DY.C.I.T. CIR-7, Nagpur V. M/S BALLARPUR INDUSTRIES LTD, GURGAON

ITA 442/NAG/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3696 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 08-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Keywords: Depreciation; Business expenditure; Earning of tax free income

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL: NAGPUR BENCH: NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 441 &442 /NAG/20 14 ASSESSMENT YEAR: 20 09 - 10 & 201 0 - 1 1 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 7 , 5 TH FLOOR, DR. BABA SAHEB AMBEDKAR BHAVAN, MECL BUILDING, SEMINARY HILLS NAGPUR - 4400 01 VS M/S. BALLARPUR INDUSTRIES LTD. FIRST INDIA PALACE TOWER - C,BLOCK - A SHUSHANT LOK PHASE - 1 MEHRAULI, GURGAON (HARYANA) PAN:A AACB5343E (APPELLANT) (RESPONDENT) APP ELLANT BY SHRI NARENDRA KANE, DR RESPONDENT BY SHRI K.P.DEWANI , ADVOCATE DATE OF HEARING: 2 3 - 0 2 - 201 6 DATE OF PRONOUNCEMENT: - 15 / 04 / 2016 O R D E R PER SHAMIM YAHYA , A.M . THESE TWO APPEALS OF THE REVENUE ARE DIRECTED AGAINST THE ORDER OF CIT ( A) FOR ASSESSMENT YEAR 2009 - 10 AND 201 0 - 1 1 RESPECTIVELY. SINCE THE ISSU ES RAISED ARE COMMON AND CONNECTED AND THE APPEALS WERE HEARD TOGETHER AND THESE HAVE BEEN CONSOLIDATED AND DISPOSED OF TOGETHER. THE GROUNDS OF APPEALS F OR ASSESSMENT YEAR 2009 - 10 ARE AS UND ER: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN LAW THE LD.CIT(A) WAS RIGHT IN HOLDING THAT PRESENCE OF EXEMPT INCOME IS NECESSARY FOR DISALLOWANCE OF EXPENDITURE U/S.14A? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN HOLDING THAT INVESTMENTS WERE MADE OUT OF THE NON - INTEREST BEARING FUNDS AND NO EXPENDITURE HAS BEEN INCURRED FOR EARNING THE EXEMPT INCOME WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT PROVED NEXUS BETWEEN THE OWN ED INTEREST FREE FUNDS AND INVESTMENT ? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN DELETING DISALLOWANCE OF PREMIUM PAYABLE ON ISSUE OF ZERO COUPON CONVERTIBLE BONDS OF RS.23,74,03,978/ - WITHOUT APPRECI ATING THE FACT THAT THE SAME DOES NOT AMOUNT TO THE EXPENSE SINCE IT IS NOT AT ALL PAYABLE BY THE ASSESSEE ON ZCCB SINCE AFTER THE MATURITY OF THE BONDS THE ASSESSEE IS REQUIRED TO ISSUE SHARES TO THE BOND HOLDERS AND NOT THE AMOUNT INVESTED WITH PREMIUM ? 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS RIGHT IN DELETING DISALLOWANCE ON ACCOUNT OF CONTRIBUTION TO VARIOUS INSTITUTIONS AND CLUB OF RS.5,81,790/ - WITHOUT APPRECIATING THE FACTS THAT THE SAME DO NOT AMOUNT T O ALLOWABLE EXPENDITURE ? 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN DELETING DISALLOWANCE ON ACCOUNT OF DEDUCTION OF CHARITY, DONATION AND CSR EXPENSE WITHOUT APPRECIATING THE FACTS THAT THE SAME DO NO T AMOUNT TO ALLOWABLE EXPENDITURE ? 2 ITA NO. 441 & 442 /NAG/2014 2. THE GROUNDS OF APPEAL F OR ASSESSMENT YEAR 2010 - 11 ARE AS UNDER: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN LAW THE LD.CIT(A) WAS RIGHT IN HOLDING THAT PRESENCE OF EXEMPT INCOME IS NECESSARY FOR DISALLOWANCE OF EXPENDITURE U/S.14A? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN HOLDING THAT INVESTMENTS WERE MADE OUT OF THE NON - INTEREST BEARING FUNDS AND NO EXPENDITURE HAS BEEN INCURRED FOR EARNING THE EXEMPT INCOME WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT PROVED NEXUS BETWEEN THE OWNED INTEREST FREE FUNDS AND INVESTMENT ? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN DELETING DISALL OWANCE OF PREMIUM PAYABLE ON ISSUE OF ZERO COUPON CONVERTIBLE BONDS OF RS.9 , 21 , 14 , 1 8 1 / - WITHOUT APPRECIATING THE FACT THAT THE SAME DOES NOT AMOUNT TO THE EXPENSE SINCE IT IS NOT AT ALL PAYABLE BY THE ASSESSEE ON ZCCB SINCE AFTER THE MATURITY OF THE BONDS THE ASSESSEE IS REQUIRED TO ISSUE SHARES TO THE BOND HOLDERS AND NOT THE AMOUNT INVESTED WITH PREMIUM ? 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) IS RIGHT IN DELETING DISALLOWANCE ON ACCOUNT OF CONTRIBUTION TO VAR IOUS INSTITUTIONS AND CLUB OF RS. 9 , 79 , 808 / - WITHOUT APPRECIATING THE FACTS THAT THE SAME DO NOT AMOUNT TO ALLOWABLE EXPENDITURE ? 5. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN DELETING DISALLOWANCE ON ACC OUNT OF DEDUCTION OF CHARITY, DONATION AND CSR EXPENSE OF RS.96,42,409/ - WITHOUT APPRECIATING THE FACTS THAT THE SAME DO NOT AMOUNT TO ALLOWABLE EXPENDITURE ? 6. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN ALLOWING ASSESSEES CLAIM OF INTEREST EXPENDITURE OF RS.43,93,00,000/ - WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO PROVE NEXUS OF INTEREST FREE FUNDS WITH INTEREST FREE ADVANCES MADE ? 3. AT THE OUTSET , IN THIS CASE THE LEARNED COUNSEL OF T HE ASSESSEE SUBMITTED THAT THE ISSUE S INVOLVED IN THIS CASE ARE COVERED B Y ITAT, NAGPUR BENCH DECISION IN THE ASSESSEE S OWN CASE FOR EARLIER YEARS . I N THIS REGARD , C OUNSEL OF THE ASSESSEE S SUBMISSION S ARE AS UNDER: - FOR ASSESSMENT YEAR 2009 - 10 : - GROUN D NO.1 & 2: - DISALLOWANCE OF EXPENDITURE U /S.14A OF I.T. ACT, 1961 AT RS.83,69,140/ - A.O. PARA 1.1 PAGE 3 - 7 CIT(A) PARA 5&6 PAGE 5 - 15 A) ISSUE COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF HONBLE ITAT, NAGPUR, NAGPUR I) ITA NO.376 - 379/ NAG/ 20 14 FOR ASST. YEAR 2005 - 06 TO 2008 - 09 VIDE ORDER DATED 04/12/2015 IN ASSESSEES OWN CASE (P - 41 & 42) B) RELIANCE ON W/S BEFORE CIT(A) (P - 1 TO 4) GROUND NO.3: - ADDITION AT RS.23,74,03,978/ - FOR PREMIUM PAYABLE ON REDEMPTION OF ZERO COUPON BONDS. A.O. PARA 7 PAGE 7 - 8 CIT(A) PARA 7.3 TO 8.4 PAGE 16 - 20 A) ZERO COUPON BONDS ISSUED TO MEET THE WORKING CAPITAL REQUIREMENT AND WAS UTILIZED FOR REGULAR BUSINESS ACTIVITIES. 3 ITA NO. 441 & 442 /NAG/2014 B) DIFFERENCE BETWEEN FACE VALUE AND REDEMPTION VALUE IS AMOUNT OF PREMIUM P AYABLE BY ASSESSEE. PREMIUM PAYABLE BY ASSESSEE IS AN AMOUNT PAYABLE FOR USE OF FUNDS RAISED THROUGH ISSUE OF ZERO COUPON BONDS. PREMIUM AMOUNT RELATING TO USE OF MONEY FOR PREVIOUS YEAR UNDER CONSIDERATION IS RS.23,74,03,978/ - C) ISSUE COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF HONBLE ITAT, NAGPUR BENCH, NAGPUR I) ITA NO. 332 & 331/ NAG/ 2014 FOR ASST. YEAR 2008 - 09 & 2007 - 08 VIDE ORDER DATED 24/11/2015 IN ASSESSEES OWN CASE (P - 44 & 46) II) ITA NO.106/NAG/2011 FOR ASST. YEAR 2006 - 07 VIDE OR DER DATED 05/06/2015 IN ASSESSEES OWN CASE (P - 71 TO 74) D) RELIANCE ON W/S BEFORE CIT(A) (P - 5 TO 8) GROUND NO.4 : - ADDITION OF RS.5,81,790/ - U/S. 40A (9) CONTRIBUTION TO VARIOUS INSTITUTION & STAFF/WORKMENS WELFARE FUND. A.O. PARA 1.4 PAGE 16 - 17 CIT(A) PARA 9 PAGE 20 A) EXPENDITURE IS IN THE NATURE OF STAFF WELFARE OR MEANT FOR BUSINESS DEVELOPING AND IS IN THE NATURE OF ALLOWABLE BUSINESS EXPENDITURE. B) ISSUE COVERED IN FAVOUR OF ASSESSEE BY FOLLOWING DECISIONS OF HONBLE ITAT, NAGPUR BENCH, NAGPUR IN THE CASE OF ASSESSEE : I) ITA NO.277/NAG/2007 ORDER DATED 19 / 03 /20 08 (ASST. YEAR 2002 - 03) (P - 80 & 81 ) II) ITA NO. 22 6/NAG/20 08 ORDER DATED 12 /0 8 /20 09 (ASST. YEAR 2005 - 06) (P - 83) GROUND NO.5: - ADDITION OF RS.2,14,03,840/ - CONTRIBUTION TO SCHOOL & INSTITUTION A.O. PARA 1.3 PAGE 9 - 16 CIT(A) PARA 10 PAGE 20 - 21 A) HONBLE CIT(A) DIRECTED A.O. TO CONSIDER CLAIM OF A SSESSEE AS PER DIRECTION OF HONBLE ITAT IN ITA NO.261/NAG/2007 B) EXPENDITURE IS IN THE NATURE OF STAFF WELFARE OR MEANT FOR BUSINESS DEVELOPING AND IS IN THE NATURE OF ALLOWABLE BUSINESS EXPENDITURE. C) RELIANCE ON : I) 266 ITR 0170(MAD) CIT V/S. MADRAS REFINERIES LTD. (P - 85) D) HONBLE CIT(A) HAS NOT GRANTED ANY RELIEF TO ASS ESSEE. CIT (A) MERELY DIRECTED A.O. TO CONSIDER CLAIM AS PER DIRECTION OF HONBLE ITAT IN THE CASE OF ASSESSEE IN ITA NO.26 1 /NAG/2007. NO GRIEVANCE TO REVENUE. GROUND MISCONCEIVED. E) RELIANCE ON ITAT NO.331/NAG/2014 GROUND NO.5 SIMILAR GROUND OF APPEAL BY R EVENUE IS DISMISSED VIDE ORDER DATED 24/11/2015 (P - 54) 4 ITA NO. 441 & 442 /NAG/2014 FOR ASSESSMENT YEAR 2010 - 11 : - GROUND NO.1 & 2: - DISALLOWANCE OF EXPENDITURE U/S.14A OF I.T. ACT, 1961 AT RS. 55 , 13 , 827 / - A.O. PARA 5 & 6 PAGE 2 - 7 CIT(A) PARA 5 & 6 PAGE 16 - 1 6 A) ISSUE COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF HONBLE ITAT, NAGPUR, NAGPUR I) ITA NO.376 - 379/NAG/2014 FOR ASST. YEAR 