THE ASSESSEE IN THIS BEHALF. OUR VIEWS ARE FORTIFIED BY THE ABOVE REFERRED JUDICIAL PRONOUNCEMENTS CITED BY THE LEARNED COUNSE L AND MENTIONED AT PARA ABOVE. RESPECTFULLY FOLLOWING THE HON'BLE SUPR EME COURT AND VARIOUS OTHER HONBLE HIGH COURTS JUDGMENTS, WE HOL D THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION OF PROVISION OF WAGE SETT LEMENT OF RS. 20.00 LACS. IN VIEW OF THE ABOVE, GROUND NO. 3 OF THE ASSESSEE IS ALLOWED. APROPOS GROUND NO. 4, THE REASONS FOR THE PAYMENT HAVE BEEN NARRATED ABOVE, WHICH HAVE NOT BEEN CONTROVERTED BY THE LEAR NED D.R.. THIS EMPHASIZES THE FACT THAT THE ASSESSEE BEING A CENTR AL COOPERATIVE BANK IS BOUND BY RULES FRAMED BY THE REGISTRAR OF COOPER ATIVE SOCIETIES, RAJASTHAN FROM TIME TO TIME IN RESPECT OF ITS BANKI NG AND STAFF ACTIVITIES. LIABILITY FOR PACS WAS FOSTERED BY THE STATUTORY RU LES. THE ASSESSING OFFICER DISPUTED THE CALCULATION THEREOF. THE LEARN ED CIT(A) CONSIDERED IT TO BE A BAD DEBT FOR WHICH NO REASONS ARE GIVEN. IN OUR CONSIDERED VIEW THE PACS PAYMENT CANNOT BE HELD TO BE A BAD DEBT, T HEREFORE, WHAT IS RELEVANT FOR US IS THE ASSESSING OFFICERS ORDER. T HE LIABILITIES HAVE BEEN CREATED BY STATUTORY RULE WHICH ASSESSEE IS BOUND T O FOLLOW. THIS PROVISION HAS BEEN CREATED FOR AMICABILITY WITH THE EMPLOYEES AND IS FOR THE COMMERCIAL BENEFIT OF THE ASSESSEE BANK AND IS TO BE HELD AS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IN THI S EVENTUALITY, THE PAYMENT IS EVEN OTHERWISE ALLOWABLE U/S 37 OF THE A CT. ANY PERCEIVED ITA 349 & 341/JP/2018_ JHALAWAR KENDRIYA SAHAKARI BANK LTD. VS ACIT 7 METHOD OF CALCULATION BY THE ASSESSING OFFICER CANN OT BE HELD AS A TOOL TO DISALLOW THE ASSESSEES CLAIM. THE REVENUES INTERE ST IS SAFEGUARDED BY A FACT THAT IF AT ALL THERE IS ANY MISTAKE IN THE CAL CULATION, THE ACCESS ARE SHORT CALCULATION WILL BE GIVEN SUITABLE TREATMENT IN BOOKS OF ACCOUNT IN SUBSEQUENT YEARS. THIS BEING SO IN OUR CONSIDERED V IEW, THE ASSESSEE IS ELIGIBLE FOR CLAIM OF PACS MANAGER FUND PAYMENT AS EXPENDITURE. OUR VIEWS ARE FORTIFIED BY THE HONBLE SUPREME COURT J UDGMENT IN THE CASE OF SHRI VENKATA SATYANARAYANA RICE MILL CONTRACTORS CO . VS. CIT (SUPRA). IN VIEW THEREOF, THIS GROUND OF ASSESSEE IS ALSO ALLOW ED. THIS ISSUE WAS AGAIN CONSIDERED BY THE TRIBUNAL FOR TH E A.Y. 2009-10 VIDE ORDER DATED 24/05/2016 IN ITA NO. 515/JP/2013 IN PA RA 6.3 AS UNDER: 6.3 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THIS ISSUE HAS BE EN CONSIDERED BY THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR A.Y. 20 08-09, WHICH IS SQUARELY APPLICABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE FOR THE YEAR UNDER CONSIDERATION. THEREFORE, BY RESPECTFULL Y FOLLOWING THE ORDER OF THE COORDINATE BENCH, WE ALLOW THE ASSESSEES AP PEAL ON THIS GROUND. THUS, THE TRIBUNAL HAS CONSISTENTLY DECIDED THIS ISSU E IN FAVOUR OF THE ASSESSEE. ACCORDINGLY FOLLOWING THE DECISIONS OF THI S TRIBUNAL, WE ALLOW THE CLAIM OF THE ASSESSEE AND DELETE THE ADDITION B Y THE ASSESSING OFFICER ON THIS ACCOUNT. 8. NOW WE TAKE REVENUES APPEAL, WHEREIN THE REVENUE H AS TAKEN FOLLOWING GROUNDS OF APPEAL: ITA 349 & 341/JP/2018_ JHALAWAR KENDRIYA SAHAKARI BANK LTD. VS ACIT 8 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) GAS ERRED IN: (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 5,37,000/- MADE BY THE A.O. U/S 14A R.W. RULE 8D. (II) THE APPELLATE CRAVES LIBERTY TO RAISE ADDITION AL GROUND AND TO MODIFY/AMEND THE GROUND OF APPEAL AT THE TIME OF HE ARING. THE ISSUE FALLS UNDER EXCEPTION AS MENTIONED IN PA RA 8(B) OF BOARDS CIRCULAR NO. 21/2015. 9. WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF T HE ASSESSEE AND CONSIDERED RELEVANT MATERIAL ON RECORD. AT THE OUTS ET, WE NOTE THAT THE LD. CIT(A) HAS CONSIDERED AND DECIDED THIS ISSUE AS UNDE R: AS REGARDS GROUND OF APPEAL NO 4, I HAVE GONE THROU GH ASSESSEES SUBMISSION AND AOS FINDINGS. THERE IS NO MENTION IN THE ASSES SMENT ORDER OF THE ASSESSEE HAVING EARNED ANY EXEMPTED INCOME ON HIS INVESTMENT S, AND IN FACT THE ASSESSEE IS A COOPERATIVE BANK, CARRYING THE FINANCING/BANKI NG ACTIVITIES AND ACCORDING THE RULES AND REGULATIONS OF THE BANK BUSINESS, THE ASS ESSEE BANK HAS MADE THE INVESTMENT IN SHARES OF THE APEX BANK AND LOAN WAS TAKEN FROM APEX BANK. SIMILARLY THE ASSESSEE BANK ALSO ISSUED THE SHARE C APITAL OF RS. 17, 74, 60,000/- TO GOVT. AND SOCIETIES AND LOANS & ADVANCES WERE GIVEN TO THE SOCIETIES. AS PER COOPERATIVE PROVISIONS, LOAN IS TO BE GIVEN TO THE PERSON, WHO IS HAVING SHARE HOLDING OF THE BANK. IT MEANS BANK HAS NOT MADE THE INVESTMENT IN SHARES OUT OF LOANS AND BORROWING ON WHICH INTEREST HAVE BEEN PAID. IT WAS THE COMPUL SORY INVESTMENT FOR TAKING THE LOANS AND BORROWINGS FROM THE APEX BODY AND THE SAI D INVESTMENT WAS MADE OUT OF SHARE CAPITAL ISSUED TO THE VARIOUS SOCIETIES, N OT FROM THE LOANS TAKEN BY THE ASSESSEE BANK, WHAT THE APPELLANT HAS IN EXEMPTED I NVESTMENTS WITH ITS PRINCIPAL ITA 349 & 341/JP/2018_ JHALAWAR KENDRIYA SAHAKARI BANK LTD. VS ACIT 9 BANK IS MUCH LESSER THAN WHAT IT HAS AS UNSECURED L OANS WHICH ARE INTEREST FREE FROM THE CO-OPERATIVES ATTACHED WITH IT. THE REFERENCE TO THE CLARIFICATORY CIRCULAR IS MADE BUT THE A.O HAS NOT IDENTIFIED THE NEXUS BETWEEN INTEREST FREE FUNDS AND INTEREST BEARING FUNDS BEING UTILIZED FOR THE INVESTMENTS MADE. THE INCOME TAX APPELLATE TRIBUNAL , B BENCH, CHEN NAI IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(2), CH ENNAI VS MR. M. BASKARAN I.T.A. NO. 1717/MDS/2013 (ASSESSMENT YEAR: 2009-10) HELD AS UNDER- NO DOUBT IN CHEMINVEST LTD VS. ITO 121 ITD 318 (SB) THE SPECIAL BENCH OF THE TRIBUNAL HAS HELD THAT DISALLOWANCE U/S 14 A CAN BE MADE EVEN IN THE YEAR IN WHICH NO EXEMPT INCOME HAS BEEN EARNED OR RECEIVED BY THE ASSESSEE. THIS DECISION OF SPECIAL BENCH OF THE TRIBUNAL HAS BEEN IMPLIEDLY OVERRULED BY THE DECISIONS OF HIGH COURTS IN SHIVAM MOTORS P LTD (AL L HC), CIT VS. CORRTECH ENERGY PVT. LTD . (GUJ HC), CIT VS. DELITE ENTERPRISES (BOM HC), CIT VS. LAKHANI MARKETING (P&H HC), CIT VS. WINSOME TEXTILES INDUSTRIES LTD . 319 ITR 204 (P&H) WHERE IT HAS BEEN HELD THAT WHEN THERE IS NO EXEMPT INCOME AND NO CLAIM FOR EXEMPTION, S. 14A AND RULE 8D HAVE NO APP LICATION AND NO DISALLOWANCE CAN BE MADE. IN THE FOLLOWING CASES, THE LATEST JUDICIAL OPINION ON THIS ISSUE IS MORE THAN AMPLY CLARIFIED EVEN AFTER CONSIDERING THE CBDT CIRCULAR- INCOME TAX APPELLATE TRIBUNAL - MUMBAI IN THE CASE OF TATA INDUSTRIES LTD, MUMBAI VS THE INCOME TAX OFFICER, WARD-2 (3) (3), IN ITA NO.4894/MUM/2008 ORDER DATED 20 JULY, 2016 REFERRED TO HON'BLE DELHI HIGH COURT IN THE CASE OF 'M/S CHEMINVEST LTD. VS. CIT' (2015) 61 TAXMAN.COM 118 , WHEREIN ALSO THE ASSESSEE HAD MADE STRATEGIC INVESTMENTS IN SUBSIDIARIES/GROU P COMPANIES FOR RETAINING CONTROL OVER THEM BUT HAS NOT RECEIVED ANY DIVIDEND INCOME FROM SUCH INVESTMENTS; HELD THAT SECTION 14A WILL NOT APPLY IF NO EXEMPT I NCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR AND THAT THE EXPR ESSION 'DOES NOT FORM PART OF ITA 349 & 341/JP/2018_ JHALAWAR KENDRIYA SAHAKARI BANK LTD. VS ACIT 10 THE TOTAL INCOME', IN SECTION 14A OF THE ACT ENVISA GES THAT THERE SHOULD BE AN ACTUAL RECEIPT OF INCOME WHICH IS NOT INCLUDED IN T HE TOTAL INCOME DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISALLOWI NG ANY EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME. ALMOST IDENTICAL ISSUE HAS BEEN TAKEN BY THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF 'CIT KANYUR VS. M/S. SHIVAM MOTORS PVT. LTD. ' IN ITA NO. 88 OF 2014 VIDE ORDER DATED 05.05.2014; BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF 'CIT VS. CORRTECTH ENERGY PVT. LTD. ' IN ITA NO.239 OF 2014 VIDE ORDER DATED 24.03.2014 AND BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF 'CIT VS. M /S. DELITE ENTERPRISES ' IN ITA NO. 110 OF 2009 VIDE ORDER DATED 26.02.09. IN THE LIGHT OF THE FACTS AVAILABLE AND THE LEGAL P OSITION IN THE MATTER, I AM NOT INCLINED TO UPHOLD THE DISALLOWANCE OF RS. 5, 37,00 0/- MADE IN THIS REGARD. THE DISALLOWANCE MADE U/S 14A BY THE A.O IS DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS TREATED AS ALLOWED. THE LD. CIT(A) HAS NOTED THE FACT THAT THE ASSESSEE HAS NOT RECEIVED ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION. FURTHER, THE ASSESSEE HAS MADE INVESTMENTS IN THE SHARES OF APEX BANK AND HAS NOT USED ANY BORROWED FUND FOR THE PURPOSE OF INVESTMENT . THIS FACT HAS NOT BEEN DISPUTED BY THE REVENUE BEFORE US THAT THE INV ESTMENT WAS MADE FROM THE ASSESSEES OWN INTEREST FREE FUNDS AND FURT HER WHEN NO EXEMPT INCOME WAS EARNED OR RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION THEN IN VIEW OF THE VARIOUS DECISIONS AS REFERRED AND RELIED UPON BY THE LD. CIT(A) INCLUDING THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF CHEMNIVEST LTD. VS. CIT-IV 378 ITR 33 , NO DISALLOWANCE IS ITA 349 & 341/JP/2018_ JHALAWAR KENDRIYA SAHAKARI BANK LTD. VS ACIT 11 CALLED FOR U/S 14A OF THE ACT. ACCORDINGLY, WE DO NO T FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE LD. CIT(A) QUA THIS I SSUE. HENCE, THIS GROUND OF REVENUES APPEAL IS DISMISSED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/09/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 07 TH SEPTEMBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- JHALAWAR KENDRIYA SAHAKARI BANK LTD., JHALAWAR. 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T., CIRCLE-1, KOTA. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 349 & 341/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR