TATVA GLOBAL ENVIROMENT LTD, MUMBAI V. ITO 9(3)(3), MUMBAI

ITA 470/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101001 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 20-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UDAYA BHASKAR JACKLE
• Keywords: Business expenditure; Earning of tax free income; Commercial expediency; Reason to believe
• Section: 14A; 11; 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER AND RAM L AL NEGI, JUDICIAL MEMBER / I .T.A. NO. 2173/MUM/2013 ( / ASSESSMENT YEAR : 2009 - 10 A N D / I .T.A. NO. 470/MUM/2014 ( / ASSESSMENT YEAR : 2010 - 11 M / S . TATVA GLOBAL ENVIRONMENT LTD. MUMBAI (FORMERLY KNOWN AS SEARCH ENVIRO LTD., C/O UNIPHOS HOUSE, 11 - C.D. MARG, OPP. MADHU PARK, KHAR (W), MUMBAI - 400 052 / VS. THE DCIT - 9(3), AAYAKAR BHAVAN, MUMBAI - 400 020 ./ ./ PAN/GIR NO. :AAICS 1718A ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI KIRIT KAMDAR / RESPONDENT BY: SHRI UDAYA BHASKAR JACKLE / DATE OF HEARING : 10 .0 9 .2015 / DATE OF PRONOUNCEMENT : 10 .0 9 .2015 / O R D E R PER N.K. BILLAIYA, AM: THESE TWO APPEALS BY THE ASSESSEE ARE PREFERRED AGAINST TWO SEPARATE ORDERS OF THE LD. CIT(A) 20, MUMBAI DATED 21.12.2012 AND ITA. NO S 2173/M/13 & 470/M/14 . 2 8.10.2013 PERTAINING A.YRS 2009 - 10 AND 2010 - 11 RESPECTIVELY. AS COMMON GRIEVANCES ARE INVOLVED IN BOTH THESE APPEALS, THE Y WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. REPRESENTATIVES OF BOTH SIDES AGREED THAT FACTS OF 2009 - 10 MAY BE CONSIDERED FOR DISPOSING BOTH THE APPEALS AS FACTS ARE IDENTICAL. 3. WE HAVE HEARD T HE RIVAL REPRESENTATIVES AT LENGTH AND HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ITA NO. 2173/M/2013 A.Y. 2009 - 10 4. THE FIRST GRIEVANCE OF THE ASSESSEE RELATES TO THE DISALLOWANCE OF INTEREST EXPENSES AMOUNTING TO RS. 1,94,94,645/ - AND DISALLOWANCE OF OTHER EXPENSES AMOUNTING TO RS. 19,49,464/ - . THE SECOND GRIEVANCE RELATES TO THE DISALLOWANCE OF INTEREST EXPENSES AMOU NTING TO RS. 1,10,83,572/ - U/S. 37 OF THE ACT AND THE LAST GRIEVANCE RELATES TO THE NON - GRANTING OF TAX CREDIT FOR TDS AMOUNTING TO RS. 13,30,533/ - . 5. THE ASSESSEE IS IN THE BUSINESS OF TRADING IN POLLUTION CONTROL EQUIPMENTS. THE RETURN FOR THE YEAR WAS FILED ON 30.9.2009 DECLARING LOSS OF RS. 60,47,746/ - . THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT. WHILE SCRUTINIZING THE RETURN OF INCOME, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS EARNED DIVIDEND AMOUNTING TO RS. 1,66,44,074/ - . THE AO FURTHER NOTICED THAT THE ASSESSEE HAS INCURRED INTEREST EXPENSES AMOUNTING TO RS. 3,58,66, 882/ - AND HAS ITA. NO S 2173/M/13 & 470/M/14 . 