2005 - 06 TO 2008 - 09 VIDE ORDER DATED 04/12/2015 IN ASSESSEES OWN CASE (P - 41 & 42) B) RELIANCE ON W/S BEFORE CIT(A) (P - 1 7 - 23 ) GROUND NO.3: - ADDITION AT RS.9 , 21 , 14 , 1 8 1 / - FOR PREMIUM PAYABLE ON REDEMPTION OF ZERO COUPON BONDS. A.O. PARA 7 PAGE 8 - 14 CIT(A) PARA 7.3 TO 8.4 PAGE 1 7 - 20 A) ZERO COUPON BONDS ISSUED TO MEET THE WORKING CAPITAL REQUIREMENT AND WAS UTILIZE D FOR REGULAR BUSINESS ACTIVITIES. B) DIFFERENCE BETWEEN FACE VALUE AND REDEMPTION VALUE IS AMOUNT OF PREMIUM PAYABLE BY ASSESSEE. PREMIUM PAYABLE BY ASSESSEE IS AN AMOUNT PAYABLE FOR USE OF FUNDS RAISED THROUGH ISSUE OF ZERO COUPON BONDS. PREMIUM AMOUNT REL ATING TO USE OF MONEY FOR PREVIOUS YEAR UNDER CONSIDERATION IS RS. 9,21,14,181 / - C) ISSUE COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF HONBLE ITAT, NAGPUR BENCH, NAGPUR I) ITA NO.332 & 331/NAG/2014 FOR ASST. YEAR 2008 - 09 & 2007 - 08 VIDE ORDER DATED 24/11/20 15 IN ASSESSEES OWN CASE (P - 44 & 46) II) ITA NO.106/NAG/2011 FOR ASST. YEAR 2006 - 07 VIDE ORDER DATED 05/06/2015 IN ASSESSEES OWN CASE (P - 71 TO 74) D) RELIANCE ON W/S BEFORE CIT(A) (P - 20 TO 23 ) GROUND NO.4 : - ADDITION OF RS .9,79,808 / - U/S. 40A (9) CONTRIBUTION TO VARIOUS INSTITUTION & STAFF/WORKMENS WELFARE FUND. A.O. PARA 9 PAGE 15 - 16 CIT(A) PARA 9 PAGE 21 A) EXPENDITURE IS IN THE NATURE OF STAFF WELFARE OR MEANT FOR BUSINESS DEVELOPING AND IS IN THE NATURE OF ALLOWABLE BUSINESS EXPENDITURE. B) ISSUE COVERED IN FAVOUR OF ASSESSEE BY FOLLOWING DECISIONS OF HONBLE ITAT, NAGPUR BENCH, NAGPUR IN THE CASE OF ASSESSEE : I) ITA NO.277/NAG/2007 ORDER DATED 19/03/2008 (ASST. YEAR 2002 - 03) (P - 80 & 81) II) ITA NO.226/NAG/2008 ORDER DATED 12/08/2009 (ASST. YEAR 2005 - 06) (P - 83) GROUND NO.5: - ADDITION OF RS .96,42,409 / - CONTRIBUTION TO SCHOOL & INSTITUTION A.O. PARA 8 PAGE 1 4 - 15 CIT(A) PARA 10 PAGE 21 - 22 5 ITA NO. 441 & 442 /NAG/2014 A) HONBLE CIT(A) DIRECTE D A.O. TO CONSIDER CLAIM OF ASSESSEE AS PER DIRECTION OF HONBLE ITAT IN ITA NO.261/NAG/2007 B) EXPENDITURE IS IN THE NATURE OF STAFF WELFARE OR MEANT FOR BUSINESS DEVELOPING AND IS IN THE NATURE OF ALLOWABLE BUSINESS EXPENDITURE. C) RELIANCE ON : I) 266 ITR 017 0(MAD) CIT V/S. MADRAS REFINERIES LTD. (P - 85) D) HONBLE CIT(A) HAS NOT GRANTED ANY RELIEF TO ASSESSEE . CIT (A) MERELY DIRECTED A.O. TO CONSIDER CLAIM AS PER DIRECTION OF HONBLE ITAT IN THE CASE OF ASSESSEE IN ITA NO.26 1 /NAG/2007. NO GRIEVANCE TO R EVENUE. GROUND MISCONCEIVED. E) RELIANCE ON ITAT NO.331/NAG/2014 GROUND NO.5 SIMILAR GROUND OF APPEAL BY REVENUE IS DISMISSED VIDE ORDER DATED 24/11/2015 (P - 54) GROUND NO.6 : - ADDITION ON ACCOUNT OF INTEREST PAID AT RS.43,93,00,000/ - A.O. PARA 10 PAGE 1 6 - 19 CIT(A) PARA 14 PAGE 30 - 37 A) A.O. HAS NOT BROUGHT ANY NEXUS OF THE BORROWED FUNDS HAVING BEEN UTILIZED FOR THE PURPOSE OF INVESTMENT IN SHARES SO AS TO MAKE DISALLOWANCE OF INTEREST. B) THE ASSESSEE COMPANY HAS MADE INVESTMENT IN S HARES OUT OF THE FREE RESERVE AVAILABLE WITH COMPANY. IT IS EVIDENT FROM THE CIT(A) ORDER AT PARA 14.9 AT PAGE 33 THAT ASSESSEE COMPANY HAS FREE RESERVE TO THE TUNE OF RS.1508.98 CRORES AND HAD INVESTMENT IN SHARES TO THE TUNE OF RS.1151.10 CRORES. IN ADDI TION TO FREE RESERVE ASSESSEE COMPANY HAD SHARE CAPITAL AT RS.120.12 CRORES. THUS INVESTMENT IN SHARES STAND REASONABLY EXPLAINED WITH REFERENCE TO FREE RESERVE AND SHARE CAPITAL WITH ASSESSEE COMPANY. CIT(A) RIGHTLY DELETED DISALLOWANCES AS MADE BY A.O. C) R ELIANCE ON : I) 313 ITR 0340 (BOM.) CIT V/S. RELIANCE UTILITIES & POWER LTD. (P - 89) II) 366 ITR 0505 (BOM.) CIT V/S. HDFC BANK LTD. (P - 94) THE ASSESSEE COMPANY HAS MADE INVESTMENT IN SHARES OUT OF THE FREE RESERVE AVAILABLE WITH COMPANY. IT IS EVIDENT FROM THE CIT(A) ORDER AT PARA 14.9 AT PAGE 33 THAT ASSESSEE COMPANY HAS FREE RESERVE TO THE TUNE OF RS.1508.98 CRORES AND HAD INVESTMENT IN SHARES TO THE TUNE OF RS.1151.10 CRORES. IN ADDITION TO FREE RESERVE ASSESSEE COMPANY HAD SHARE CAPITAL AT RS.120.12 CRORES. THUS INVESTMENT IN SHARES STAND REASONABLY EXPLAINED WITH REFERENCE TO FREE RESERVE AND SHARE CAPITAL AVAILABLE WITH ASSESSEE COMPANY. CIT(A) RIGHTLY DELETED DISALLOWANCE AS MADE BY A.O. RELIANCE ON: - I) 313 ITR 0340(BOM.) CIT V/S. RELI ANCE UTILITIES & POWER LTD. (P - 89) II) 366 ITR 0505 (BOM.) CIT V/S. HDFC BANK LTD. (P - 94) 6 ITA NO. 441 & 442 /NAG/2014 4. PER CONTRA THE LEARNED DR FAIRLY ACCEPTED THE PROPOSITION THAT THE ISSUE S INVOLVED HAVE BEEN DULY COVERED BY THE ITAT, NAGPUR BENCH DECISION IN ASSESS EE S OWN CASE FOR EARLIER YEARS. 5. ACCORDINGLY, AFTER HEARING B OTH THE COUNSEL S AND PERUSING THE RECORDS , WE FIND TH AT IT IS THE CONTENTION OF THE COUNSEL OF THE ASSESSEE THAT ALL THE ISSUES RAISED IN THESE APPEALS EXCEPT GROUND NO.6 FOR ASSESSMENT YEAR 201 0 - 11 ARE COVERED BY THE DECISION OF ITAT, NAGPUR BENCH, NAGPUR IN ASSESSEES OWN CASE FOR EARLIER YEARS. THIS PROPOSITION HAS BEEN FAIRLY ACCEPTED BY THE LD. DEPARTMENTAL REPRESENTATIVES. NO CASE HAS BEEN MADE OUT BEFORE US THAT THERE IS ANY CHANGE IN THE FACTS IN THE PRESENT YEA R. UNDER TH ESE CIRCUMSTANCES, FOLLOWING THE PRECEDENT IN ASSESSEES OWN CASE IN EARLIER YEARS, WE AFFIRM THE ORDER OF LD . CIT(A) ON ALL THE ISSUE RAISED IN BOTH THE APPEALS EXCEPT GROUND NO.6 IN ITA NO. 442 ASSESSMENT YEAR 2010 - 11. 6. THE GROUND NO. 6 FOR ASSESSMENT YEAR 2010 - 11 RELATES TO THE ASSESSEES CLAIM OF INTEREST EXPENDITURE OF RS.43.93 CRORES. THIS WAS DISALLOWED BY THE AO ON THE FOLLOWING BASIS : - A. FUNDS AMOUNTING TO RS. 571 CRORE WHICH YIELD INTEREST IN EARLIER YEARS WERE WI THDRAWN BY THE APPELLANT AND USED FOR ACQUISITION OF SHARES DURING THE YEAR UNDER CONSIDERATION. B. THE SAID RS.571 CRORE WHICH YIELDED INTEREST IN EARLIER YEARS WAS ADVANCED BY THE APPELLANT OUT OF THE BORROWED FUNDS ON WHICH INTEREST WAS BEING PAID BY THE A PPELLANT. C. THAT THERE WAS A DIVERSION OF INTEREST BEARING FUNDS, BORROWED IN EARLIER YEARS, TO ACQUISITION OF SHARES DURING THE YEAR UNDER CONSIDERATION. D. IN VIEW OF THE ABOVE FACTS, INTEREST ON RS.571 CRORE, WHICH HAS BEEN CLAIMED AS AN EXPENSE WAS REQUIRED TO BE DISALLOWED AND THIS RESULTED IN THE SALE DISALLOWANCE OF RS.43.93 CRORE. 7. UPON ASSESSEES APPEAL IN THIS REGARD, THE LD. CIT(A) ACCEPTED THE ASSESSEES CONTENTION THAT THERE WERE SUFFICIENT INTEREST - FREE FUNDS AVAILABLE. FOR THIS PROPOSITION THE LD. CIT(A) HAS QUOTED FROM THE BALANCE SHEET OF THE ASSESSEE THE LD. CIT(A) AND TABUL A R CHART HAS BEEN PREPARED WHICH SHOWS THE INCREASE/DECREASE IN THE INTEREST BEARING LOANS AND ADVANCES GIVEN OVER THE LAST 3 YEARS . R EL YING ON THE ABOVE SAID TABULAR CHART THE LD. CIT(A) HAS HELD THAT THE SAID CHART SHOWS THAT THERE IS NO LINKAGE /C O - RELAT ION BETWEEN INCREASE/DECREASE IN THE INTEREST BEAR ING LOANS WITH THE INCREASE/DECREASE LOANS AND ADVANCES ARE GIVEN. THEREAFTER, AFTER REFERRING CERTAIN FIGURE S OF THE BAL ANCE SHEET THE LD. CIT(A) HAS CONCLUDED THAT THERE IS NO RELATION BETWEEN BORROWING AND ADVANCES IN EARLIER YE ARS OR CURRENT YEAR. THEREAFTER, HE HELD THAT THE ABOVE FACTS CLEARLY ESTABLISHED THAT THERE IS NO BASIS TO CONCLUD E THAT THE SAID AMOUNT OF RS. 57 1 CRORES WITHDRAWN BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION FROM THE LOANS AND ADVANCES WAS FINANCED OUT OF INTEREST BEARING FUNDS TAKEN IN EARLIER YEARS. 7 ITA NO. 441 & 442 /NAG/2014 8. THEREAFTER THE LD. CIT(A) HAS REFERRED TO THE DECISION OF J URISDICTIONAL HIGH COURT IN TH E CASE OF CIT V/S. RELIANCE UTILITY PVT. LTD., (SUPRA) AND CIT V/S. HDFC BANK LTD., (SUPRA) FOR THE PROPOSITION THAT IF FUNDS WERE AVAILABLE BOTH INTEREST FREE AND OVERDRAFT AND OR LOANS TAKEN , THEN A PRESUMPTION WOULD ARISE TH AT INVESTMENT WOULD BE OUT OF THE INTEREST FREE FUND GENERATED OR AVAILABLE WITH THE COMPANY, WITH THE INTEREST FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENTS. THEREAFTER, THE LD. CIT(A) HELD AS UNDER : - IN THE CASE OF THE APPELLANT A TABLE SHOWING THE VARIOUS INTEREST FREE F UNDS AVAILABLE AND THE INVESTMENT MADE HAVE BEEN TABULATED AND THE SAME PRODUCED BELOW : - AMT (IN CRORES) ASST. YEAR GENERAL RESERVE CAPITAL RESERVE SHARE PREMIUM DEPRECIATION RESERVE TOTAL FREE RESERVES INVESTMENT IN SHARES 2009 - 10 760.38 15.2 27.16 497 .61 1300.35 305.46 2010 - 11 785.38 15.2 143.95 564.45 1508.98 1151.10 IT IS EVIDENT FROM THE ABOVE TABLE THAT THE INVESTMENT MADE BY THE APPELLANT IN SHARES IS LESS THAN THE INTEREST - FREE FUNDS AND RESERVE AVAILABLE AND IN SUCH CIRCUMSTANCES AND CASE OF THE APPELLANT IS SQUARELY COVERED BY THE PROPOSITION SET OUT IN THE JURISDICTION HIGH COURT PRONOUNCEMENTS IN THE CASE OF COMMISSIONER OF INCOME TAX V/S RELIANCE UTILITIES AND POWER LTD. (SUPRA) AND COMMISSIONER OF INCOME TAX V/S HDFC BANK LTD.(SUPRA) 9. AG AINST ABOVE ORDER, REVENUE I S IN APPEAL IS BEFORE US. 10. HAVING HEARD BOTH THE COUNSEL & PERUSING THE RECORDS, UPON CARE FUL CONSIDERATION, WE FIND THAT IN THE ASSESSMENT ORDER AO HAS ALSO REPRODUCED THE BALANCE SHEET OF THE ASSESSEE AND THEREAFTER MADE A CO NCLUSION THAT THERE WAS A D IV ERSION OF INTEREST FREE FUNDS. AGAINST THE ABOVE CONCLUSION THE LD. CIT ALSO REFERRED TO CERTAIN FACTS AND FIGURES O F THE BAL ANCE SHEET AND ANOTHER TABULAR SUBMISSION AND HAS GIVEN A FINDING THAT SUFFICIENT INTERE ST FREE FUNDS WERE AVAILABLE AND THERE WAS NO D I VERSION OF THE INTEREST FREE FUNDS. IN OUR CONSIDERED OPINION , ON THE BASIS OF SAME BALANCE SHEET, THE LD. CIT HAS COME TO A DIFFERENT CONCLUSION FROM THAT OF AO . IN THIS CONNECTION , WE ARE OF THE OPINION THAT A O SHOULD BE GIVEN A N OPPORTUNITY TO EXAMINE THE FACTS AND FIGURES WHICH ARE THE BASIS FOR LD. CIT DECISION AND ARRIVAL AT THE CONCLUSION WHICH IS IN OPPOSITION WITH TH AT OF AO. 11. SIMILARLY, THE ISSUE BEING COVERED BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RELIANCE UTILITY PVT. LTD. AND IN HDFC BANK ALSO WAS NOT BEFORE THE AO AS THERE IS NO DISCUSSION IN THE ASSESSMENT ORDER IN THIS REGARD. HENCE , IN OUR CONSIDERED OPINION THIS ASPECTS ALSO NEEDS TO BE EXAMINED BY THE AO. ACCORDINGLY, WE REMIT THIS ISSUE TO THE FILE OF THE AO. THE AO IS DIRECTED TO EXAMINE THE ISSUE ON THE BASIS OF FACTS AND FIGURES CONSIDERED BY THE LD. CIT(A). THE AO IS ALSO DIRECTED TO FOLLOW THE J URISDICTIONAL HIGH COURT DECISION A S REFERRED BY THE LD. CIT(A). NEED LESS TO A DD, ASSESSEE SHOULD BE GRANTED AN OPPORTUNITY O F BEING HEARD. 8 ITA NO. 441 & 442 /NAG/2014 12. IN THE RESULT, THIS ITA NO.441 IS DISMISSED AND ITA NO.442 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOU NCED IN THE OPEN COURT ON THIS 15 TH DAY OF APRIL , 2016 SD/ - SD/ - (MUKUL K. SHRAWAT) (SHAMIM YAHYA) JUDICIAL MEMB ER ACCOUNTANT MEMBER NAGPUR, DATED: - 15 / 04 /2016 MANGESH BODKHE /PS COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T., CONCERNED 4. CIT ( APPEALS) - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSI STANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR.