SHOPPERS STOP LTD, MUMBAI V. ACIT CEN CIR 29, MUMBAI

ITA 4475/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55050 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 02-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 01-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Assessee Lawyers: ARVIND SONDE
• Keywords: Depreciation; Earning of tax free income; Revised return
• Section: 142(1); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI R.S. SYAL, A.M. AND SHRI V. DURGA RAO, J.M. ITA NO. 1448 & 4475/MUM/2010 ASSESSMENT YEARS: 2006-07 AND 2007-08 SHOPPERS STOP LTD., . APPELLANT EUREKA TOWERS, B-WING, 9 TH FLOOR, MINDSPACE, LINK ROAD, MALAD(WEST), MUMBAI 400 064 (PAN AABCS4383A) VS. ASSTT. COMMISSIONER OF INCOME-TAX, RESPONDENT CENTRAL CIRCLE 29, AAYAKAR BHAVAN, MUMBAI. APPELLANT BY : MR. ARVIND SONDE RESPONDENT BY : MR. G.P. TRIVEDI DATE OF HEARING : 02/08/2011 DATE OF PRONOUNCEMENT: 30/08/2011 ORDER PER V. DURGA RAO, J.M.: BOTH THESE APPEALS PERTAIN TO SAME ASSESSEE ARE DI RECTED AGAINST THE ORDERS OF CIT(A)- 40, MUMBAI, PASSED ON 04/12/09 & 08/04/10 FOR THE ASSESSMENT YEARS 2006-07 AND 2007- 08 RESPECTIVELY. SINCE COMMON ISSUES ARE INVOLVED IN B OTH THESE APPEALS, THEY WERE HEARD TOGETHER AND, THEREFORE, A COMMON O RDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2. TO DECIDE THESE APPEALS WE REFER TO THE FACTS IN AY 2006-07. COMMON GROUND RAISED IN BOTH THE APPEALS, WHICH REA DS AS UNDER:- IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT(A) ERRED BOTH IN FACTS IN LAW IN PARTLY SUSTAINING THE DISALLOWANCE MADE BY THE AO U/S 14A OF THE ACT, 196 1. ITA NOS .1448 & 4475/M/2010 M/S SHOPPERS STOP LTD. 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FILED ITS RETURN OF INCOME ON 13/11/06 DECLARING TOTAL INCOME OF RS. 38,75,60,710/- AND, THEREAFTER, A REVISED RETURN WA S FILED ON 18/03/08 DECLARING INCOME OF RS. 35,78,21,940/-. TH E RETURN OF INCOME WAS PROCESSED U/S 143(1) ON 10/01/2008. NOTI CES U/S 143(2) WAS SERVED ON 16/04/07 AND NOTICE U/S 142(1) ALONG WITH QUESTIONNAIRE WAS ISSUED. IN RESPONSE TO THE SAID N OTICES, THE AR OF THE ASSESSEE ATTENDED FROM TIME TO TIME AND FILED T HE DETAILS CALLED FOR. THE ASSESSEE COMPANY IS RUNNING A RETAIL DEPA RTMENTAL STORE IN THE NAME OF SHOPPERS STOP THROUGH ITS VARIOUS OUTLE TS SPREAD ACROSS THE COUNTRY. THE AO NOTED THAT THE YEAR UNDER CONSI DERATION THE ASSESSEE HAD MADE TOTAL INVESTMENT OF RS. 242.1 MIL LION IN SHARES OF ITS GROUP CONCERN ON VARIOUS DATES VIDE ASSESSEES LETTER DATED 29/12/08 IN ITS SUBSIDIARY M/S CROSSWORD BOOKSTORES LTD. THE ASSESSEE HAD SUBMITTED THAT THE SAID INVESTMENT IS MADE OUT OF SURPLUS FUNDS, THEREFORE, NO DISALLOWANCE U/S 14A I S CALLED FOR. HOWEVER, ON PERUSAL OF DETAILS AND BANK STATEMENTS FILED, THE AO NOTICED THAT INVESTMENTS WERE MADE OUT OF BORROWED FUNDS FROM VARIOUS BANK ACCOUNTS AND TRANSFERRED FROM OD ACCOU NT OF ONE BANK TO CC ACCOUNT OF ANOTHER BANK AND ALL THE BANK ACCO UNTS HAD OVERDRAWN BALANCE WHICH INDICATED THAT INVESTMENTS IN SHARES WERE MADE OUT OF BORROWINGS FROM BANKS. THE AO, THEREFOR E, COMPUTED THE INTEREST @ 12% P.A. ON DAY TO DAY BASIS, WHICH COME S TO RS. 1,54,86,125/- AND THE SAME WAS DISALLOWED U/S 14A O F THE ACT AS EXPENSES INCURRED IN RELATION TO EXEMPT INCOME. AGG RIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A). 4. BEFORE THE CIT(A), BESIDES REITERATING THE SUBMI SSIONS MADE BEFORE THE AO, THE LEARNED AR OF THE ASSESSEE SUBMI TTED THAT THE ASSESSEE WAS ROUTING ALL BUSINESS FUNDS INCLUDING L OAN FUNDS THROUGH A SERIES OF BANK ACCOUNTS AS A RESULT OF WHICH, THE LOAN FUNDS AND CASH ACCRUALS FROM THE BUSINESS GOT MERGED AND LOST THEIR IDENTITY ON TRANSFER OF BALANCE TO COMMON POOL ACCOUNT. POINT W AS MADE THAT ITA NOS .1448 & 4475/M/2010 M/S SHOPPERS STOP LTD. 3 WHEN BOTH BORROWED AND LOAN FUNDS EXCEED THE INTERE ST FREE LOAN ON INVESTMENT, THE PRESUMPTION CAN BE MADE THAT INVEST MENTS OR INTEREST FREE LOANS HAVE BEEN MADE FROM SURPLUS FUNDS AND NO T FROM BORROWINGS. FOR THIS CONTENTION, RELIANCE WAS PLACE D ON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANC E UTILITIES AND POWER LTD., 313 ITR 340 AND THE DECISION OF THE ITA T, DELHI IN THE CASE OF MARUTI UDYOG LTD. VS. DCIT, 120 ITD 119. IT WAS SUBMITTED THAT SINCE THE ASSESSEE HAD SUFFICIENT INTEREST FRE E FUNDS AVAILABLE FOR THE PURPOSE OF INVESTMENTS, NO DISALLOWANCE U/S 14A IS CALLED FOR AS NO EXPENSES CAN BE SAID TO HAVE BEEN INCURRED IN RE LATION TO INVESTMENT IN SHARES. IT WAS ALSO ARGUED THAT THE W ORKING OF THE INTEREST HAD ALSO BEEN DONE ON AN ARBITRARY BASIS B Y THE AO AS THE RATE OF INTEREST TAKEN BY HIM WAS INCORRECT. FURTHE R, IT WAS ALSO SUBMITTED THAT THE WORKING OF THE INTEREST HAD BEEN MADE WITHOUT INTIMATING IT TO THE ASSESSEE. IN THIS RESPECT, WIT HOUT PREJUDICE TO THE ASSESSEES MAIN DEFENCE, WORKING OF DISALLOWANCE AS PER RULE 8D OF THE INCOME-TAX RULES, 1962 WAS ALSO SUBMITTED. AFTE R CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) HELD AS UND ER:- 2.2 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. AS I SEE, WHEREAS THE AO HAS ATTRIBUTED THE SOURCE OF THE INVESTMENTS TO OVERDRA WN BALANCES IN THE BANK ACCOUNT, THE APPELLANT HAS COUNTERED IT BY HOLDING THAT IT HAD MIXED FUNDS AND THAT THE INVESTMENTS HAD BEE N MADE OUT OF THE SURPLUS PORTION