3 ALSO EARNED INTEREST AMOUNTING TO RS. 52,88,665/ - .THE AO WAS OF THE FIRM BELIEF THAT DISALLOWANCE U/S. 14A IN RESPECT OF THE EXEMPT INCOME IS REQUIRE D TO BE MADE IN THE INSTANT CASE. THE AO PROCEEDED BY COMPUTING THE DISALLOWANCE U/S. 14A AS PRESCRIBED UNDER RULE 8D AND COMPUTED THE DISALLOWANCE AT RS. 2,14,44,109/ - AND ADDED TO THE INCOME DECLARED. THE AO FURTHER NOTICED THAT THE ASSESSEE HAS CLAIME D NET INTEREST OF RS. 3,05,78,217/ - BEING INTEREST PAID RS. 3,58,66,882/ - LESS INTEREST EARNED RS. 52,88,665/ - . THE AO WAS OF THE OPINION THAT THE ASSESSEE HAS DIVERTED BORROWED FUNDS TOWARDS SHARE APPLICATION MONEY AND INVESTMENT IN EQUITY SHARES OF SUBS IDIARY AND ASSOCIATE COMPANIES. THE AO OBSERVED THAT THE INTEREST OF RS. 1,94,94,645/ - IS ALREADY DISALLOWED U/S. 14A. HE ACCORDINGLY DISALLOWED THE BALANCE AMOUNT OF RS. 1,10,83,572/ - AND COMPLETED THE ASSESSMENT. 6. AGGRIEVED BY THIS, THE ASSESSEE CAR RIED THE MATTER BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) IT WAS STRONGLY CONTENDED THAT THE ASSESSEE HAS MADE INVESTMENTS OUT OF OWN FUNDS AS WELL AS WITH BORROWED FUNDS. IT WAS EXPLAINED THAT DURING THE YEAR, THE ASSESSEE HAS RECEIVED DIVIDEND OF R S. 63,50,534/ - FROM BHARUCH ENVIRO INFRASTRUCTURE LTD., RS. 35,28,140/ - FROM ENVIRO TECHNOLOGY LTD AND RS. 67,65,400/ - FROM UPL ENVIRONMENTAL ENGINEERS LTD, TOTAL DIVIDEND RECEIVED IS RS. 1,66,44,074/ - . IT WAS CONTENTED THAT NO PORTION OF INTEREST EXPENS ES IS ATTRIBUTABLE TO THE EXEMPT INCOME RECEIVED DURING THE YEAR. THEREFORE, NO DISALLOWANCE IS CALLED FOR U/S. 14A OF THE ACT. ITA. NO S 2173/M/13 & 470/M/14 . 4 6.1. IN SO FAR AS DISALLOWANCE OUT OF OTHER EXPENSES ARE CONCERNED, IT WAS EXPLAINED THAT OUT OF THE TOTAL EXPENDITURE OF RS. 87,04,079/ - , THE ASSESSEE ITSELF HAS DISALLOWED RS. 50,85,541/ - AND ONLY BALANCE AMOUNT OF RS. 36,18,538/ - HAS BEEN CLAIMED AS BUSINESS EXPENDITURE. THE CONTENTIONS/SUBMISSIONS DID NOT FIND ANY FAVOUR WITH THE FIRST APPELLATE AUTHORITY WHO CONFIRMED THE DISALLOWANCES MADE BY THE AO. 7. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 8. THE LD. COUNSEL FOR THE ASSESSEE ONCE AGAIN SUBMITTED THE ARGUMENTS WHICH ARE IN LINE WITH THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. IT IS THE SAY OF THE LD. CO UNSEL THAT NO DISALLOWANCE OUGHT TO BE MADE U/S. 14A SINCE THE PURPOSE OF MAKING THE INVESTMENTS IS DEFINITELY NOT FOR THE PURPOSE OF EARNING EXEMPT INCOME BUT THE INVESTMENTS MADE BY THE ASSESSEE ARE STRATEGIC IN NATURE. RELIANCE WAS PLACED ON THE DECIS ION OF THE TRIBUNAL, MUMBAI BENCH IN THE CASE OF J.M. FINANCIAL LTD IN ITA NO. 4521/M/2012. THE LD. COUNSEL FURTHER BROUGHT TO THE NOTICE OF THE BENCH THAT THE INVESTMENTS HAVE BEEN MADE IN EARLIER YEARS OUT OF OWN FUNDS AND IN A.Y. 2008 - 09, NO DISALLOWAN CE WAS MADE IN RESPECT OF INTEREST EXPENDITURE. COPY OF THE ORDER OF ASSESSMENT FOR A.Y. 2008 - 09 W A S PLACED BEFORE THE BENCH. 8.1. IN SO FAR AS THE DISALLOWANCE IN RESPECT OF OTHER EXPENSE IS CONCERNED, THE LD. COUNSEL POINTED OUT THAT IN THE A.Y. 2007 - 08, THE TRIBUNAL HAS HELD THAT THE STATUTORY AND ADMINISTRATIVE EXPENSES INCURRED DURING THE COURSE OF BUSINESS OUGHT TO BE ALLOWED WHILE ITA. NO S 2173/M/13 & 470/M/14 . 5 COMPUTING PROFITS AND GAINS FROM BUSINESS OR PROFESSION. THE LD. COUNSEL PLACED THE ORDER OF THE TRIBUNAL. 9. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE FINDINGS OF THE REVENUE AUTHORITIES. 10. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. UNDISPUTEDLY, THE INVESTMENTS MADE BY THE ASSESSEE ARE IN ITS SUBSIDIARY COMPANIES AND ASSOCIATED COMPANIES WHICH ARE SPECIAL PURPOSE VEHICLE FORM ED TO EXECUTE SPECIFIC PROJECTS. UNDOUBTEDLY, THE INVESTMENTS IN SUBSIDIARY/ASSOCIATE COMPANIES ARE DONE ON ACCOUNT OF BUSINESS EXPEDIENCY IN ORDER TO CARRY ON THE BUSIN ESS OF THE ASSESSEE. ACCORDINGLY, THE INVESTMENTS CAN BE SEEN IN THE LIGHT OF STRATEGIC IN NATURE AND INEXTRICABLY LINKED WITH THE MAIN BUSINESS OPERATION OF THE ASSESSEE. THE TRIBUNAL IN THE CASE OF J.M. FINANCIAL LTD. (SUPRA) HAD CONSIDERED SIMILAR FAC TS AND FINALLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE, THE TRIBUNAL HAS CONSIDERED THE DECISION IN THE CASE OF GARWARE WALL ROPES LTD. VS ACIT IN ITA NO. 5408/M/12 WHEREIN T HE RELEVANT FINDINGS READ AS UNDER: WE HAVE CONSIDERED THE RIVAL SUBMISSION AND CAREFULLY PERUSED THE RELEVANT RECORDS. SO FAR AS THE ISSUE REGARDING DISALLOWANCE U/S 14A IN THE CASE WHERE NO DIVIDEND HAS BEEN RECEIVED, THE SAME IS COVERED AGAINST THE AS SESSEE BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 - 09, WHEREIN THE TRIBUNAL HAS FOLLOWED THE DECISION OF SPECIAL BENCH OF TRIBUNAL WHILE DECIDING THE ISSUE. THEREFORE, WE DO AGREE WITH THE FINDING OF THE TRIBUNAL ON THIS PO INT. FURTHER SINCE THE ASSESSEE HAS RAISED THE NEW PLEA IN THE YEAR UNDER CONSIDERATION THAT NO EXPENDITURE HAD BEEN INCURRED BY THE ASSESSEE FOR EARNING THE ITA. NO S 2173/M/13 & 470/M/14 . 6 EXEMPT INCOME OR FOR THE INVESTMENT IN QUESTION. WE FIND MERIT AND SUBSTANCE IN THE CONTENTION OF THE ASSESSEE ON THIS POINT BECAUSE THE INVESTMENT HAS BEEN MADE BY THE ASSESSEE IN THE GROUP CONCERN AND NOT IN THE SHARES OF ANY UN - RELATED PARTY. THEREFORE, THE PRIMARY OBJECT OF INVESTMENT IS HOLDING CONTROLLING STAKE IN THE GROUP CONCERN AND NOT EARNIN G ANY INCOME OUT OF INVESTMENT. FURTHER THE INVESTMENT WERE MADE LONG BACK AND NOT IN THE YEAR UNDER CONSIDERATION. THEREFORE, IN VIEW OF THE FACT THAT THE INVESTMENT ARE IN THE GROUP CONCERN WE DO NOT FIND ANY REASON TO BELIEVE THAT THE ASSESSEE WOULD HAV E INCURRED ANY ADMINISTRATIVE EXPENSES IN HOLDING THESE INVESTMENTS. THE AO HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT THE ASSESSEE HAS INCURRED ANY EXPENDITURE IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. SECTION 14A HA S WITHIN IT IMPLICIT THE NOTION OF APPORTIONMENT IN THE CASES WHERE THE EXPENDITURE IS INCURRED FOR COMPOSITE/INDIVISIBLE ACTIVITIES IN WHICH TAXABLE AND NON TAXABLE INCOME IS RECEIVED BUT WHEN NO EXPENDITURE HAS BEEN INCURRED IN RELATION TO THE EXEMPT INC OME THEN PRINCIPLE OF APPORTIONMENT EMBEDDED IN SECTION 14A HAS NO APPLICATION. THE OBJECT OF SECTION 14A IS NOT ALLOWING TO REDUCE TAX PAYABLE ON THE NON EXEMPT INCOME BY DEDUCTING THE EXPENDITURE INCURRED TO EARN THE