DCIT, CHENNAI V. L & T Housing Finance Ltd., CHENNAI

ITA 489/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6069 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 13-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 27-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS VIJAYALAKSHMI; MRS VIJAYA PRABHA
• Assessee Lawyers: GIRISH S SUNDAR; R VENKATESAN
• Keywords: Opportunity of being heard; Principle of natural justice; Earning of tax free income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI , , ! ' BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./ ITA NO.468/MDS/2017 /ASSESSMENT YEAR: 2011-12 M/S.L&T HOUSING FINANCE LTD., (FORMERLY KNOWN AS INDO PACIFIC HOUSING FINANCE LTD.), UNIT NO.205 & 206, 2 ND FLOOR, KODAMBAKKAM HIGH ROAD, CAPITAL TOWER, CHENNAI-600 034. VS. THE DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-4(1), CHENNAI. [PAN: AAACW 1328 G ] ( & /APPELLANT) ( '(& /RESPONDENT) ./ ITA NOS.488, 489 & 490/MDS/2017 /ASSESSMENT YEARS: 2010-11, 2011-12 & 2012-13 THE DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-4(1), CHENNAI. VS. M/S.L&T HOUSING FINANCE LTD., (FORMERLY KNOWN AS INDO PACIFIC HOUSING FINANCE LTD.), UNIT NO.205 & 206, 2 ND FLOOR, KODAMBAKKAM HIGH ROAD, CAPITAL TOWER, CHENNAI-600 034. [PAN: AAACW 1328 G ] ( & /APPELLANT) ( '(& /RESPONDENT) ASSESSEE BY : MR.GIRISH S.SUNDAR, CA & MR.R.VENKATESAN, CA DEPARTMENT BY : MRS.VIJAYALAKSHMI, CIT & MRS. VIJAYAPRABHA, JCIT * /DATE OF HEARING : 10.10.2017 * /DATE OF PRONOUNCEMENT : 10.10.2017 ITA NOS.468 & 488 TO 490/MDS/2017 :- 2 -: / O R D E R PER BENCH : ITA NO.468/MDS/2017 IS AN APPEAL FILED BY THE ASSE SSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-8, CH ENNAI, IN ITA NOS.29/12-13, 92/14-15 & 79/15-16 DATED 22.12.2016 FOR THE AYS 2010- 11 TO 2012-13. ITA NO.488 TO 490/MDS/2017 ARE TH E APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF IN COME TAX (APPEALS)- 8, CHENNAI, IN ITA NOS.29/12-13, 92/14-15 & 79/15-1 6 DATED 22.12.2016 FOR THE AYS 2010-11 TO 2012-13. 2. MRS.VIJAYALAKSHMI, CIT & MRS. VIJAYAPRABHA, JCI T, REPRESENTED ON BEHALF OF THE REVENUE AND SHRI MR.GIRISH S.SUNDAR, CA & MR.R.VENKATESAN, CA, REPRESENTED ON BEHALF OF THE A SSESSEE. 3. AS ALL THE ISSUES ARISE OUT OF THE COMMON ORDER OF THE LD.CIT(A) AND RELATED TO THE SAME ASSESSEE AND ARE HAVING COMMON ISSUES, ALL THE APPEALS ARE DISPOSED OFF BY THIS COMMON ORDER. 4. AT THE OUTSET, IT MUST BE MENTIONED HERE THAT TH E ASSESSEE HAS FILED MULTIPLE PAPER BOOKS WHEREIN TWO PAPER BOOKS FILED ON 20.09.2017 AND OTHER PAPER BOOKS DATED NIL CONTAINING PAGES 649, 4 67, 23. AT THE TIME OF THE HEARING, NONE OF THE PAPERS IN THE PAPER BOO KS HAVE BEEN REFERRED TO BY THE LD.AR OR THE LD.DR. CONSEQUENTLY, THEY AR E NOT TAKEN ON RECORD. THE ISSUES IN THE APPEALS OF THE REVENUE ARE IN RES PECT OF THE ITA NOS.468 & 488 TO 490/MDS/2017 :- 3 -: DISALLOWANCE U/S.14A R.W.R.8D WHICH HAS BEEN DELETE D/REDUCED BY THE LD.CIT(A), THE ISSUE IN RESPECT OF THE DISALLOWANCE IN RESPECT OF THE NPAS, THE ISSUE IN RESPECT OF THE DISALLOWANCE DELETED BY THE LD.CIT(A) IN RESPECT OF THE PROVISION FOR EXPENSES AND THE DELET ION OF THE DISALLOWANCE MADE BY THE AO IN RESPECT OF THE DELAYED PAYMENTS O F THE EMPLOYEES CONTRIBUTION TO ESI & PF. 5. IN THE ASSESSEES APPEAL, THERE IS ONLY ONE ISSU E WHICH IS AGAINST THE CONFIRMATION BY THE LD.CIT(A) OF THE DISALLOWANCE M ADE BY THE AO IN RESPECT OF THE LOSS ARISING DUE TO THE PAYMENT MADE BY THE ASSESSEE TOWARDS PREMATURE TERMINATION OF THE SECURITIZATION AGREEMENT WITH AXIS BANK, AN UNRELATED PARTY. EACH OF THE ISSUES IS DEC IDED IN SERIATIM: 6. FIRST COMING TO THE ISSUE IN THE ASSESSEES APPE AL BEING AGAINST THE ACTION OF THE LD.CIT(A) IN CONFIRMING THE ADDITION MADE BY THE AO BY DISALLOWANCE OF THE LOSS ARISING DUE TO THE PAYMENT MADE BY THE APPELLANT TOWARDS THE PREMATURE TERMINATION OF THE SECURITIZA TION AGREEMENT WITH AXIS BANK. IT WAS SUBMITTED BY THE LD.AR THAT THE ASSESSEE HAD CLAIMED LOSS ON THE PRE-CLOSURE ON SECURITIZATION TO AN EXT ENT OF RS.8,61,13,095/-. IT WAS A SUBMISSION THAT THE ASSESSEE IS IN THE BUS INESS OF PROVIDING HOUSING LOANS. THE ASSESSEE HAD SECURITIZED THEIR LOAN PORTFOLIO WITH AXIS BANK DURING THE PERIOD FROM SEPTEMBER, 2002 TO NOVE MBER, 2005. IT WAS A SUBMISSION THAT THE ASSESSEE HAD OFFERED THE INCO ME BY WAY OF THE SECURITIZATION OF THEIR LOANS DURING THE AYS 2003-0 4 TO 2006-07. IT WAS A ITA NOS.468 & 488 TO 490/MDS/2017 :- 4 -: SUBMISSION THAT THE SECURITIZATION AGREEMENT BETWEE N THE ASSESSEE AND AXIS BANK WAS CANCELLED IN SEPTEMBER, 2010 ON MUTUA LLY AGREED BASIS AND AS PER THE UNDERSTANDING, THE ASSESSEE HAD PAID AN AMOUNT OF RS.8,61,13,095/- TO AXIS BANK. IT WAS A SUBMISSION THAT THE AO HAD DISALLOWED THE SAID LOSS ON ACCOUNT OF THE CANCELLA TION OF THE SECURITIZATION AGREEMENT ON THE GROUND THAT IT WAS NOT EXPLAINED O R PROVED THAT THE SAID AMOUNTS WERE ALREADY OFFERED FOR TAXATION. FURTHER , THE AO HAD HELD THAT THE NATURE OF THE OUTSTANDING PRINCIPLE COULD PARTA KE THE CHARACTER OF THE CAPITAL LOSS ONLY AND NOT REVENUE LOSS. IT WAS A S UBMISSION THAT THE LD.CIT(A) CONFIRMED THE DISALLOWANCE ON THE GROUND THAT NO AGREEMENT WITH REGARD TO THE PRE-CLOSURE OF SECURITIZATION WA S FURNISHED EITHER BEFORE THE AO OR BEFORE THE LD.CIT(A) AND THE EVIDENCE FUR NISHED BY THE ASSESSEE ONLY GAVE THE DETAILS OF WHAT HAPPENED CON SEQUENT TO THE PRE- CLOSURE WITHOUT REVEALING ANY DETAILS WITH REGARD T O THE ACTUAL TERMS AND CONDITIONS FOR PRE-CLOSURE OF THE SECURITIZATION AG REEMENT. IT WAS A SUBMISSION THAT THE ASSESSEE HAVING ALREADY OFFERED THE SECURITIZATION INCOME TO TAX IN THE EARLIER ASSESSMENT YEARS AND T HE SECURITIZATION AGREEMENT HAVING BEEN PRE-CLOSED BY CANCELLATION IN SEPTEMBER, 2010, THE ASSESSEE WAS ENTITLED TO THE LOSS AS CLAIMED. 6.1 IN REPLY, LD.DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND THE LD.CIT(A) ON THIS ISSUE. IT WAS A SUBMISSION THAT NO EVIDENCE WHATSOEVER HAD BEEN PRODUCED BEFORE THE AO OR THE LD.CIT(A) NO R BEFORE THE TRIBUNAL AND CONSEQUENTLY, THE DISALLOWANCE AS MADE BY THE A O AND AS CONFIRMED ITA NOS.468 & 488 TO 490/MDS/2017 :- 5 -: BY THE LD.CIT(A) WAS LIABLE TO BE UPHELD. IT WAS A SUBMISSION THAT NO PROOF WHATSOEVER THAT THE AMOUNT HAD BEEN OFFERED T O TAX HAVE BEEN SHOWN BEFORE ANY OF THE AUTHORITIES NOR COPIES OF T HE AGREEMENTS OR THE CANCELLATION OF THE AGREEMENTS BEEN PRODUCED. IT W AS A SUBMISSION THAT ONLY ORAL ARGUMENTS HAVE BEEN PLACED WITHOUT ANY SU PPORTING DOCUMENTS. IN REPLY, LD.AR SUBMITTED THAT HE HAD NO OBJECTION, IF THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION AND TO GR ANT THE ASSESSEE ADEQUATE OPPORTUNITY TO PRODUCE THE EVIDENCE AS CAL LED FOR. 6.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PE RUSAL OF THE ASSESSMENT ORDER AND ALSO THE ORDER OF THE LD.CIT(A ) CLEARLY SHOWS THAT NO EVIDENCE AS CALLED FOR BY THE AO TO SUBSTANTIATE THE CASE HAS BEEN PRODUCED BEFORE THE AO OR BEFORE THE LD.CIT(A). N OR HAS IT BEEN PRODUCED EVEN BEFORE US. ADMITTEDLY, IF EVIDENCES H AD BEEN PRODUCED OR REFERRED TO, ADMITTEDLY, NATURAL JUSTICE WOULD REQU IRE, THE ISSUE TO BE RESTORED TO THE FILE OF THE AO FOR EXAMINATION OF A LL THE EVIDENCES, IF THE SAME HAVE NOT BEEN PROPERLY CONSIDERED BY HIM. HOW EVER, THIS COULD BE DONE ONLY IF SUCH EVIDENCES ARE AT LEAST PLACED BEF ORE THE TRIBUNAL ALONG WITH THE REASONS AS TO WHY THE SAME HAD NOT BEEN PR ODUCED BEFORE THE AO IN THE COURSE OF THE ORIGINAL PROCEEDINGS OR BEF ORE THE LD.CIT(A) IN THE COURSE OF THE APPEAL PROCEEDINGS. UNFORTUNATELY, N O EVIDENCE AS CALLED FOR BY THE AO OR AS HAS BEEN REFERRED TO BY THE LD.CIT( A) ARE PRODUCED BY THE ASSESSEE. THIS BEING SO, WE ARE UNABLE TO UNDERSTA ND AS TO WHAT PURPOSE WOULD BE SERVED IN RESTORING THE ISSUE TO THE FILE OF THE AO AS THE ITA NOS.468 & 488 TO 490/MDS/2017 :- 6 -: ASSESSEE HAS ALSO NOT GIVEN ANY REASON AS TO WHY TH E EVIDENCE WAS NOT PRODUCED BEFORE THE LOWER AUTHORITIES NOR SUCH EVID ENCE HAS BEEN BROUGHT TO THE ATTENTION OF THE TRIBUNAL. IN THESE CIRCUMS TANCES, WE ARE NOT INCLINED TO RESTORE TO THE FILE OF THE AO FOR RE-AD JUDICATION. ON MERITS, THE ASSESSEE HAS PRODUCED NO EVIDENCE TO SUBSTANTIATE H IS CASE THAT THE INCOME IN RESPECT OF THE SECURITIZATION OF THE SAID LOANS HAS BEEN OFFERED DURING THE RELEVANT ASSESSMENT YEARS. THE ASSESSEE IS ALSO NOT IN A POSITION TO SHOW THE AGREEMENT WITH THE AXIS BANK I N RESPECT OF THE PRE- CLOSURE OF THE SECURITIZATION OR THE MUTUALLY AGREE D TO COMPUTATION. THIS BEING SO, WE ARE OF THE VIEW THAT THE FINDINGS OF T HE LD.CIT(A) ON THIS ISSUE IS ON RIGHT FOOTING AND DOES NOT CALLED FOR A NY INTERFERENCE. 6.3 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.468/MDS/2017 STANDS DISMISSED. 7. IN RESPECT OF THE REVENUES APPEAL, THE FIRST IS SUE RAISED IS AGAINST THE ACTION OF THE LD.CIT(A) IN DIRECTING THE RE-COM PUTATION OF THE DISALLOWANCE U/S.14A R.W.R.8D. IT WAS A SUBMISSION THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS.75,000/- FOR EACH OF T HE RELEVANT ASSESSMENT YEARS. THE SAID DIVIDEND INCOME HAS BEE N RECEIVED BY THE ASSESSEE FROM THE INVESTMENT MADE IN THE UNCOATED E QUITY SHARES OF KALYAN JANATHA SAHAKARI AMOUNTING TO RS.5.00 LAKHS. IT WAS A SUBMISSION THAT THE ASSESSEE HAD SUO MOTU MADE DISALLOWANCE OF 10% OF THE DIVIDEND INCOME U/S.14A R.W.R.8D. HOWEVER, IT WAS A SUBMIS SION THAT WHILE ITA NOS.468 & 488 TO 490/MDS/2017 :- 7 -: COMPUTING DISALLOWANCE U/S.14A R.W.R.8D, THE AO HAD UNDER RULE 8D(2)(I) IN RELATION TO THE DIRECT EXPENDITURE RELATING TO T HE EXEMPT INCOME, THE AO HAD DISALLOWED NIL INCOME. UNDER RULE 8D(2)(II) INT EREST RELATING TO THE EXEMPT INCOME, THE AO HAD CONSIDERED THE INTEREST D EBITED TO THE P&L A/C NOT DIRECTLY RELATED TO THE PARTICULAR INCOME OR RE CEIPT AND UNDER RULE 8D(2)(III) IN RESPECT OF THE 0.5% OF THE INVESTMENT S YIELDING EXEMPTED INCOME, THE AO HAD TAKEN AVERAGE OF ALL THE INVESTM ENTS BY THE ASSESSEE. IT WAS A SUBMISSION THAT ON APPEAL, THE LD.CIT(A) H AD HELD THAT TERM LOANS WHICH HAD BEEN TAKEN FROM VARIOUS BANKS AND I NTEREST THEREON COULD NOT BE CONSIDERED IN SO FAR AS THE INTEREST HAVE BE EN, IN FACT, EARNED AND PAID OUT OF THE LOANS EXTENDED BY THE APPELLANT TO THE ULTIMATE BORROWERS. IT WAS A SUBMISSION THAT CONSEQUENTLY, THE LD.CIT(A ) HAD EXCLUDED THE INTEREST AMOUNTS PERTAINING TO THE TERM LOANS FOR T HE PURPOSE OF COMPUTING THE DISALLOWANCE U/S.14A R.W.R.8D. IT WA S A FURTHER SUBMISSION THAT IN RESPECT OF THE RULE 8D(2)(III), THE LD.CIT( A) HAD HELD THAT THE INVESTMENTS MADE IN THE GOVERNMENT SECURITIES HAD Y IELDED TAXABLE INCOME AND THEREFORE THEY COULD NOT BE CONSIDERED A S PART OF THE COMPUTATION UNDER RULE 8D(2)(III) OF THE ACT. IT W AS A SUBMISSION THAT THE LD.CIT(A) HAD ERRED IN GIVING RELIEF TO THE ASSESSE E. IT WAS A SUBMISSION THAT THE EVIDENCE PRODUCED BY THE ASSESSEE BEFORE T HE LD.CIT(A) HAD NOT BEEN PUT TO THE AO FOR HIS REBUTTAL. IT WAS A SUBM ISSION THAT THE ORDER OF THE LD.CIT(A) MAY BE REVERSED. ITA NOS.468 & 488 TO 490/MDS/2017 :- 8 -: 7.1 IN REPLY, THE LD.AR SUBMITTED THAT HE HAD NO OB JECTION, IF THE ISSUE OF THE COMPUTATION OF THE DISALLOWANCE U/S.14A R.W. R.8D IS RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION. 7.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN T HE PRESENT APPEAL, THE ISSUE MAINLY REVOLVES AROUND THE APPLICABILITY OF RULE 8D(2)(II) AND RULE 8D(2)(III) WHICH SHOWS THAT THE WORDS ARE IN A CASE WHETHER THE ASSESSEE HAS INCURRED EXPENDITURE BY WAY OF INTERES T DURING THE PREVIOUS YEAR WHICH IS NOT DIRECTLY ATTRIBUTABLE TO ANY PART ICULAR INCOME OR RECEIPT, AMOUNT COMPUTED IN ACCORDANCE WITH THE FOLLOWING FO RMULA. 7.3 HERE, THE ASSESSEE IS SPECIFICALLY CLAIMING THA T THE INTEREST AMOUNTS PERTAIN TO TERM LOANS WHICH HAVE BEEN, IN FACT, EXT ENDED TO THE APPELLANT FOR EXTENDING HOUSING LOANS TO THE ULTIMATE BORROWE RS. THIS HAS ALSO BEEN VERIFIED BY THE LD.CIT(A). IN RESPECT OF THE PROVI SIONS OF RULE 8D(2)(III), THE WORDS ARE A AMOUNT EQUAL TO 0.5% OF THE AVERAG E VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME, AS APPEARING IN THE BALANCE SHEET OF THE AS SESSEE. 7.4 THE ASSESSEE HAS PRODUCED EVIDENCE BEFORE THE L D.CIT(A) CLAIMING THAT THE INVESTMENT IN THE GOVERNMENT SECURITIES HA VE YIELDED TAXABLE INCOME AND THE SAME HAVE BEEN ACCEPTED BY THE LD.CI T(A). HOWEVER, AS THESE EVIDENCES HAVE NOT BEEN VERIFIED BY THE AO, I N THE INTEREST OF NATURAL JUSTICE, THE ISSUE OF THE COMPUTATION OF TH E DISALLOWANCE U/S.14A ITA NOS.468 & 488 TO 490/MDS/2017 :- 9 -: R.W.R.8D IS RESTORED TO THE FILE OF THE AO ONLY BEC AUSE THE EVIDENCES HAVE BEEN PRODUCED BEFORE THE LD.CIT(A) AND HE HAS DONE THE VERIFICATION WITHOUT GRANTING AN OPPORTUNITY TO THE AO. 8. THE SECOND ISSUE IN THE REVENUES APPEAL IS AGAI NST THE ACTION OF THE LD.CIT(A) IN DELETING THE ADDITION BEING THE REVERS AL OF THE PROVISIONS OF NPA AS MADE BY THE AO. IT WAS SUBMITTED BY THE LD. DR THAT IN THE COURSE OF ASSESSMENT, IT WAS NOTICED THAT THE NPAS WERE CL AIMED AS A PROVISION, WHICH WAS NOT ALLOWABLE UNDER THE ACT. THE ASSESSE E HAD ALSO NOT SHOWN AS TO IN WHICH YEAR THE INCOME WAS OFFERED TO TAX A LSO. THE ASSESSEE HAD NOT IDENTIFIED THE RELATABLE INCOME AND THE YEAR IN WHICH IT WAS OFFERED. CONSEQUENTLY, THE AO HAD DISALLOWED THE SAME. IT W AS A SUBMISSION THAT ON APPEAL, THE ASSESSEE HAD SUBMITTED BEFORE THE LD .CIT(A) THAT THE ASSESSEE HAD SUO MOTU DISALLOWED THE PROVISION FOR NPA IN THE YEAR OF ITS CREATION AND REVERSED, THE PROVISION FOR NPA AT THE TIME OF WRITE OFF OR RECOVERY. IT WAS A SUBMISSION BEFORE THE LD.CIT(A) THAT THE ASSESSEE HAD PRODUCED THE EVIDENCES TO SHOW THAT THE PROVISION F OR NPA HAD BEEN REVERSED BACK FOR THE AYS 2009-10 & 2010-11 AND THE REVERSED AMOUNTS HAD BEEN DISALLOWED FOR THE AYS 2011-12 & 2012-13. IT WAS A SUBMISSION THAT CONSEQUENTLY THE DISALLOWANCE HAD BEEN DELETED BY THE LD.CIT(A). IT WAS A SUBMISSION THAT THE ORDER OF THE LD.CIT(A) WA S LIABLE TO BE REVERSED. ITA NOS.468 & 488 TO 490/MDS/2017 :- 10 -: 8.1 IN REPLY, THE LD.AR SUBMITTED THAT THE ISSUE MA Y BE RESTORED TO THE FILE OF THE AO FOR RE-VERIFICATION AND THAT THE EVI DENCE PRODUCED BEFORE THE LD.CIT(A) WOULD BE PRODUCED BEFORE THE AO. 8.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS I T IS NOTICED THAT THE ASSESSEE HAS PRODUCED FRESH EVIDENCE BEFORE THE LD. CIT(A) WHO HAS CONSIDERED THE SAME FOR DELETING THE DISALLOWANCE M ADE BY THE AO WITHOUT GRANTING THE AO ADEQUATE OPPORTUNITY TO SUBSTANTIAT E HIS CASE, THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION AFTER GRANTING THE ASSESSEE ADEQUATE OPPORTUNITY TO PRODUCE THE EVIDEN CE TO SUBSTANTIATE ITS CASE. 9. IN RESPECT OF THE ISSUE OF THE PROVISION FOR EXP ENSES WHICH HAS BEEN ALLOWED BY THE LD.CIT(A). IT WAS SUBMITTED BY THE LD.DR THAT IN THE COURSE OF THE ASSESSMENT, THE AO HAD NOTICED THAT T HE ASSESSEE HAD DEBITED THE P&L A/C WITH A SUM OF RS.41,37,475/- TO WARDS MISCELLANEOUS EXPENSES. THE ASSESSEE HAD SUBMITTED THE DETAILS O F THE SAME. IT WAS A SUBMISSION THAT IN THE DETAILS, IT WAS NOTICED THAT AN AMOUNT OF RS.40.00 LAKHS HAS BEEN MARKED AS PROVISION FOR EXPENSES WHI CH WAS NOT ALLOWABLE UNDER THE INCOME TAX ACT. CONSEQUENTLY, THE AO HAD DISALLOWED THE SAME. ON APPEAL, THE LD.CIT(A) HAD DELETED THE DIS ALLOWANCE ON THE GROUND THAT THE ASSESSEE HAD DISALLOWED THE SAID AM OUNT OF RS.40.00 LAKHS SUO MOTU U/S.40(A)(IA) OF THE ACT AT THE TIME OF FILING OF THE RETURN. IT WAS A SUBMISSION THAT THE SUO MOTU DISALLOWANCE U/S.40(A)(IA) OF THE ITA NOS.468 & 488 TO 490/MDS/2017 :- 11 -: ACT HAS NOT BEEN SHOWN TO THE AO. IT WAS A SUBMISS ION THAT THE ORDER OF THE LD.CIT(A) WAS LIABLE TO BE REVERSED. 9.1 IN REPLY, THE LD.AR SUBMITTED THAT THE ISSUE CO ULD BE RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION. 9.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS I T IS NOTICED THAT THE LD.CIT(A) HAS DELETED THE DISALLOWANCE ON THE GROUN D THAT THE SAID AMOUNT OF RS.40.00 LAKHS WAS SUO MOTU DISALLOWED BY THE ASSESSEE WHEN FILING OF ITS RETURN ON ACCOUNT OF THE NON-DEDUCTIO N OF TDS AND THE EVIDENCES HAS NOT BEEN PRODUCED BEFORE THE AO, THIS ISSUE TO BE STORED TO THE FILE OF THE AO FOR RE-ADJUDICATION AFTER GRANTI NG THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. 10. THE NEXT ISSUE IN THE REVENUES APPEAL, IS AGAI NST THE ACTION OF THE LD.CIT(A) IN DELETING THE DISALLOWANCE MADE BY THE AO IN RESPECT OF THE DELAYED PAYMENT OF EMPLOYEES CONTRIBUTION TO ESI & PF. THE LD.DR SUBMITTED THAT IN VIEW OF THE DECISION OF THE HONB LE GUJARAT HIGH COURT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATIO N IN TCA NO.437/2013, THE ORDER OF THE LD.CIT(A) WAS LIABLE TO BE REVERSED. 10.1 IN REPLY, THE LD.AR SUBMITTED THAT THE ISSUE W AS SQUARELY COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF INDUSTRIAL SECURITY & INTELLIGENCE INDIA PVT. LTD. IN TCA NOS.585 & ITA NOS.468 & 488 TO 490/MDS/2017 :- 12 -: 586/2015 DATED 24.07.2015 WHEREIN THE ISSUE HAS BEE N HELD IN FAVOUR OF THE ASSESSEE. IT WAS A SUBMISSION THAT THE LD.CIT( A) HAS FOLLOWED THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT A ND CONSEQUENTLY THE SAME WAS LIABLE TO BE UPHELD. 10.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE LD.CIT(A) HAS FOLLOWED THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF INDUSTRIAL SECURITY & INTELLIG ENCE INDIA PVT. LTD., WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. CONSEQUENTLY, THE FINDINGS OF THE LD.CIT(A) ON THIS ISSUE STANDS CONFIRMED. ITA NO.488/MDS/2017 FOR THE AY 2010-11: 11. IN THE REVENUES APPEAL, THE ONLY ISSUE IS IN R EGARD TO THE DISALLOWANCE U/S.14A R.W.R.8D. AS WE HAVE ALREADY R ESTORED THE ISSUE TO THE FILE OF THE AO FOR RE-ADJUDICATION, THE APPEAL OF THE REVENUE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.489/MDS/2017 FOR THE AY 2011-12: 12. THE ISSUES IN THIS APPEAL ARE DISALLOWANCE U/ S.14A R.W.R.8D, REVERSAL OF PROVISION FOR NPA, DISALLOWANCE OF PROV ISIONS FOR EXPENSES AND DELAYED PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS PF & ESI. ITA NOS.468 & 488 TO 490/MDS/2017 :- 13 -: 13. AS THE ISSUES IN RESPECT OF U/S.14A R.W.R.8D, R EVERSAL OF THE PROVISIONS FOR NPA AND THE DISALLOWANCE OF THE PROV ISIONS FOR EXPENSES HAS BEEN RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICA TION AND IN RESPECT OF THE ISSUE OF THE DELAYED PAYMENT OF THE EMPLOYEES CONT RIBUTION TO PF & ESI, WE HAVE UPHELD THE ORDER OF THE LD.CIT(A), THE APPE AL OF THE REVENUE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.490/MDS/2017 FOR THE AY 2012-13: 14. THE ISSUES INVOLVED IN THIS APPEAL ARE IN RESPE CT OF THE DISALLOWANCE U/S.14A R.W.R.8D AND REVERSAL OF THE PROVISIONS FOR NPA. BOTH ISSUES ARE RESTORED TO THE FILE OF THE AO FOR RE-ADJUDICATION, CONSEQUENTLY, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PU RPOSES. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IN ITA NO.468/MDS/2017 STANDS DISMISSED AND THE APPEALS FI LED BY THE REVENUE IN ITA NOS.488, 489 & 490/MDS/2017 ARE PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 10, 2017, AT CHENNAI. SD/- SD/- ( ) ( CHANDRA POOJARI ) ! /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER ITA NOS.468 & 488 TO 490/MDS/2017 :- 14 -: /CHENNAI, 0 /DATED: OCTOBER 10, 2017. TLN * '12 32 /COPY TO: 1. & /APPELLANT 4. 4 /CIT 2. '(& /RESPONDENT 5. 2 ' /DR 3. 4 ( ) /CIT(A) 6. /GF