PRASHANT J PATEL, MUMBAI V. ADDL CIT 4(2), MUMBAI

ITA 3546/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5840 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 18-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: V G GINDE
• Keywords: Business income; Earning of tax free income
• Section: 143(3); 14A; 6

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI , BEFORE SHRI R.C.SHARMA , A M & DR.STM PAVLAN , J M ITA NO. 35 46 / MUM/20 1 2 ( ASSESSMENT YEAR : 200 8 - 09 ) SHRI PRASHANT J. PATEL, 21 - 28, GOKUL ARCADE, S.N.ROAD, VILE PARLE(E), MUMBAI - 400 057 VS. ADCIT RG.4(2) MUMBAI PAN/GIR NO. : A A BPP 2156 M ( APPELLANT ) .. ( RESPONDENT ) AND ITA NO. 4044/ MUM/20 12 ( ASSESSMENT YEAR :2008 - 09 ) ADCIT RG.4(2) MUMBAI VS. SHRI PRASHANT J. PATEL, 21 - 28, GOKUL ARCADE, S.N.ROAD, VILE PARLE(E), MUMBAI - 400 057 PAN/GIR NO . : A ABPP 2156 M ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : MR. M.L.PERUMAL /ASSESSEE BY : MR. V.G.GINDE DATE OF HEARING : 13 TH MARCH , 201 4 DATE OF PRONOUNCEMENT : 28 TH MARCH , 201 4 O R D E R PER R.C.SHARMA ( A .M.) : THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A), DATED 21 - 3 - 2012 , FOR THE ASSESSMENT YEAR ITA NO S . 3546&4044 /20 1 2 2 200 8 - 09 , IN THE MATTER OF ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT. 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 3. FACTS IN BRIEF ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF SHARE BROKING TRADING AND INVESTMENT IN SHARES AND SECURITIES. DURING THE COURSE OF SCRUTINY ASSESSMENT THE AO MADE DISALLOWANCE UNDER SECTION 14A AMOUNTING TO RS.24,22,933/ - , DISALLOWANCE WAS ALSO MADE ON ACCOUNT OF STOCK EXCHANGE PENALTY OF RS.2,92,395/ - , DISALLOWANCE WAS ALSO MADE UNDER SECTION 40(A)(IA) . THE SHORT TERM CAPITAL GAINS OFFERED BY THE ASSESSEE WAS ALSO TREATED BY THE AO AS BUSINESS INCOME. BY THE IMPUGNED ORDER CIT(A) TREATED THE INCOME OF RS. 61,74,614/ - AS SHORT TERM CAPITAL GAINS RATHER THAN BUSINESS INCOME. THE CIT(A) ALSO DELETED THE DISALLOWANCE OF RS.71,86,298/ - ON ACCOUNT OF CLIENT REFERRAL FEE, HOLDING THAT NO TDS IS REQUIRED TO BE DEDUCTED ON CLIENT REFERRAL FEE. HOWEVER, THE CIT(A) HAS CONFIRMED THE DISALLOWANCE MADE BY THE AO UNDER SECTION 14A. AGAINST THIS ORDER OF CIT(A), BOTH ASSESSEE AND REVENUE ARE IN APPEALS BEFORE US. 4 . FROM THE RECORD WE FOUND THAT AMOUNT OF CAPITAL GAIN SO OFFERED WAS DECLINED BY THE AO ON THE PLEA THAT ASSESSEE HAS DEALT IN HUGE NUMBERS OF SHARES HELD AS INVESTMENT AND THE HOLDING PERIOD WAS TOO SHORT. HOWEVER, THE CIT(A) AFTER GIVING DETAILED FINDING HELD THAT PROFIT ON INVESTMENT WAS LIABLE TO TAX AS CAPITAL GAIN. THE PRECISE OBSERVATIONS OF THE CIT(A) ARE AS UNDER : - ITA NO S . 