EXEMPT INCOME. IN THE CASE IN HAND IT IS NOT THE CASE OF THE REVENUE THAT THE ASSESSEE HAS INCURRED ANY DIRECT EXPENDITURE OR ANY INTEREST EXPENDITURE FOR EARNING THE EXEMPT INCOME OR KEEPING THE INVESTMENT IN QUESTION. IF THERE IS EXPENDITURE DIRECTLY OR INDIRECTLY INCURRED IN RELATION TO EX EMPT INCOME THE SAME CANNOT BE CLAIMED AGAINST THE INCOME WHICH IS TAXABLE. FOR ATTRACTING THE PROVISIONS OF SECTION 14A - THERE SHOULD BE PROXIMATE CAUSE FOR DISALLOWANCE WHICH HAS RELATIONSHIP WITH THE TAX EXEMPT INCOME AS HELD BY THE HONBLE SUPREME COU RT IN CASE OF CIT VS. WALFORT SHARE AND STOCK BROKERS P. LTD. ( 326 ITR 1). THEREFORE, THERE SHOULD BE A PROXIMATE RELATIONSHIP BETWEEN THE EXPENDITURE AND THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. IN THE CASE IN HAND THE ASSESSEE HAS CLAIME D THAT NO EXPENDITURE HAS BEEN INCURRED FOR EARNING THE EXEMPT INCOME, THEREFORE, IT WAS INCUMBENT ON THE AO TO FIND OUT AS TO WHETHER THE ASSESSEE HAS INCURRED ANY EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME AND IF SO TO QUANTIFY THE EXPENDITURE OF DISALLOWANCE. THE AO HAS NOT BROUGHT ON RECORD ANY FACT OR MATERIAL TO SHOW THAT ANY EXPENDITURE HAS BEEN INCURRED ON THE ACTIVITY WHICH HAS RESULTED INTO BOTH TAXABLE AND NON TAXABLE INCOME. THEREFORE, IN OUR VIEW WHEN THE ASS ESSEE HAS PRIMA FACIE BROUGHT OUT A CASE THAT NO EXPENDITURE M/S JM FINANCIAL LIMITED 10 HAS BEEN INCURRED FOR ITA. NO S 2173/M/13 & 470/M/14 . 7 EARNING THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME THEN IN THE ABSENCE OF ANY FINDING THAT EXPENDITURE HAS BEEN INCURRED FOR EARNING THE EXEMPT INCOME THE PROVISIONS OF SECTION 14A CANNOT BE APPLIED. ACCORDINGLY WE DELETE THE ADDITION/DISALLOWANCE MADE BY AO U/S 14A R.W. RULE 8D. 11. A SIMILAR VIEW WAS TAKEN BY THE DELHI BENCH OF THIS TRIBUNAL IN THE CASE OF M/S ORIENTAL STRUCTURAL ENGINEERS (P) LTD (SUPRA) WHICH HAS BEEN CONFIRMED BY THE HONBLE DELHI HIGH COURT VIDE DECISION DATED 15.01.2013 IN PARA 6.3 AS UNDER: - 6.3 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUSED THE RECORDS. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A FINDING THAT ONLY INTEREST OF RS 2,96,731/ - WAS PAID ON FUNDS UTILIZED FOR MAKING INVESTMENTS ON WHICH EXEMPTED INCO ME WAS RECEIVABLE. FURTHER, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS OBSERVED THAT IN RESPECT OF INVESTMENT OF RS 6,07,775,000/ - MADE IN SUBSIDIARY COMPANIES AS PER DOCUMENTS PRODUCED BEFORE HIM, THEY ARE ATTRIBUTABLE TO COMMERCIAL EXPEDIENCY, BECAUSE AS PER SUBMISSION MADE BY THE ASSESSEE, IT HAD TO FORM SPECIAL PURPOSE VEHICLES (SPY) IN ORDER TO OBTAIN CONTRACTS FROM THE NHAI AND THE SPVS SO FORMED ENGAGED THE ASSESSEE COMPANY AS CONTRACT TO EXECUTE THE WORKS AWARDED TO THEM (I.E. SPVS) BY THE NHAI. I N ITS PROFIT AND LOSS ACCOUNT FOR THE YEAR, THE ASSESSEE HAS SHOWN THE TURNOVER FROM EXECUTION OF THESE CONTRACTS AND THEREFORE NO EXPENSE AND INTEREST ATTRIBUTABLE TO THE INVESTMENTS MADE BY THE APPELLANT IN THE PSVS CAN BE DISALLOWED U/S 14A LW. RULE 8D BECAUSE IT CANNOT BE TERMED AS EXPENSE/ INTEREST INCURRED FOR EARNING EXEMPTED INCOME. UNDER THE CIRCUMSTANCES, LD. COMMISSIONER OF INCOME TAX (APPEALS) IS CORRECT IN HOLDING THAT DISALLOWANCE OF A FURTHER SUM RS 40,556/ - CALCULATED@2%OFTHEDIVIDEND EARNED IS SUFFICIENT. UNDER THE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), HENCE WE UPHOLD THE SAME. ITA. NO S 2173/M/13 & 470/M/14 . 8 12. AS NO DISTINGUISHING DECISION HAS BEEN BROUGHT ON RECORD BY THE LD. DR IN FAVOUR OF THE REVE NUE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL (SUPRA), WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE AO TO DELETE THE DISALLOWANCE ON ACCOUNT OF INTEREST EXPENSES AMOUNTING TO RS. 1,94,94,645/ - . 13. IN SO FAR AS DISALLOWANCE OF OTHE R EXPENSES AMOUNTING TO RS. 19,49,464/ - IS CONCERNED, AS PER THE CHART EXHIBITED AT PAGE - 33 OF THE PAPER BOOK, WE FIND THAT THE TOTAL AMOUNT DEBITED IS RS. 87,04,079/ - OUT OF WHICH THE ASSESSEE HAS SUO MOTO DISALLOWED RS. 50,85,541/ - . WE FURTHER FIND THA T EXPENDITURE AMOUNTING TO RS. 6,56,117/ - ARE COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2007 - 08. THUS, ONLY THE EXPENDITURE AMOUNTING TO RS. 29,62,421/ - REMAIN TO BE CONSIDERED. 13.1. WE FIND THAT THE ASSESSEE HAS ALSO RECEI VED INCOME FROM BUSINESS AUXILIARY SERVICES AMOUNTING TO RS. 1.15 LAKHS. IN OUR CONSIDERED OPINION, THE BALANCE EXPENDITURE OF RS. 29,62,421/ - MAY BE CONSIDERED FOR EARNING THE INCOME FROM AUXILIARY SERVICES. HOWEVER, AT THE SAME TIME WE FIND THAT SOME RE ASONABLE DISALLOWANCE OUGHT TO BE ATTRIBUTED FOR WHICH 2% OF THE DIVIDEND INCOME SHOULD MEET THE ENDS OF JUSTICE. WE, ACCORDINGLY DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO 2% OF DIVIDEND INCOME. GROUND NO. 1 WITH ITS SUB - GROUND IS PARTLY ALLOWED. 14. GROUND NO. 2 RELATES TO THE DISALLOWANCE IN INTEREST EXPENSES AMOUNTING TO RS. 1,10,83,572/ - U/S. 37 OF THE ACT. 14.1. AS MENTIONED ELSEWHERE, THE INVESTMENTS MADE BY THE ASSESSEE HAVE TO BE SEEN IN THE LIGHT OF STRATEGIC INVESTMENT ITA. NO S 2173/M/13 & 470/M/14 . 9 INEXTRICABLY LINKE D WITH THE MAIN BUSINESS OPERATIONS OF THE ASSESSEE AND THE MAIN OBJECT OF THE ASSESSEE COMPANY READS AS UNDER: TO UNDERTAKE, DESIGN, MANUFACTURE AND SUPPLY OF POLLUTION CONTROL EQUIPMENT AS WELL AS COMPLETE PLANTS AND THEIR OPERATION AND DETAILED DESIGN AND ENGINEERING RELATING TO ENVIRONMENTAL PROTECTION PROJECTS, TO SET UP AND/OR OPERATE FACILITIES FOR COMMON E FFLUENT TREATMENT PLANTS, TO SET UP AND/OR OPERATE FACILITIES FOR SAFE DISPOSAL OF INDUSTRIAL WATERS SUCH AS LANDFILL FOR SOLID WASTES AND INCINERATOR FOR HAZARDOUS SOLID/LIQUID WASTES, TO SET UP FACILITIES AND/OR OPERATE FOR CONVERSION OF ORGANIC WASTES I NTO ORGANIC MANURE USING SUITABLE PROCESSES INCLUDING BIOCONVERSION, TO UNDERTAKE ACTIVITIES FOR CREATION OF PUBLIC AWARENESS ABOUT ENVIRONMENTAL ISSUES, TO TAKE UP AND COORDINATE WITH CONCERNED STATE, NATIONAL AND INTERNATIONAL ORGANIZATION, AGENCIES AND AUTHORITIES ON MATTERS RELATED TO ENVIRONMENTAL ISSUES FOR THE IMPROVEMENT AND BETTERMENT OF ENVIRONMENT AND TO SUBSCRIBE FOR, TAKE OR OTHERWISE ACQUIRE AND HOLD SHARES, STOCKS, DEBENTURES OR OTHER SECURITIES OF ANY OTHER COMPANY HAVING OBJECTS ALTOGETHER OR IN PART SIMILAR TO THOSE OF THE COMPANY. 14.1. IN ORDER TO CARRY OUT THE AFOREMENTIONED MAIN OBJECT, THE ASSESSEE HAS MADE INVESTMENTS IN SUBSIDIARY COMPANIES AND ASSOCIATE COMPANIES WHICH ARE SPECIAL PURPOSE VEHICLES FORMED TO EXECUTE SPECIFIC PRO JECTS. THUS, THE ALLEGATION OF THE AO THAT ASSESSEE HAS DIVERTED AND APPLIED BORROWED FUNDS IN NON - BUSINESS ACTIVITIES DO NOT HOLD ANY WATER. THE HON BLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS SPENCER & CO. LTD. 359 ITR 644 HAVE HELD THAT THE INTERE ST ON BORROWED CAPITAL WERE INVESTMENTS IN SHARES UTILIZING BORROWED CAPITAL FOR STRATEGIC BUSINESS PURPOSES IN COMPANIES PROMOTED AS SPECIAL PURPOSE TO STRENGTHEN AND PROMOTE ASSESSEES EXISTING BUSINESS INTEREST WAS ALLOWABLE. A SIMILAR VIEW WAS TAKEN BY THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF RPG TRANSMISSIONS LTD IN ITA. NO S 2173/M/13 & 470/M/14 . 10 359 ITR 673. RESPECTFULLY FOLLOWING THE DECISIONS OF THE HONBLE HIGH COURT (SUPRA), IN THE LIGHT OF IDENTICAL FACTS OF THE CASE IN HAND, WE DO NOT FIND ANY REASON FOR THE DISALLO WANCE OF RS. 1,10,83,572/ - . WE, ACCORDINGLY, DIRECT THE AO TO DELETE THE SAME. GROUND NO. 2 IS ACCORDINGLY ALLOWED. 15. GROUND NO. 3 RELATES TO NON - GRANTING OF TAX CREDIT FOR TDS AMOUNTING TO RS. 13,30,533/ - . 16. THE CREDIT FOR THE TAX HAS BEEN DENIED ONLY BECAUSE THE SAME IS NOT REFLECTED IN FORM NO. 26AS. HOWEVER, IN OUR CONSIDERED OPINION, THE REVENUE IS OBLIGED TO GRANT THE ASSESSEE THE CREDIT FOR THE TDS FOR WHICH IT IS ABLE TO SATISFACTOR ILY PROVES TO THE AO , T HE FACTUM OF DEDUCTION OF TAX AT SO URCE AND ITS DEPOSIT TO THE CREDIT OF THE CENTRAL GOVERNMENT. WE RESTORE THIS ISSUE TO THE FILE OF THE AO. THE AO IS ACCORDINGLY DIRECTED TO ALLOW THE ASSESSEE CREDIT FOR THE TDS AFTER VERIFYING THE TDS CERTIFICATE. GROUND NO. 3 IS ALLOWED FOR STATISTI CAL PURPOSE. 17. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 470/M/2014 A.Y 2010 - 11 18. THE GRIEVANCE OF THE ASSESSEE RELATES TO THE DISALLOWANCE MADE U/S. 14A R.W. RULE 8D AND DISALLOWANCE OF INTEREST EXPENDITURE U/S. 37 OF THE ACT. 19. BOTH THESE ISSUES HAVE BEEN DISCUSSED BY US AT LENGTH IN ITA NO. 2173/M/2013. RESPECTFULLY FOLLOWING OUR OWN DECISION, THE IMPUGNED ADDITIONS ARE DIRECTED TO BE DELETED. ITA. NO S 2173/M/13 & 470/M/14 . 11 20. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 2173/M/13 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 470/M/14 IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 10 TH SEPTEMBER , 2015 SD/ - SD/ - ( RAM L AL NEGI ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 10 TH SEPTEMBER , 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI