DCIT, Gurgaon V. M/s. Q.H. Talbros Ltd., Gurgaon

ITA 4939/DEL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7358 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 15-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURENDER PAL
• Keywords: Depreciation; Notional interest; Rule 8D
• Section: 80HHC; 14A; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.AS. NO.806 & 4939/DEL/2016 ASSESSMENT YEARS: 2009-10 & 2011-12 DCIT, CIRCLE-3, GURGAON. V. Q.H. TALBROS LTD., PLOT NO.400, UDYOG VIHAR, PHASE-III, GURGAON. TAN/PAN: AAACO2191D (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SURENDER PAL, SR.D.R. RESPONDENT BY: SHRI V.K. AGGARWAL, AR DATE OF HEARING: 10 07 2019 DATE OF PRONOUNCEMENT: 26 07 2019 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEALS HAVE BEEN FILED BY THE REVENU E AGAINST THE IMPUGNED ORDERS DATED 02.12.2015, PASSE D BY COMMISSIONER OF INCOME TAX (APPEALS)-II, GURGAON AN D DATED 05.07.2016 PASSED BY COMMISSIONER OF INCOME TAX (AP PEALS)- I, GURGAON FOR THE QUANTUM OF ASSESSMENTS PASSED U/S.143(3) FOR THE ASSESSMENT YEARS 2009-10 AND 201 1-12, RESPECTIVELY. IN THE ASSESSMENT YEAR 2009-10 THE RE VENUE HAS TAKEN THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS.1,38,67,815/- MADE BY ASSESSING OFFI CER BY DISALLOWING DEDUCTION U/S.10B TO THIS EXTENT CLAIME D ON DUTY I.T.AS. NO.806 & 4939/DEL/2016 2 DRAWBACK RECEIVED BY THE ASSESSEE AS PER SCHEME FRA MED BY THE GOVERNMENT UNDER CUSTOMS ACT. 2. LD. CIT (A) HAS ERRED ON FACT AND IN LAW IN DELE TING THE DISALLOWANCE TO THE EXTENT OF RS.3,58,749/- ON ACCO UNT OF INTEREST ON THE INVESTMENT OF RS.29,89,571/- FOR NON-BUSINESS E XPENDITURE. 3. LD. CIT (A) HAS ERRED ON FACT AND IN LAW IN DELE TING THE DISALLOWANCE RS.73,29,225/- OUT OF INTEREST UNDER P ROVISO TO SECTION 36(1)(III) BEING INTEREST @12% ON CAPITAL WORK IN P ROGRESS AMOUNTING TO RS.6,09,93,541/- J AS ASSETS WERE NOT PUT TO USE DURING THIS PREVIOUS YEAR. 4. LD. CIT (A) HAS ERRED ON FACT AND IN LAW IN DELE TING THE DISALLOWANCE OF RS.18,62,886/- MADE UNDER SECTION 1 4A OF THE INCOME TAX ACT, 1961. 2. IN THE ASSESSMENT YEAR 2011-12, THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS:- 1. LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DEL ETING THE DISALLOWANCE TO THE EXTENT OF RS. 32,42,244/- ON AC COUNT OF INTEREST ON THE INVESTMENT OF RS. 2,70,18,699/- FOR NON-BUSI NESS EXPENDITURE. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS. 31,59,173/- MADE BY ASSESSING OFFIC ER BY DISALLOWING DEDUCTION U/S 10B TO THIS EXTENT CLAIME D ON DUTY DRAWBACK RECEIVED BY THE ASSESSEE AS PER SCHEME FRA MED BY THE GOVERNMENT UNDER CUSTOMS ACT. 3. LD. CIT(A) HAS ERRED ON FACT AND IN LAW IN DELET ING THE DISALLOWANCE OF RS. 18,04,390/- MADE UNDER SECTION 14A OF THE INCOME TAX ACT, 1961. I.T.AS. NO.806 & 4939/DEL/2016 3 3. AT THE OUTSET, IT HAS BEEN SUBMITTED BY THE LD . COUNSEL THAT ALL THE ISSUES INVOLVED IN BOTH THE APPEALS AR E SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL, IN ASSESSE ES OWN CASE FOR THE ASSESSMENT YEAR 2007-08 AND ASSESSMENT YEAR 2010-11. 4. IN SO FAR AS THE ISSUE RELATING TO DEDUCTION U/S .10B IS CONCERNED, THE FACTS IN BRIEF ARE THAT THE ASSESSE IS A MANUFACTURER AND DISTRIBUTOR OF STEERING AND SUSPEN SION COMPONENTS OF FOUR WHEELERS. IT HAS TWO EXPORT UNIT S AS EOU UNDERTAKINGS, ONE AT MANESAR AND OTHER AT GURGAON. THE ASSESSE HAD CLAIMED DEDUCTION U/S.10B FOR AN AMOUNT OF RS.6,78,92,066/-. THE AO NOTED THAT ASSESSE HAD INC LUDED AMOUNT OF RS.1,10,12,152/- BEING EXPORT INCENTIVES AS PART OF EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCT ION U/S.10B. HE HELD THAT EXPORT INCENTIVES IN THE FORM OF DUTY DRAWBACK IS NOT THE INCOME DERIVED FROM THE BUSINES S OF EXPORT OF ARTICLES OR THINGS AS REQUIRED U/S.10B(1) . ACCORDINGLY, EXCESS DEDUCTION WAS COMPUTED BY HIM A T RS.1,38,67,815/-. 5. LD. CIT(A) FOLLOWING THE ITAT ORDER IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 I N ITAS NO.1321/DEL/2012 AND 1320/DEL/2013 VIDE ORDER DATED 04.11.2015 HAD DELETED THE SAME ADDITION. 6. WE FIND THAT THIS ISSUE OF DEDUCTION UNDER SECTI ON 10B ON SIMILAR FACTS HAD COME UP FOR CONSIDERATION BEFORE THE I.T.AS. NO.806 & 4939/DEL/2016 4 TRIBUNAL WHEREIN THE TRIBUNAL AFTER FOLLOWING VARIO US DECISIONS OF HONBLE DELHI HIGH COURT HAVE DELETED THE ADDITION AFTER OBSERVING AND HOLDING AS UNDER:- 5. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE FIRST GROUND OF APPEAL RELATES TO WHETH ER DEPB BENEFITS ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 10B OF THE ACT. THE ISSUE IS NO MORE RES-INTEGRA AS THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRINCIPLE COMMISSIONER OF INCOME TAX VS. UNIVERS AL PRECISION SCREWS, ITA NO. 392/2015, DATED 06.10.2015 AND CIT VS. XLNC FASHIONS, ITA NO. 438/2014, DATED 01.09.2014 AND CI T VS. HRITNIK EXPORTS PVT. LTD., ITA NO. 219 & 239 OF 2014, DATED 13TH NOVEMBER, 2014 HELD THAT THE BUSINESS PROFIT SHOULD BE CONSID ERED FOR THE PURPOSE OF DEDUCTION UNDER SECTION 10B OF THE ACT. THE HONBLE DELHI HIGH COURT IN THE CASE OF XLNC FASHIONS (SUPRA) HEL D AS FOLLOWS: DEDUCTION UNDER SECTION 10B OF THE INCOME TAX ACT, 1961 (ACT, IN SHORT) IS TO BE MADE AS PER THE FORMULA PRESCRIBED BY SUB- SECTION (4), WHICH READS AS UNDER: 10B. SPECIAL PROVISION IN RESPECT OF NEWLY ESTABLISHED HUNDRED PER CENT EXPORT- ORIENTED UNDERTAKINGS- .. .. (4) FOR THE PURPOSES OF SUB-SECTION (1), THE PROFIT S DERIVED FROM EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE SHALL BE TH E AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS OF THE UNDERTAKING, THE SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE BEARS TO THE TOTAL TURNOVER OF THE BUSINES S CARRIED ON BY THE UNDERTAKING. SUB-SECTION (4), THEREFORE, IS THE SPECIAL PROVISIO N WHICH ENABLES THE ASSESSEE TO COMPUTE THE PROFITS DERIVED FROM THE EX PORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE. WE DO NOT SEE ANY CONF LICT BETWEEN SUB- SECTION (1) AND SUB-SECTION (4) TO SECTION 10B, AS SUB-SECTION (1) STATES THAT DEDUCTION OF SUCH PROFITS AND GAINS AS ARE DER IVED BY A HUNDRED PERCENT EXPORT-ORIENTED UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS OR I.T.AS. NO.806 & 4939/DEL/2016 5 SOFTWARE WOULD BE ELIGIBLE UNDER THE SAID SECTION. SUB- SECTION (1) IS A GENERAL PROVISION AND IDENTIFIES THE INCOME WHICH I S EXEMPT AND HAS TO BE READ IN HARMONY WITH SUBSECTION (4) WHICH IS THE FO RMULA FOR FINDING OUT OR COMPUTING WHAT IS ELIGIBLE FOR DEDUCTION UNDER S UB-SECTION (1). NEITHER OF THE TWO PROVISIONS SHOULD BE MADE IRRELEVANT AND BOTH HAVE TO BE APPLIED WITHOUT NEGATING THE OTHER. IN OTHER WORDS, THE MANNER OF COMPUTING PROFITS DERIVED FROM EXPORTS UNDER SUB-SE CTION (1), HAS TO BE DETERMINED AS PER THE FORMULA STIPULATED IN SUB-SEC TION (4), OTHERWISE SUB-SECTION (4) WOULD BECOME OTIOSE AND IRRELEVANT. THE ISSUE IN QUESTION IN THIS APPEAL WHICH PERTAINS TO THE ASSESSMENT YEAR 2009-10, RELATES TO DUTY DRAW BACK IN THE FORM OF DEPB BENEFITS. AS PER SECTION 28, CLAUSE (III-C), ANY DUTY OF CUSTOMS OR EXCISE REPAID OR REPAYABLE AS DRAWBACK TO A PERSON AGAINST EXPORTS U NDER CUSTOMS AND CENTRAL EXCISE DUTIES DRAW BACK RULES, 1971 IS DEEM ED TO BE PROFITS AND GAINS OF BUSINESS OR PROFESSION. THE SAID PROVISION HAS TO BE GIVEN FULL EFFECT TO AND THIS MEANS AND IMPLIES THAT THE DUTY DRAW BACK OR DUTY BENEFITS WOULD BE DEEMED TO BE A PART OF THE BUSINE SS INCOME. THUS, WILL BE TREATED AS PROFIT DERIVED FROM BUSINESS OF THE U NDERTAKING. THESE CANNOT BE EXCLUDED. EVEN OTHERWISE, WHEN WE APPLY SUB-SECTION (4) TO SE CTION 10B, THE ENTIRE AMOUNT RECEIVED BY WAY OF DUTY DRAW BACK WOULD NOT BECOME ELIGIBLE FOR DEDUCTION/EXEMPTION. THE AMOUNT QUANTIFIED AS PER T HE FORMULA WOULD BE ELIGIBLE AND QUALIFY FOR DEDUCTION/EXEMPTION. THE P OSITION IS SOMEWHAT AKIN OR CLOSE TO SECTION 80HHC OF THE ACT, WHICH AL SO PRESCRIBES A FORMULA FOR COMPUTATION OF DEDUCTION IN RESPECT OF EXPORTS. FURTHER, IN THE CASE OF PRINCIPAL COMMISSIONER OF I NCOME TAX VS. UNIVERSAL PRECISION SCREWS (SUPRA) THE HONBLE DELH I HIGH COURT HELD AS FOLLOWS: 9. ON THE QUESTION OF INTEREST ON THE FDRS, THE IT AT HAS REFERRED TO SECTION 10B (4) WHICH STATES THAT FOR THE PURPOSES OF SECTION 10B (1), THE PROFITS DERIVED FROM EXPORT OF ARTICLES OR THINGS O R COMPUTER SOFTWARE SHALL BE THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS OF THE UNDERTAKING, THE SAME PROPORTION AS THE EXPORT TUR NOVER IN RESPECT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE BEARS TO THE TOTAL TURNOVER OF I.T.AS. NO.806 & 4939/DEL/2016 6 THE BUSINESS CARRIED ON BY THE UNDERTAKING. AS NOT ED BY THIS COURT IN CIT V. HRITNIK EXPORTS PVT. LTD. (DECISION DATED 13TH N OVEMBER, 2014 IN ITA NO.219 & 239 OF 2014), SECTION 10B (4) MANDATES THE APPLICATION OF THE FORMULA FOR DETERMINING THE PROFITS DERIVED FROM EX PORTS FOR THE PURPOSES OF SECTION 10B(1). IN OTHER WORDS, THE FORMULA WOUL D READ THUS: PROFITS DERIVED = PROFITS OF THE BUSINES S X EXPORT TURNOVER FROM EXPORT OF THE UNDERTAKING TOTAL TURNOVER 9A. IN TERMS OF THE ABOVE FORMULA, THE QUESTION THA T WOULD ARISE IS WHETHER THE INTEREST ON THE FDRS COULD FORM PART OF THE PROFITS OF THE BUSINESS OF THE UNDERTAKING. THE ATTENTION OF THE COURT HAS BEEN DRAWN TO THE DECISION OF THE KARNATAKA HIGH COURT IN CIT V. MOTOROLA INDIA ELECTRONICS PVT. LTD. (2014) 46 TAXMANN.COM 167 (KA R.) WHICH HELD THAT THERE WAS A DIRECT NEXUS BETWEEN THE INTEREST RECEI VED FROM THE FDRS CREATED BY A SIMILARLY PLACED ASSESSEE FROM THE AMO UNTS BORROWED BY IT. THE HIGH COURT APPROVED THE ORDER OF THE ITAT IN TH AT CASE WHICH HELD THAT THE ENTIRE PROFITS OF THE BUSINESS OF THE UNDE RTAKING SHOULD BE TAKEN INTO CONSIDERATION WHILE COMPUTING THE ELIGIBLE DED UCTION UNDER SECTION 10B OF THE ACT BY ITA 392/2015 PAGE 5 OF 5 APPLYING THE MANDATORY FORMULA. 6. THUS, THE HONBLE HIGH COURT HAS CATEGORICALLY H ELD THAT THE EXPORT BENEFITS OF DEPB INTEREST SHOULD BE CONSIDERED FOR THE PURPOSES OF DEDUCTION UNDER SECTION 10B OF THE ACT. RESPECTFULL Y FOLLOWING THE RATIO LAID DOWN IN THE ABOVE CASES, WE DIRECT THE A SSESSING OFFICER TO CONSIDER THE EXPORT BENEFITS FOR THE PURPOSE OF DED UCTION UNDER SECTION 10B OF THE ACT. THEREFORE, THE REASONING OF CIT(A) WHILE ALLOWING THESE GROUNDS OF APPEAL IS UPHELD. HENCE, THE GROUND OF A PPEAL FILE THE REVENUE IS DISMISSED. 