3546&4044 /20 1 2 3 4.5 1 HAVE CONSIDERED THE CONTENTION OF THE AO AS WELL AS THE LD. AR. I FIND THAT THERE IS MERIT IN THE ARGUMENTS AND THE FACT S OF THE CASE BEFORE ME. THE BRIEF SUMMARY OF THE ARGUMENTS OF THE LD AR ARE AS UNDER: 1. THE APPELLANT CONSISTENTLY MAINTAINED TWO SEPARATE PORTFOLIOS ONE FOR TRADING AND OTHER FOR INVESTMENT WHICH IS ACCORDINGLY REFLECTED IN THE ACCOUNTS 2 IN THE BOO KS OF ACCOUNT REGULARLY MAINTAINED BY THE APPELLANT AND DULY QUOTED, C ONSI S TENTLY THE SHARES FORMING PART OF TRADING PORTFOLIO ARE REFLECTED AS STOCK - IN - TRADE AND THOSE FOR MING OF INVESTMENT PORTFOLIO ARE REFLECTED AS INVESTMENTS. 3.THE SHARES HELD IN TRAD ING PORTFOLIO ARE CONSISTENTLY VALUED AT COST OR MARKET PRICE, WHICHEVER IS LOWER . WHEREAS, SHARES HELD IN INVESTMENT PORTFOLIO ARE CONSISTENTLY VALUED AT COST. 4. THE PAST TAX RECORD OF THE APPELLANT WOULD ALSO REVEAL THAT WHEN SHARES HELD IN INVESTMEN T WERE SOLD, THE SURPLUS/INCOME IS ALWAYS ASSESSED AND TAXED AS CAPITAL GAINS EITHER SHORT TERM OR LONG TERM, AS THE CASE MAY HE, AT THE APPLICABLE RATE OF TAX. 5.THE APPELLANT HAS EARNED SUBSTANTIAL DIVIDEND ON THE INVESTMENTS HELD BY HIM. 6. THE APPELL ANT HAS NOT UTILIZED BORROWED FUND FOR PURCHASE OR ACQUISITION OF INVESTMENTS. 7. THE FREQUENCY OF TRANSACTIONS IN THE CASE OF THE APPELLANT ARE NOT HIGH.. DURIN G THE YEAR, THE APPELLANT HAS EXECUTED IN AGGREGATE 57 SALE TRANSACTION, IN ONLY 29 SCRIPTS RE SULTING IN SHORT TERM CAPITAL GAINS. IT IS VERY EVIDENT FROM THE STATEMENT OF CAPITAL GA IN SUBMITTED BEFORE ME THAT THE APPELLANT HAS NOT ENTERED INTO HUGE NUMBER OF TRANSACTION WHICH HAS RESULTED INTO SHORT TERM CAPITAL GAINS. 4.6 I HAVE ALSO EXAMINED T HE CONTENTION OF THE LD. AR, WHERE THE RELIANCE IS PLACED ON THE DECISION OF HONBLE MUMBAI TRIBUNAL IN CASE OF DHANLAXMI COTEX LTD. (ITA NO. 4S79/ MUM / 10 ) AND ALSO ON THE DECISION OF GOPAL PUROHIT REPORTED IN 29 SOT 117 WHICH WAS CONFIRMED B Y THE HONBLE B OMBAY HIGH COURT REPORTED IN 336 ITR 287. I AM IN AGREEMENT WITH THE LD ARS SUBMISSIONS THAT FACTS OF THE APPELLANTS CASE ARE SIMILAR TO CASE OF GOPAL PUROHIT AND THAT THE PRINCIPLES! CRITERIA LAID DOWN IN CASE OF DHANALAXMI COTEX LTD ARE ADHERED TO BY T HE APPELLANT. 4.7 THE APPELLANTS STATUS AS AN INVESTOR IS VALID BECAUSE: I) THE APPELLANT IS CONSISTENTLY MAINTAINING TWO SEPARATE PORTFOLIOS ONE FOR INVESTMENTS AND OTHER FOR TRADING. 2) THE DEPARTMENTS IN PAST YEARS HAS ASSESSED THE APPELLANT AS INVE STOR, AND THERE IS NO CHANGE IN THE MODUS OF OPERANDI OF SHARE TRANSACTIONS FROM YEAR TO YEAR. 3) THE INTENTION OF THE APPELLANT IS CLEARLY REFLECTED IN THE MANNER IN WHICH THE ACCOUNTS ARE MAINTAINED. ITA NO S . 3546&4044 /20 1 2 4 4) THE APPELLANT HAS EARNED SUBSTANTIAL DIVIDEND ON IN VESTMENTS. 5) THE APPELLANT HAS NOT UTILIZED BORROWED FUNDS FOR PURCHASE OF INVEST. 