OF THE MIXED FUNDS., WEIGHIN G THESE TWO POSITIONS ON THE SCALE OF THE FACTS AND THE PROVISI ONS OF SECTION 14A OF THE ACT, I AGREE WITH THE AO. AS I SEE, THE AO HAS COME TO HIS SPECIFIC FINDING ON THE BASIS OF CIRCULATION OF MONEY IN THE APPELLANTS BANK ACCOUNT. IN THIS PROCESS, I SEE, A O HAS DISCOVERED THAT THE MULTIPLE TRANSFERS FROM THE OD ACCOUNT OF ONE BANK TO CC ACCOUNT OF ANOTHER BANK HAS LED TO A SIT UATION WHERE ALL THE BANK ACCOUNTS HAVE OVERDRAWN BALANCES. IN T HIS BACKDROP, I FIND THAT THE AO HAS RIGHTLY HELD THAT THE INVESTMENTS HAVE BEEN MADE OUT OF BORROWINGS FROM BANKS. AS I S EE, THE OVERDRAWN BALANCES ARE TOO OBVIOUS AND ACCORDINGLY, INVESTMENTS COULD NOT HAVE BEEN SOURCED FROM ANY SOURCE OTHER T HAN THESE OVERDRAWN BALANCES. THE APPELLANT ON ITS PART HAS N OT BEEN ABLE TO SPECIFICALLY SUBSTANTIATE THAT THE INVESTMENTS H AD BEEN MADE OUT OF THE SURPLUS FUNDS. IN THIS RESPECT, I FIND T HE APPELLANTS ARGUMENT ON THE MERGING OF THE LOAN FUNDS AND THE C ASH ACCRUALS FROM BUSINESS TOO GENERAL AND SIMPLISTIC. THE APPEL LANT HAS ARGUED THAT IT HAD CASH PROFITS EARNED DURING THE Y EAR BUT AT THE ITA NOS .1448 & 4475/M/2010 M/S SHOPPERS STOP LTD. 4 SAME TIME IT HAS NOT BEEN ABLE TO PROVE THAT IT IS THESE CASH PROFITS WHICH WERE USED FOR SUCH A SUBSTANTIAL INVE STMENT OF RS. 242.10 MILLION. IN ABSENCE OF A DIRECT NEXUS, HIS P RESUMPTION IS LOPSIDED PARTICULARLY WHEN THE APPELLANTS BORROWIN GS ARE ALSO TO THE TUNE OF RS. 585.54 MILLION WHICH ARE SUBSTANTIA LLY HIGHER THAN ITS CASH PROFITS. IN THIS RESPECT, THE APPELLA NTS RELIANCE ON THE DECISION QUOTED BY IT IS ALSO MISPLACED. AS I F IND, IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD., A CLE AR FINDING AND ANALYSIS OF ACCUMULATION OF OVERDRAWN BALANCES IN T HE BANK ACCOUNT WAS NOT THE GROUND OF THE DISALLOWANCES. AC CORDINGLY, THIS DECISION WAS GIVEN IN A DIFFERENT CONTEXT. SIM ILARLY, IN ITS DECISION IN THE CASE MARUTI UDYOG LTD. V. DCIT, THE HONBLE ITAT, DELHI HAS GIVEN ITS DECISION IN THE CONTEXT OF DISA LLOWANCE UPHELD BY THE CIT(A) ON DAY TO DAY WORKING PRODUCT METHOD. AS AGAINST THIS, THE PREMISE OF THE APPELLANTS CASES IS A CLE AR FINDING OF OVERDRAWN BALANCES IN THE BANK ACCOUNTS. IN THE LIG HT OF THE FOREGOING, I AGREE WITH THE AOS FINDING THAT THE I NVESTMENTS HAVE BEEN MADE OUT OF BORROWED FUNDS. HOWEVER, SO FAR AS THE WORKING OF THE DISALLOWANCE OF INTEREST @ 12% IS CO NCERNED, I AM IN DISAGREEMENT WITH THE AO. TO THIS END, I FIND TH AT THE DISALLOWANCE U/S 14A IS TO BE DONE IN TERMS OF THE METHOD STIPULATED UNDER RULE 8D OF THE INCOME-TAX RULES, 1 962. AS I SEE, RULE 8D INSERTED W.E.F. 24/3/08, LAYS DOWN THE METH OD FOR DETERMINING THE AMOUNT OF EXPENDITURE IN RELATION T O INCOME NOT INCLUDIBLE IN TOTAL INCOME. CLAUSE (1) OF THE RULE SPELLS OUT THAT IF CLAUSES (A) & (B) OF THE RULE ARE SATISFIED, THEN A O HAS TO MANDATORILY DETERMINE THE AMOUNT OF EXPENDITURE I N RELATION TO THE EXEMPTED INCOME IN ACCORDANCE WITH THE PROVISI ONS OF SUB- RULE (2) OF THE IT RULES. THE HIGHLIGHTED PORTIONS WILL MAKE IT CLEAR THAT ONCE PROVISIONS OF SECTION 14A ARE FOUND TO BE APPLICABLE, RULE 8D IS THE METHOD TO BE FOLLOWED TO WORK OUT THE QUANTUM OF THE DISALLOWANCE. IN THIS RESPECT, PROVI SIONS OF SUB- SECTION (2) & SUB-SECTION (3) OF SECTION 14A ARE AL SO VERY CLEAR. AS MAY BE NOTED, SUB-SECTION (2) OF SECTION 14A CLEARL Y STIPULATES THAT THE AMOUNT OF EXPENDITURE IN RELATION TO THE EXEMPTED INCOME IS TO BE DETERMINED IN ACCORDANCE WITH SUC H METHOD AS MAY BE PRESCRIBED AND RULE 8D BEING THAT METHOD, I S, TO BE MANDATORILY FOLLOWED. THE APPLICABILITY OF RULE 8D IN SYNC WITH SECTION 14A HAS ALSO BEEN UPHELD BY THE HONBLE ITA T SPECIAL BENCH, MUMBAI IN THE CASE OF ITO VS. DAGA CAPITAL M ANAGEMENT PVT. LTD. IN THIS DECISION, THE HONBLE ITAT HAS SP ECIFICALLY HELD THAT SECTION 14A HAVING RETROSPECTIVE OPERATION, TH E RULE 8D WOULD ALSO BE CORRESPONDINGLY RETROSPECTIVE IN OPER ATION. ACCORDINGLY, AS I FIND, WHEREAS THE AO HAS RIGHTLY HELD THAT INVESTMENTS HAVE BEEN MADE OUT OF BORROWED FUNDS, H E HAS ERRED IN NOT APPLYING RULE 8D WHILE COMPUTING THE DISALLO WANCE. IN THIS LIGHT, I UPHOLD THE AOS DECISION THAT THE INVESTME NTS HAVE BEEN MADE OUT OF BORROWED FUNDS. AS FAR AS THE QUANTUM O F DISALLOWANCE IS CONCERNED, I FIND THAT THE APPELLAN T HAS GIVEN ITS WORKING FOR DISALLOWANCE UNDER RULE 8D. THE AO IS D IRECTED TO ITA NOS .1448 & 4475/M/2010 M/S SHOPPERS STOP LTD. 5 VERIFY THIS AND WORK OUT THE DISALLOWANCE IN TERMS OF THE METHOD SPELT OUT IN RULE 8D. THE GROUNDS OF APPEAL ARE, TH IS, PARTLY ALLOWED. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL. 6. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS HAVING SUFFICIENT OWN FUNDS TO MAKE INVESTMENTS, THEREFORE, BOTH THE AUTHORITIES BELOW WRONGLY APPLI ED THE PROVISIONS OF SECTION 14A OF THE ACT. IN THIS CONNECTION, HE INVI TED OUR ATTENTION TO PAGE 9 OF THE PAPER BOOK TO SHOW THAT THE INVESTMEN TS MADE BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS RS. 35 .59 CRORES. HE HAS ALSO REFERRED PAGE NO. 10 OF THE PAPER BOOK AND SUB MITTED THAT DEPRECIATION IN THE YEAR UNDER CONSIDERATION CLAIME D IS RS. 139.36 MILLIONS AND THE PROFIT AFTER TAX IS RS. 271.05 CRO RES AND THE NET PROFIT AVAILABLE WITH THE ASSESSEE IS OF RS. 41 CRORES. TH EREFORE, HE ARGUED THAT THE ASSESSEE IS HAVING SUFFICIENT OWN FUNDS TO MAKE INVESTMENTS. WHEN THE SUFFICIENT OWN FUNDS ARE AVAILABLE WITH T HE ASSESSEE WHILE THE ASSESSEE ALSO BORROWED FUNDS, THE PRESUMPTION G OES IN FAVOUR OF THE ASSESSEE THAT THE INVESTMENTS MADE BY THE ASSES SEE IS FROM OWN FUNDS, FOR WHICH HE PLACED RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RE LIANCE UTILITIES AND POWER LTD., [2009] 313 ITR 340 (BOM.). HE FURTHER S UBMITTED THAT THE REVENUE AUTHORITIES HAVE NOT APPLIED SECTION 14A IN AY 2004-05. IT IS POINTED OUT THAT NO BORROWINGS WERE TAKEN IN THE YE AR UNDER CONSIDERATION. 7. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T ALL THE INVESTMENTS MADE BY THE ASSESSEE BEFORE 31 ST MAY, 2006. THE LEARNED DR SUBMITTED THAT THE FUNDS UTILIZED FOR THE PURPO SE OF INVESTMENTS FROM THE MIXED FUNDS, THEREFORE, DATE OF INVESTMENT IS IMMATERIAL. IT IS SUBMITTED THAT THE CASE RELIED UPON BY THE LEARN ED COUNSEL FOR THE ASSESSEE IS DISTINGUISHABLE ON THE FACTS TO THE CAS E OF THE ASSESSEE AS ITA NOS .1448 & 4475/M/2010 M/S SHOPPERS STOP LTD. 6 EACH CASE HAS TO BE DECIDED BY CONSIDERING THE FACT S OF EACH CASE. THE LEARNED DR STRONGLY SUPPORTED THE ORDERS OF THE AUT HORITIES BELOW. 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE RELE VANT MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW AS WELL AS DECISIONS CITED. THE ASSESSEE IS RUNNING A RETAI L DEPARTMENTAL STORES IN THE NAME AND STYLE OF SHOPPERS STOP, WH ICH IS SPREAD ACROSS THE COUNTRY. DURING THE YEAR UNDER CONSIDERA TION THE ASSESSEE HAS INVESTED RS. 24.21 CRORES, OUT OF WHICH THE AO HAD DISALLOWED RS. 1,54,86,125/- OUT OF INTEREST EXPENDITURE BY INVOKI NG SECTION 14A OF THE ACT. THE CASE OF THE ASSESSEE IS THAT THE ASSES SEE IS HAVING SUFFICIENT OWN FUNDS AND WHEN HE HAS BORROWED FUNDS EVEN IF HE IS HAVING OWN FUNDS, THE PRESUMPTION ALWAYS GOES IN FA VOUR OF THE ASSESSEE THAT THE ASSESSEE MADE INVESTMENTS OUT OF OWN FUNDS, THEREFORE, THE PROVISIONS OF SECTION 14A OF THE ACT , IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE. THE AO HAS NOT ACCEPTED T HE SUBMISSIONS OF THE ASSESSEE ON THE GROUND THAT THE INVESTMENTS HAV E BEEN MADE OUT FROM BORROWED FUNDS FROM THE BANK AND THE OVERDRAWN BALANCES ARE TOO OBVIOUS, THEREFORE, INVESTMENTS COULD NOT HAVE BEEN SOURCED FROM ANY OTHER SOURCE OTHER THAN THE OVERDRAWN BALANCES. THE CIT(A) CONFIRMED THE ORDER OF THE AO BY APPROVING THE SAID FINDINGS OF THE AO AND DIRECTED THE AO TO FOLLOW THE DECISION ITAT IN THE CASE OF DAGA CAPITAL INVESTMENT LTD. AND WORK OUT THE DISALLOWAN CE IN TERMS OF THE METHOD SPELT OUT IN RULE 8D. BEFORE US, THE LEARNE D COUNSEL FOR THE ASSESSEE HAS ESTABLISHED THAT THE ASSESSEE HAS GOT SUFFICIENT OWN FUNDS TO MAKE INVESTMENTS BY WAY MATERIAL EVIDENCE VIDE PAGES 89 & 10 OF THE ASSESSEES PAPER BOOK. IT IS SEEN THAT TH E INCREASE IN INVESTMENT DURING THE YEAR IS ONLY BY RS. 242.10 MI LLIONS WHEREAS THE SHAREHOLDER FUND OF THE ASSESSEE HAS INCREASED TO 1 752 MILLIONS. IT IS OBVIOUS THAT INCREASE IN SHAREHOLDER FUND ITSELF IS MORE THAN 7 TIMES, THAN THE INVESTMENT MADE BY THE ASSESSEE DURING THE YEAR. IT IS ALSO SEEN THAT THE PROFIT AFTER TAX FOR THE YEAR ITSELF IS 271.05 MILLIONS. IF WE ADD BACK THE AMOUNT OF DEPRECIATION OF RS. 139.3 5 MILLIONS, WHICH ITA NOS .1448 & 4475/M/2010 M/S SHOPPERS STOP LTD. 7 IS A NON-CASH ALLOWANCE, THE CASH PROFIT WILL FURTH ER SWELL BY THIS AMOUNT. IT CAN, THUS, BE SEEN THAT ONLY CASH PROFIT FROM OPERATIONS IS MORE THE INVESTMENTS MADE BY THE ASSESSEE DURING TH E YEAR. IN THIS CONNECTION, WE REFER TO THE THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF RELIANCE UTILITIES AND POWER LTD. [2009 ] 313 ITR 340 (BOM.) WHEREIN IT WAS HELD THAT IF THERE WERE FUNDS AVAILABLE BOTH INTEREST-FREE AND OVERDRAFT AND/OR LOANS TAKEN, THE N A PRESUMPTION WOULD ARISE THAT INVESTMENTS WOULD BE OUT OF INTERE ST FREE FUNDS GENERATED OR AVAILABLE WITH THE COMPANY, IF THE INT EREST FREE FUNDS WERE SUFFICIENT TO MEET THE INVESTMENTS. WE, THEREFORE, FIND THAT THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE SAID CASE IS SQUARELY APPLIES TO THE FACTS OF THE CASE O F THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, WE UPHOLD THE SUBMISSIONS OF THE ASSESSEE TH AT ASSESSEE IS HAVING SUFFICIENT OWN FUNDS AND WHEN HE HAS BORROWE D FUNDS EVEN IF HE IS HAVING OWN FUNDS, THE PRESUMPTION ALWAYS GOES IN FAVOUR OF THE ASSESSEE THAT THE ASSESSEE MADE INVESTMENTS OUT OF OWN FUNDS, THEREFORE, THE PROVISIONS OF SECTION 14A OF THE ACT , IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE. IN VIEW OF THE SAID DISCU SSION, WE SET ASIDE THE ORDER OF THE CIT(A) AND DELETE THE DISALLOWANCE MADE BY THE AO U/S 14A OF THE ACT. ACCORDINGLY, THE GROUNDS RAISED IN AY 2006-07 IS ALLOWED. 9. SINCE THE GROUND RAISED IN AY 2007-08 IS SIMILAR TO THAT OF AY 2006-07 (SUPRA), RESPECTFULLY FOLLOWING THE CONCLUS ION DRAWN IN AY 2006-07, WE DELETE THE DISALLOWANCE MADE BY THE AO U/S 14A OF THE ACT AND THE GROUND IS ALLOWED. ITA NOS .1448 & 4475/M/2010 M/S SHOPPERS STOP LTD. 8 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2011. SD/- SD/- (R.S. SYAL) (V. D URGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 30 TH AUGUST, 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, E BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.