7. THUS, RESPECTFULLY FOLLOWING THE SAME, THE ISSUE OF CLAIM OF DEDUCTION U/S.10B IS ALLOWED IN FAVOUR OF THE ASSESSE AND AGAINST THE REVENUE. I.T.AS. NO.806 & 4939/DEL/2016 7 8. THE NEXT ISSUE PERTAINS TO DISALLOWANCE OF INTER EST OF RS.3,58,749/- ON ACCOUNT OF INTEREST ON INVESTMENTS . THE AO NOTED THAT ASSESSE HAD INVESTED AN AMOUNT OF RS.29, 89,571/- IN M/S. TALBROS AUTOMOTIVE COMPANY LTD. WHICH WAS I NTEREST FREE INVESTMENT. THE AO AFTER REFERRING TO THE DECI SION OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F CIT VS. ABHISHEK INDUSTRIES LTD., 286 ITR 1 (P&H) HAD MADE DISALLOWANCE OF NOTIONAL INTEREST OF RS.3,58,749/-. THE CASE OF THE ASSESSE WAS THAT IT WAS NOT ANY KIND OF INTERES T FREE LOAN, ALBEIT WAS FOR THE PURPOSE OF INVESTMENT AND IT HAS NOT INCURRED ANY INTEREST EXPENDITURE IN RELATION TO TH E SAID INVESTMENT, BECAUSE THE INVESTMENT WAS MADE OUT OF ASSESSEES OWN SURPLUS FUNDS AND EVEN THE PROFIT BE FORE DEPRECIATION AND AFTER TAX WAS MORE THAN RS.10 CROR E. BESIDES THIS, ASSESSE HAD A SHARE CAPITAL AND RESERVE SURPL US OF RS.29.11 CRORE. THUS, NO INTEREST COULD HAVE BEEN D ISALLOWED. 9. LD. CIT (A) FOLLOWING THE EARLIER ORDER OF THE T RIBUNAL IN ASSESSMENT YEARS 2007-08 AND 2008-09 HAS DELETED THE SAID ADDITION. 10. ON PERUSAL OF THE IMPUGNED ORDER AND THE FACTS AND ISSUES PLACED BEFORE US, WE FIND THAT FIRST OF ALL, AO HAS MERELY MADE THE DISALLOWANCE FOLLOWING THE RATIO LA ID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF CIT VS. ABHIS HEK INDUSTRIES LTD. (SUPRA), WHEREAS THE FACT OF THE MA TTER WAS THAT ASSESSE IS NOT GIVEN ANY INTEREST FREE LOAN BU T MADE INVESTMENT IN M/S. TALBROS AUTOMOTIVE COMPANY LTD. OUT OF I.T.AS. NO.806 & 4939/DEL/2016 8 ITS OWN SURPLUS FUNDS. THUS, THERE COULD NOT BE CAS E OF GIVING ANY INTEREST FREE LOAN. MOREOVER, WE FIND THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSE NOT ONLY IN T HE ASSESSMENT YEAR 2007-08, BUT ALSO IN THE ASSESSMENT YEAR 2010-11, WHEREIN THIS ISSUE HAS BEEN DECIDED IN FAV OUR OF THE ASSESSE. ACCORDINGLY, DISALLOWANCE OF INTEREST MADE BY THE AO HAS RIGHTLY BEEN DELETED BY THE LD. CIT (A). 11. THE NEXT ISSUE RELATES TO DELETION OF DISALLOWA NCE OF RS.73,29,225/- OUT OF INTEREST UNDER PROVISO TO SECTION 36(1)(III), BEING INTEREST @12% ON CAPITAL-WORK-IN- PROCESS AMOUNTING TO RS.6,09,93,541/-. THE FACTS IN BRIEF A RE THAT THE ASSESSEE HAD SHOWN CAPITAL-WORK-IN-PROCESS AT RS.6,09,93,541/-, WHICH AO NOTED THAT, THIS WAS IN THE NATURE OF ASSET YET NOT IN USE. AFTER INVOKING PROVISO TO SECTION 36(1)(III), ASSESSING OFFICER DISALLOWED IN TEREST @12%. THE CASE OF ASSESSEE BEFORE THE AUTHORITIES BELOW W AS THAT INTEREST OF RS.5,04,552/- INCURRED IN RESPECT OF AC QUISITION OF ASSETS FOR EXTENSION OF BUSINESS HAS ALREADY BEEN O FFERED FOR DISALLOWANCE BY THE ASSESSEE IN COMPUTATION OF TAXA BLE INCOME AND THE COMPLETE DETAILS OF INTEREST COMPUTA TION FOR THE PERIOD UP TO ASSETS PUT TO USE. THIS HAS BEEN D ULY CHECKED AND CERTIFIED BY THE AUDITORS AND THEREAFTE R AUDITORS HAVE CONSIDERED THE INTEREST FOR THE PERIOD BETWEEN THE DATE OF DISBURSEMENT OF LOAN AND DATE OF PUTTING THE ASS ET IN USE AS PER PROVISO TO SECTION 36(1)(III) AND AO HAS NOT FOUND ANY FAULT WITH THE COMPUTATION. I.T.AS. NO.806 & 4939/DEL/2016 9 12. THE LD. CIT (A) FOLLOWING THE EARLIER YEARS O RDER FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 HAS DELETED TH E ADDITION. 13. WE FIND THAT IN ASSESSMENT YEAR 2007-08, THE TRIBUNAL HAS DELETED THE SIMILAR ADDITION NOT ONLY IN THE ASSESSMENT YEAR 2007-08, BUT ALSO IN THE ASSESSMENT YEAR 2010-11. OTHERWISE ALSO, ONCE THIS FACT HAS NOT BEE N DISPUTED THAT INTEREST FOR THE PERIOD BETWEEN THE DATE OF DI SBURSEMENT OF LOAN AND DATE OF PUTTING THE ASSETS IN USE HAS B EEN DISALLOWED AS PER SECTION 36(1)(III) BY THE ASSESSE E ITSELF, THEN WITHOUT THERE BEING ANY FACTUAL INFIRMITY EITHER FO R THE PERIOD UP TO PUTTING THE ASSET IN USE OR IN THE COMPUTATIO N, NO SUCH DISALLOWANCE CAN BE MADE. ACCORDINGLY, THIS ISSUE I S DECIDED IN FAVOUR OF THE ASSESSE. 14. LASTLY, COMING TO THE ISSUE OF DISALLOWANCE AT RS.18,62,886/- MADE U/S.14A, AGAIN THIS ISSUE HAD C OME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ALL THE EA RLIER YEARS WHEREIN DISALLOWANCE HAVE BEEN DELETED. FROM THE PE RUSAL OF THE IMPUGNED ORDER OF THE AO, WE FIND THAT ASSESSE HAS EARNED DIVIDEND OF RS.11,19,530/- AND AO HAS MECHAN ICALLY APPLIED RULE 8D FOR MAKING THE DISALLOWANCE U/S.14A WITHOUT ANY SATISFACTION HAVING REGARD TO THE ACCOUNTS MAIN TAINED BY THE ASSESSEE AS MANDATED IN SECTION 14A(2). THE TRI BUNAL IN THE EARLIER YEARS HAS DELETED THE DISALLOWANCE ON T HE GROUND THAT AO HAS NOT GIVEN ANY REASONS AS TO HOW HE IS N OT SATISFIED WITH CORRECTNESS OF THE CLAIM OF THE ASSE SSEE. NOW IT I.T.AS. NO.806 & 4939/DEL/2016 10 IS WELL SETTLED PRINCIPLE LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT, (2018) 402 ITR 640 (SC) THAT RECORDING OF SATISFACTION BY THE AO IS MANDATORY BEFORE PROCEEDING TO MAKE ANY DISALLOWANC E U/R 8D WHICH HERE IN THIS CASE HAS NOT BEEN DONE. ACCOR DINGLY, DISALLOWANCE OF SECTION 14A HAS RIGHTLY BEEN DELETE D. 15. SINCE SIMILAR ISSUES ARE INVOLVED IN THE ASSESS MENT YEAR 2011-12 EXACTLY BASED ON THE SAME REASONING AN D ON SAME SET OF FACTS, THEREFORE AFORESAID FINDING WILL APPLY MUTATIS MUTANDIS IN THIS YEAR ALSO. 16. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JULY, 2019. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26 JULY, 2019 PKK