6) THE ASSESSING OFFICER HAS ALSO ACCEPTED THE STATUS OF APPELLANT AS INVESTOR BY ACCEPTING THE LONG TERM CAPITAL GAINS AS CAPITAL GAINS. 4.8 IN LIGHT OF THE ABOVE DISCUSS ION THE ASSESSING OFFICER IS DIRECTED TO TREAT THE INCOME OF THE APPELLANT AS SALE OF SHARES ON WHICH STT IS PAID AS SHORT TERM CAPITAL GAIN AND NOT AS BUSINESS INCOME. ACCORDINGLY THIS GROUND OF APPEAL IS ALLOWED . 5 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND FROM THE RECORD THAT ASSESSEE WAS CONSISTENTLY MAIN TAINING TWO SEPARATE PORTFOLIO - ON E FOR TRADING AND OTHER FOR INVESTMENT. SHARES HELD IN TRADING PORTFOLIO WERE REFLECTED AS STOCK - IN - TRADE AND THOSE FORMING PART OF INVESTMENT PORTFOLIO WERE REF LECTED AS INVESTMENT. STOCK OF SHARES HELD IN TRADING PORTFOLIO WERE CONSISTENTLY VALUED AT COST O R M ARKET PRICE, WHICHEVER IS LOWER , WHEREAS SHARES HELD AS INVESTMENT PORTFOLIO WE RE CONSISTENTLY VALUED AT COST. WE FOUND THAT ASSESSEE HAS EARNED SUBSTANTIA L DIVIDEND INCOME ON INVESTMENT AND PAST TAX RECORD OF THE ASSESSEE REVEALED THAT ASSESSEE HELD SHARES AS INVESTMENT PORTFOLIO. THE INCOME SO OFFERED ON SHARES WERE ALWAYS ASSESSED AND TAXED AS CAPITAL GAINS EITHER SHORT TERM OR LONG TERM DEPENDING UPON THE PERIOD OF HOLDING. THE CIT(A) A FTER APPLYING THE PROPOSITION OF LAW LAID DOWN IN THE CASE OF DHANALAXMI COTEX LTD. (SUPRA) AND GOPAL PUROHIT , 29 SOT 117 , WHICH WAS CONFIRMED BY THE HONBLE BOMBAY HIGH COURT REPORTED IN 336 ITR 287, TO THE FACTS OF THE INSTANT CASE AND CAME TO THE CONCLUSION THAT PROFIT EARNED BY ON DELIVERY BAS ED TRANSACTION IN RESPECT OF SHARES HELD AS INVESTMENT ARE LIABLE TO CAPITAL GAIN TAX. DETAILED FINDINGS RECORDED BY THE CIT(A) AT PARA 4.5, 4.6 & 4.7 HAVE NOT ITA NO S . 3546&4044 /20 1 2 5 BEEN CONTROVERTED B Y REVENUE BY BRINGING ANY POSITIVE MATERIAL ON RECORD. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDING S OF CIT(A) FOR TREATING THE PROFIT ON SALE OF SHARES AS CAPITAL GAIN S . 6. THE CIT(A) ALSO DELETED THE ADDITION MADE ON ACCOUNT OF REFE RRAL FEE FOR NON - DEDUCTION OF TAX AT SOURCE UNDER SECTION 40(A)(IA) OF THE I.T. ACT. THE PRECISE OBSERVATION OF THE CIT(A) ARE AS UNDER : - 5.3 1 HAVE CONSIDERED THE CONTENTION OF THE AO AS WELL AS THE LD. AR. THE PROVISIONS OF SECTIONS194 H AND PARTICULARL Y THE EXPLANATION (I) TO SECTION 194H OF THE ACT, WHICH READS AS FOLLOWS: COMMISSION OR BROKERAGE INCLUDES ANY PAYMENT RECEIVED OR RECEIVABLE, DIRECTLY OR INDIRECTLY, BY A PERSON ACTING ON BEHALF OF ANOTHER PERSON FOR SERVICES RENDERED (NOT BEING PROFES SIONAL SERVICES) OR FOR ANY SERVICES IN THE COURSE OF BUYING OR SELLING OF GOODS OR IN RELATION TO ANY TRANSACTION RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING, NOT BEING SECURITIES; 5.4 THE CLIENT REFERRAL FEES CANNOT TERMED AS COMMISSION OR BROKERAG E AS IT IS OUT OF THE PURVIEW OF DEFINITION OF COMMISSION OR BROKERAGE. FURTHER, IT IS CAN BE OBSERVED FROM THE AFORESAID EXPLANATION THAT ANY PAYMENT IN RELATION TO ANY TRANSACTIONS RELATING TO ANY ASSET, VALUABLE ARTICLE OR THING WHICH IS SECURITY IS SPE CIFICALLY EXCLUDED FROM THE DEFINITION OF COMMISSION OR BROKERAGE. THE DEPARTMENT HAS ALSO CONSISTENTLY ACCEPTED THE SAID STAND OF THE APPELLANT IN THE PAST. ACCORDINGLY, THE CLIENT REFERRAL FEES DO NOT FALL WITHIN THE PURVIEW OF SECTION 194H OF THE ACT AS SPECIFICALLY EXCLUDED. ACCORDINGLY, THE PROVISIONS OF DEDUCTION OF TAX AT SOURCE THEREOF DO NOT APPLY. ACCORDINGLY THIS GROUND OF APPEAL IS ALLOWED. 7 . WE HAVE CONSIDERED RIVAL CONTENTIONS. THE AO HAD DISALLOWED PAYMENT OF REFERRAL FEES ON THE PLEA OF N ON - DEDUCTION OF TAX AT SOURCE ON SUCH PAYMENT. WHETHER SUCH REFERRAL FEES COMES UNDER MEANING OF COMMISSION OR BROKERAGE SO AS TO MAKE IT LIABLE TO DEDUCTION OF TAX AT SOURCE IS GOVERNED BY PROVISIONS OF SECTION 194H. AS PER PROVISIONS OF ITA NO S . 3546&4044 /20 1 2 6 SECTION 194H, EXP LANATION (I), COMMISSION OR BROKERAGE DO NOT INCLUDE THE PAYMENT RECEIVED FOR ANY SERVICES IN THE COURSE OF BUYING AND SELLING OF SECURITIES. IN THE INSTANT CASE BEFORE US, THE REFERRAL FEE WAS PAID TO SUB - BROKER I N RESPECT OF TRANSACTION OF PURCHASE AND S ALE OF SECURITIES THERE , IT IS NOT COVERED BY THE EXPLANATION (I) TO SECTION 194H . ACCORDINGLY, CLIENT REFERRAL FEE CANNOT BE TERMED AS COMMISSION OR BROKERAGE AS IT IS OUTSIDE THE DEFINITION OF COMMISSION OR BROKERAGE. WE ALSO FOUND THAT DEPARTMENT HAS A LSO CONSISTENTLY ACCEPTED THE STAND OF THE ASSESSEE IN THE PAST. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS RECORDED BY THE CIT(A) IN PARA 5.3 & 5.4 RESULTING INTO DELETION OF DISALLOWANCE MADE UNDER SECTION 40(A)(IA) AMOUNTING TO R S. 71,86,398/ - . 8 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED . 9. IN THE APPEAL OF THE ASSESSEE, THE ASSESSEE IS AGGRIEVED FOR DISALLOWANCE MADE UNDER SECTION 14A READ WITH RULE 8D. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ASSESSEE HAS INCURRED INTEREST AND OTHER EXPENDITURE IN RELATION TO EARNING OF EXEMPT INCOME. ACCORDINGLY, THE AO MADE DISALLOWANCE UNDER SECTION 14A. BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE ACTION OF THE AO AFTER HAVING THE FOLLOWING OBSERVATIONS : - 3.3 I HAVE CONSIDERED THE ARGUMENTS OF THE AO AS WELL AS OF THE ID.A.R. I FIND THAT THE AO HAS J USTIFIABLY INVOKED THE PROVISIONS OF RULE SO TO DETERMINE THE QUANTUM OF EXPENSES WHICH HAS TO BE DISALLOWED U/S.14A WITH RESPECT TO EARNING OF EXEMPT INCOME. THE A SSESSEE HAD NOT MAINTAINED SEPARATE ACCOUNTS OF EXPENSES INCURRED FOR EARNING OF EXEMPT INCOME. FURTHER, AS THE ASSESSEE HAD NOT MAINTAINED ANY SEPARATE RECORDS ON ACCOUNT OF EXPENDITURE HAVING BEEN INCURRED FOR EARNING OF DIVIDEND INCOME ITA NO S . 3546&4044 /20 1 2 7 THE AO BLINDLY CA NNOT BE FASTENED WITH ANY BURDEN TO DISCOVER SUCH EXPENDITURE OF ESTABLISH NEXUS OF SUCH EXPENDITURE WITH EXEMPT INCOME. IT IS UNDER SUCH CIRCUMSTANCES, IN ABSENCE OF RELEVANT DETAILS OF SUCH EXPENDITURE WHEN IT WILL NOT BE POSSIBLE TO DIRECTLY DETERMINE T HE AMOUNT OF EXPENDITURE HAVING BEEN INCURRED FOR EARNING OF EXEMPT INCOME, THAT T HE PROVISIONS OF RULE 8D COME INTO PLAY. THE APPELLANTS CONTENTION THAT THE PROVISIONS OF SECTION 14A DOES NOT PROVIDE FOR APPORTIONMENT OF EXPENSES IS NOT SUSTAINABLE IN VI EW OF INSERTION OF SUB - SECTION (2) OF SECTION L4A WITH EFFECT FROM 01.04.2007 REQUIRING THE AO TO DETERMINE SUCH AMOUNT IN ACCORDANCE WITH SUCH METHOD AS HAS BEEN PRESCRIBED. SUCH METHOD AS MENTIONED IN SUB - SECTION (2) OF SECTION L4A HAS BEEN PRESCRIBED AS PER RULE 8D . I, THEREFORE, HOLD THAT THERE IS NO MERIT IN THE APPELLANT'S CONTENTION THAT THE PROVISIONS OF SECTION 14A DOES NOT PROVIDE FOR APPORTIONMENT OF EXPENSES UNLIKE SECTION 80HHC. THE APPELLANT'S CONTENTION THAT IT HAD NOT UTILIZED ANY BORROWED F UND FOR INVESTMENT IN SECURITIES THAT EARNED DIVIDEND INCOME BECAUSE THE BALANCE SHEET AS ON 31.03.2008 SHOWS CERTAIN BALANCE OF OWN AND OUTSTANDING BORROWED FUND IS ERRONEOUS BECAUSE MERELY FROM BALANCE OF OWN FUND IN THE BALANCE SHEET, IT CANNOT BE SAID THAT NO BORROWED FUND HAD EVER BEEN UTILIZED FOR THE PURPOSE OF MAKING INVESTMENT OR UNDERTAKING TRANSACTIONS WHICH HAVE YIELDED DIVIDEND INCOME WHICH HAS BEEN CLAIMED AS EXEMPT. THE APPELLANT HAS FAILED TO PRODUCE ANY CASH FLOW STATEMENT OR ANY OTHER MATE RIAL WHICH CAN ESTABLISH THAT BORROWED FUND HAD NOT BEEN UTILIZED FOR EARNING OF EXEMPT INCOME IN AS MUCH AS NO SUCH FUND HAD BEEN UTILIZED FOR MAKING INVESTMENT FROM WHICH DIVIDEND HAD BEEN RECEIVED. MERELY, ON THE BASIS OF BALANCE OF OWN FUND AND BORROWE D FUND AS ON THE DATE OF THE BALANCE SHEET, IT CANNOT BE PRESUMED THAT BORROWED FUND HAD NOT BEEN UTILIZED FOR EARNING OF EXEMPT INCOME. 3.4 IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. [ITA NO.63612010J, THE HON'B1E BOMBAY HIGH COURT HAD HELD THAT RULE 8D WAS APPLICABLE ONLY FROM A.Y. 2008 - 09. THUS, ADDITION OF THE AMOUNT DETERMINED AS PER RULE 8D HAS TO BE MADE FOR THE CURRENT YEAR I.E. A.Y.200S - 09 AS AMOUNT OF EXPENDITURE INCURRED FOR EARNING OF EXEMPT INCOME. THE RECENT SPECIAL BENCH JUDGMENT IN THE C ASE OF M/ S.DAGA CAPITAL MANAGEMENT PVT. LTD. (2008) REPORTED IN 26 SOT 603 SUPPORTS THE VIEW THAT THE AO HAS RIGHTLY MADE THE DISALLOWANCE U/S.14A. 3.5 THE APPELLANT'S CONTENTION THAT NO EXPENDITURE HAD BEEN INCURRED TO EARN EXEMPT INCOME IS NOT ACCEPTAB LE FOR THE REASON THAT THE ASSESSEE BEING A SHARE BROKER UNDERTAKES TRANSACTIONS OF SHARE WHICH INCLUDES THOSE TRANSACTIONS WHICH SUBSEQUENTLY YIELDED DIVIDEND OF CAPITAL GAIN WHICH WAS EXEMPT. THE EXPENSES DEBITED TO P & L ACCOUNT HAD BEEN INCURRED FOR UN DERTAKING TRANSACTIONS OF SHARES WHICH ALSO INCLUDED SUCH TRANSACTIONS WHICH YIELDED EXEMPT DIVIDEND. THEREFORE, THE EXPENSES ITA NO S . 3546&4044 /20 1 2 8 INCLUDING INTEREST AND ADMINISTRATIVE EXPENSES DEBITED TO P & L ACCOUNT INCLUDE EXPENDITURE INCURR ED FOR UNDERTAKING TRANSACTIONS OF SHARES WHICH YIELDED EXEMPT INCOME. APPARENTLY, ANY EXPENDITURE INCURRED FOR UNDERTAKING TRANSACTIONS FOR SHARES WHICH SUBSEQUENTLY YIELDED EXEMPT INCOME IS REQUIRED TO BE TREATED AS EXPENDITURE INCURRED FOR EARNING OF EXEMPT DIVIDEND INCOME. THEREFORE, THE ASSESSEE'S CONTENTION THAT NO EXPENDITURE HAD BEEN INCURRED FOR EARNING OF EXEMPT INCOME IS NOT ACCEPTABLE. THE ASSESSEE HAS HOWEVER, NOT MAINTAINED ANY DETAILS OF EXPENSES INCURRED FOR UNDERTAKING TRANSACTIONS OF SHARES WHICH HAVE YIELDED EXEMPT INCO ME. THE AMOUNT OF SUCH EXPENDITURE IS, THEREFORE, REQUIRED TO BE DETERMINED AS PER PROVISIONS OF RULE 8D . IN VIEW OF ABOVE DISCUSSION, THE ADDITION OF RS.21,22,933/ - (24,22,933 - 3,00,000) IS CONFIRMED AFTER REDUCING RS .. 3,00,000/ - ALREADY DISALLOWED BY THE APPELLANT FROM RS.24,22,933/ - . THUS, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 10 . IN VIEW OF THE FINDING RECORDED BY THE LOWER AUTHORITIES, IT IS CLEAR THAT ASSESSEE HAS NOT MAINTAINED SEPARATE ACCOUNT WITH RESPECT TO EXPENDITURE INCURRED ON EXEMPT INCOME AND OTHER INCOME. AS THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION WAS 2008 - 09, FOLLOWING THE VERDICT OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF GODREJ & BOYCE MFG. (SUPRA), T HE AO HAS CORRECTLY APPLIED RULE 8D WITH REGARD TO THE INTEREST EX PENDITURE DIRECTLY RELATED TO THE EARNING OF EXEMPT INCOME AS WELL AS INDIRECT EXPENDITURE ATTRIBUTABLE TO THE EXEMPT INCOME AND WORKED OUT OF THE SAME AT RS. 24,22,933/ - . AS THE ASSESSEE HIMSELF HAS MADE A DISALLOWANCE OF RS. 3 LAKHS UNDER SECTION 14A, THE CIT(A) HAS RESTRICTED THE DISALLOWANCE TO RS. 21,22,933/ - . THE DETAILED FINDING RECORDED BY THE CIT(A) AT PARA 3.3 TO 3.5 HAS NOT BEEN CONTROVERTED. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS RECORDED BY THE CIT(A). ITA NO S . 3546&4044 /20 1 2 9 11 . IN THE RES ULT, BOTH THE APPEALS OF THE ASSESSEE AND REVENUE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH MARCH . 201 4 . 28 TH MARCH ,2014 SD/ - SD/ - ( ) ( S.T.M.PAVLAN ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 28 / 0 3 /2014 /PKM , PS COPY OF THE ORDER FORWAR DED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//