WADHWA RESIDENCY P.LTD, MUMBAI V. ADDL CIT RG 9(3), MUMBAI

ITA 5413/MUM/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6925 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 23-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT PATANKAR
• Keywords: Recovery proceedings; Business income; Earning of tax free income
• Section: 43B; 143(3); 142(1); 14A

Judgement Text

1 ITA 5413/MUM/2015 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI JOGINDER SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.5413/MUM/2015 (ASSESSMENT YEAR: 2011-12) M/S WADHWA RESIDENCY PVT LTD, 301, 3 RD FLOOR, PLATINA, PLOT C-59, G BLOCK, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 051 PAN : AADCR0872M VS ADDL CIT, RANGE 9(3), MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI JITENDRA JAIN (ADV) RESPONDENT BY SHRI ABHIJIT PATANKAR DATE OF HEARING 25-04-2018 DATE OF PRONOUNCEMENT 20-06-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE CIT(A)-21, MUMBAI DATED 07-09-2015 AND IT PERTA INS TO AY 2011-12. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT, FILED ITS RETURN OF INCOME FOR AY 2011-12 ON 30-09-2011 DECLARING TOTAL INCOME AT RS.1,44,49,230. THE CASE HAS BEEN SELECTED FOR SCR UTINY AND NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEA RED FROM TIME TO 2 ITA 5413/MUM/2015 TIME AND FURNISHED THE DETAILS, AS CALLED FOR. THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) ON 28-03-2014 DETERMINING THE TOTAL INCOME AT RS.4,36,53,826 INTERALIA MAKING ADDITION TOWARDS DI SALLOWANCE OF EXPENSES INCURRED IN RELATION TO EXEMPT INCOME U/S 14A R.W.R. 8D, DISALLOWANCE OF UNPAID SERVICE TAX LIABILITY U/S 43 B OF THE ACT FOR RS.54,78,681 AND ADHOC DISALLOWANCE OF EXPENSES OF RS.5 LAKHS. 3. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE MADE THREEFOLD ARGUMENTS ON THE ISSUE OF DISALLOWANCE OF EXPENDITU RE INCURRED IN RELATION TO EXEMPT INCOME U/S 14A R.W.R. 8D. THE F IRST AND FOREMOST ARGUMENT OF THE ASSESSEE IS THAT THE AO HAS NOT REC ORDED HIS SATISFACTION HAVING REGARD TO THE ACCOUNTS OF THE A SSESSEE IN RESPECT OF EXPENSES INCURRED IN RELATION TO EXEMPT INCOME WHIC H IS A PRE-CONDITION AS PER THE PROVISIONS OF SECTION 14A(2). THE AO HA S NOT RECORDED HIS SATISFACTION ABOUT INCORRECTNESS OF CLAIM MADE BY T HE ASSESSEE HAVING REGARD TO ITS ACCOUNTS. THE AO HAS DISALLOWED EXPEN SES BY APPLYING THE PRINCIPLES OF RULE 8D(2). THE ASSESSEE ALSO MA DE AN ALTERNATIVE SUBMISSION CHALLENGING AMOUNT QUANTIFIED BY THE AO U/R 8D(2)(II) OF I.T. RULES, 1962 BY STATING THAT THE ASSESSEES OWN FUND S IN THE FORM OF SHARE CAPITAL, RESERVES, INTEREST FREE UNSECURED LO ANS AND ADVANCES COLLECTED FROM CUSTOMERS IS MORE THAN THE VALUE OF INVESTMENTS MADE IN 3 ITA 5413/MUM/2015 PARTNERSHIP FIRM WHICH EARNED EXEMPT INCOME. THERE FORE, ONCE THERE IS A MIXED FUND AVAILABLE WITH THE ASSESSEE INCLUDING INTEREST BEARING FUND, A GENERAL PRESUMPTION IS DRAWN TO THE EFFECT THAT T HE INVESTMENTS MADE IN INVESTMENTS ARE OUT OF INTEREST FREE FUNDS, THER EFORE, NO DISALLOWANCE CAN BE MADE. THE ASSESSEE ALSO MADE ONE MORE ARGUM ENT ON THE ISSUE OF DETERMINATION OF INTEREST DISALLOWANCE U/R 8D(2)(II) BY STATING THAT THE AO WAS ERRED IN CONSIDERING INTEREST EXPEN SES OF RS.104,20,09,566 RELATING TO WIP AS THE SAID TERM L OAN BORROWED FROM INDIA BULLS WAS EXCLUSIVELY UTILIZED FOR DEVELOPMEN T OF PROJECT AND NO PART OF FUNDS HAS BEEN USED FOR INVESTMENTS IN PART NERSHIP FIRM. IF INTEREST PAID ON TERM LOAN BORROWED FROM INDIA BULL S IS EXCLUDED FOR THE PURPOSE OF DETERMINATION OF DISALLOWANCE, THEN THE ACTUAL DISALLOWANCE WORKS OUT TO RS.25,22,600 WHICH MAY BE CONSIDERED. INSOFAR AS DISALLOWANCE OF EXPENDITURE U/R 8D(2)(III), ASSESS EE SUBMITTED THAT NO PART OF THE ADMINISTRATIVE EXPENSES CAN BE CONSIDER ED AS RELATING TO EARNING EXEMPT INCOME AS THE ASSESSEE HAS MADE A SI NGLE INVESTMENT IN PARTNERSHIP FIRM FOR WHICH THERE IS NO NECESSITY OF DEPLOYING ANY PERSONAL OR OTHER EXPENSES. THEREFORE, THE AO WAS INCORRECT IN DETERMINING DISALLOWANCES BY INVOKING RULE 8D(2)(II I). 4. SIMILARLY, IN RESPECT OF DISALLOWANCE OF SERVICE TAX LIABILITY U/S 43B, THE ASSESSEE SUBMITTED THAT IN ACCORDANCE WITH THE FINANCE ACT, 2010, 4 ITA 5413/MUM/2015 BUILDERS / DEVELOPERS WERE MADE LIABLE TO SERVICE T AX FOR CONSIDERATION RECEIVED ON SALE OF FLAT UNDER CONSTRUCTION. HOWEV ER, SUCH LEVY OF SERVICE TAX HAS BEEN CHALLENGED BY MAHARASHTRA CHAM BER OF HOUSING INDUSTRY BEFORE THE HONBLE BOMBAY HIGH COURT AND T HE HONBLE HIGH COURT GRANTED INTERIM STAY AGAINST RECOVERY OF SERV ICE TAX. SINCE THE HIGH COURT HAS GRANTED INTERIM STAY, THE ASSESSEE H AS TREATED SERVICE TAX COLLECTED AMOUNTING TO RS.54,78,681 AS ITS LIAB ILITY FOR THE YEAR UNDER CONSIDERATION. HOWEVER, THE SAME HAS BEEN PAID IN THE SUBSEQUENT FINANCIAL YEAR WHEN THE ISSUE HAS BEEN RESOLVED BY THE HONBLE HIGH COURT. THEREFORE, SUCH UNPAID LIABILITY TOWARDS SE RVICE TAX CANNOT BE CONSIDERED AS INCOME OF THE ASSESSEE WITHIN THE MEA NING OF SECTION 2(24)(X) R.W.S. 43B OF THE INCOME-TAX ACT, 1961. 5. THE CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIO NS OF THE ASSESSEE REJECTED ALL ARGUMENTS OF THE ASSESSEE IN RESPECT O F DISALLOWANCE OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME U /S 14A BY HOLDING THAT ALTHOUGH THE ASSESSEE HAS MADE VARIOUS ARGUMEN TS INCLUDING THE THEORY OF MIXED FUNDS, FAILED TO FURNISH NECESSARY EVIDENCES INCLUDING BANK STATEMENTS AND CASH FLOW STATEMENT TO PROVE TH AT AS ON THE DATE OF INVESTMENT, IT IS HAVING SUFFICIENT OWN FUNDS TO CO VER UP INVESTMENT MADE IN PARTNERSHIP FIRM. THEREFORE, THE AO WAS RI GHT IN QUANTIFYING DISALLOWANCES BY INVOKING RULE 8D(2)(II). THE LD.C IT(A) ALSO REJECTED 5 ITA 5413/MUM/2015 ALTERNATIVE PLEA OF THE ASSESSEE BY HOLDING THAT TH ERE IS NO FAULT IN THE COMPUTATION OF THE AVERAGE VALUE OF INVESTMENTS AND AVERAGE VALUE OF ASSETS. THE INVESTMENT CONSIDERED IN RULE 8D COMPU TATION IS ONLY IN RESPECT OF INVESTMENTS IN THE FIRM FROM WHICH TAX E XEMPT INCOME IS EARNED. HOWEVER, THE PRESUMPTION UNDERLYING THE RU LE 8D(2) COMPUTATION IS THAT THE PRO-RATA COST FOR ALREADY A VAILABLE FUNDS IS CONSIDERED AS HAVING BEEN INCURRED FOR MAKING INVES TMENTS WHICH HAS RESULTED IN TAX FREE INCOME. SINCE THE AO HAS RIGH TLY TAKEN TOTAL INTEREST DEBITED IN THE P&L ACCOUNT AND ALSO APPLIED THE PRI NCIPLES PRESCRIBED U/R 8D(2)(II), THERE IS NO ERROR IN THE QUANTIFICATION MADE BY THE AO TOWARDS DISALLOWANCE OF INTEREST. WITH THESE OBSERVATIONS, THE CIT(A) CONFIRMED ADDITION MADE BY THE AO TOWARDS DISALLOWANCE OF EXP ENSES INCURRED IN RELATION TO EXEMPT INCOME. 6. INSOFAR AS DISALLOWANCE OF SERVICE TAX UNPAID LI ABILITY, THE CIT(A) OBSERVED THAT SERVICE-TAX CHARGED ON SALE CONSIDERA TION IS A TRADING RECEIPT AND SUCH SERVICE TAX IS NOT PAID TO THE GOV ERNMENT ACCOUNT WITHIN THE PRESCRIBED TIME ALLOWED UNDER THE ACT, HENCE, A S PER THE PROVISIONS OF SECTION 43B, THE SAME HAS TO BE DISALLOWED. THO UGH THE ASSESSEE CLAIMS THAT SERVICE-TAX WAS NOT PAID TO THE GOVERNM ENT ACCOUNT DUE TO THE OPERATION OF INTERIM STAY BY THE HIGH COURT, FA ILS TO PROVE THAT THERE WAS NO SUCH WRITTEN AGREEMENTS WITH THE CUSTOMERS O N REFUND OF SERVICE 6 ITA 5413/MUM/2015 TAX IN CASE THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE CUSTOMERS. THE CIT(A) FURTHER OBSERVED THAT THE ASSESSEE ITSELF AD MITTED THAT THE SERVICE TAX COLLECTED FROM BUYERS WAS ULTIMATELY PAID TO TH E GOVERNMENT IN FY 2011-12; THEREFORE, THERE IS NO MERIT IN THE ARGUME NTS OF THE ASSESSEE THAT THE SAME WAS TREATED AS LIABILITY BECAUSE OF O PERATION OF INTERIM STAY OF HONBLE HIGH COURT. THEREFORE, HE OPINED T HAT THE SERVICE TAX IS A TRADING RECEIPT AND, THEREFORE, PART OF INCOME FO R AY 2011-12 AND ANY FAILURE TO DEPOSIT SERVICE TAX WITHIN THE PRESCRIBE D TIME ATTRACTS DISALLOWANCE PROVIDED U/ 43B AND ACCORDINGLY, THE A O WAS RIGHT IN MAKING ADDITION TOWARDS UNPAID SERVICE TAX LIABILIT Y U/S 43B. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL B EFORE US. 7. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM ASSESSEES APPEAL IS DISALLOWANCE OF EXPENDITURE INCURRED IN R ELATION TO EXEMPT INCOME OF RS.2,32,25,915 U/S 14A OF THE I.T. ACT, 1 961 R.W.S. 8D(2) OF I.T. RULES, 1962. THE LD.AR FOR THE ASSESSEE SUBMI TTED THAT THE LD.CIT(A) WAS ERRED IN CONFIRMING ADDITION MADE BY THE AO U/S 14A WITHOUT APPRECIATING THE FACT THAT THE AO HAS NOT R ECORDED HIS SATISFACTION HAVING REGARD TO THE BOOKS OF ACCOUNT OF THE ASSESSEE THAT THE ASSESSEE HAS INCURRED ANY EXPENDITURE IN RELATI ON TO EXEMPT INCOME; BUT, FAILED TO MAKE SUO MOTO DISALLOWANCE ON SUCH E XPENSES. IN THE ABSENCE OF ANY SATISFACTION IN THE ASSESSMENT ORDER , INVOKING RULE 8D(2) 7 ITA 5413/MUM/2015 TO DETERMINE THE DISALLOWANCE IS INCORRECT. THE LD .AR REFERRING TO THE PROVISIONS OF SECTION 14A(2) SUBMITTED THAT THE PRO VISION IS VERY CLEAR INASMUCH AS THAT IF THE AO, HAVING REGARD TO THE AC COUNTS OF THE ASSESSEE IS NOT SATISFIED WITH THE CORRECTNESS OF T HE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THIS A CT, SHALL DETERMINE DISALLOWANCE BY INVOKING RULE 8D(2) BY APPLYING PRE SCRIBED METHOD. IN THIS CASE, THERE IS NO IOTA OF EVIDENCE IN THE ASSE SSMENT ORDER OF ANY KIND OF SATISFACTION ARRIVED AT BY THE AO HAVING RE GARD TO THE ACCOUNTS OF THE ASSESSEE. THEREFORE, THE LD.CIT(A) WAS COMPLET ELY ERRED IN CONFIRMING ADDITION MADE BY THE AO. THE LD.AR FURT HER REFERRING TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MA XOPP INVESTMENTS LTD VS CIT (2018) 402 ITR 640 (SC) SUBMITTED THAT T HE HONBLE SUPREME COURT HAS CATEGORICALLY OBSERVED AT PARA 41 OF THE ORDER THAT BEFORE APPLYING THE RULE, AO NEEDS TO RECORD SATISFACTION THAT HAVING REGARD TO THE ACCOUNT OF THE ASSESSEE, SUO MOTO DISALLOWANCE U/S 14A WAS NOT CORRECT. IN THIS REGARD, HE RELIED UPON THE DECISI ON OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG CO LTD VS ACIT 328 ITR 81(BOM). THE LD.AR FURTHER SUBMITTED THAT ALTERNAT IVELY, THE ASSESSEE HAS ITS OWN INTEREST FREE FUNDS IN THE FORM OF SHAR E CAPITAL AND RESERVES WHICH IS MORE THAN THE VALUE OF INVESTMENTS IN PART NERSHIP FIRM WHICH 8 ITA 5413/MUM/2015 YIELDED EXEMPT INCOME. THEREFORE, ONCE THERE IS MI XED FUNDS INCLUDING INTEREST BEARING FUNDS, A GENERAL PRESUMPTION IS DR AWN THAT THE INTEREST FREE FUNDS ARE UTILIZED FOR MAKING INVESTMENTS IN S ECURITIES YIELDING EXEMPT INCOME. THE ASSESSEE HAS PROVED WITH EVIDEN CE THAT INTEREST FREE FUNDS ARE MORE THAN ITS INVESTMENTS AND HENCE, THE AO WAS COMPLETELY ERRED IN DETERMINING DISALLOWANCE OF INT EREST EXPENSES U/R 8D(2)(II). IN THIS REGARD, HE RELIED UPON THE DECI SION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF RELIANCE UTILITIES & POWE R LTD VS CIT 338 ITR 340 (BOM). 8. ON THE OTHER HAND, THE LD.DR STRONGLY SUPPORTED THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE LD.CIT(A) HAS REJECTE D ALL ARGUMENTS OF THE ASSESSEE IN THE LIGHT OF PROVISIONS OF SECTION 14A AND RULE 8D(2) TO UPHOLD THE ADDITION MADE BY THE AO IN RESPECT OF DI SALLOWANCE OF EXPENSES. THEREFORE, THERE IS NO MERIT IN THE ARGU MENTS OF THE ASSESSEE THAT THE AO HAS NOT RECORDED HIS SATISFACTION HAVIN G REGARD TO THE ACCOUNTS OF THE ASSESSEE BEFORE INVOKING RULE 8D(2) OF I.T. RULES, 1962. INSOFAR S ALTERNATIVE SUBMISSIONS OF THE ASSESSEE T HAT IT IS HAVING OWN INTEREST FREE FUNDS WHICH IS SUFFICIENT TO EXPLAIN INVESTMENTS IN PARTNERSHIP FIRM WHICH YIELDED EXEMPT INCOME IS ALS O FOUND NOT ACCEPTABLE BY THE LD.CIT(A) FOR THE REASON THAT THE ASSESSEE HAS FAILED TO FURNISH ANY KIND OF EVIDENCE INCLUDING BANK STAT EMENT AND CASH FLOW 9 ITA 5413/MUM/2015 STATEMENT TO PROVE AVAILABILITY OF FUNDS AS ON THE DATE OF INVESTMENTS. THEREFORE, THE CIT(A) WAS RIGHT IN CONFIRMING ADDIT ION MADE BY THE AO AND HIS ORDER SHOULD BE UPHELD. 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THE AO HAS DISALLOWED EXPENSES INCURRED IN RELATION TO EXEMPT INCOME U/S 14A BY INVOKING RULE 8D(2). ACCORDING TO THE AO, THE ASSE SSEE HAS EARNED EXEMPT INCOME FROM PARTNERSHIP FIRM WHICH WAS CLAIM ED EXEMPT U/S 10(2A); HOWEVER, FAILED TO MAKE ANY SUO MOTO DISALL OWANCE OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS MADE INVESTMENTS IN M/S VIJAY ASSOCIATES, A PARTNERSHIP FIRM FOR AN AMOUNT OF RS. 38.53 CRORES. THE AO ALSO OBSERVED THAT THE ASSESSEE HAS BORROWED HUG E LOANS AND ADVANCES ON WHICH CLAIMED INTEREST EXPENSES OF RS.1 04.20 CRORES. THE ASSESEE ALSO INCURRED VARIOUS EXPENDITURE TOWARDS E MPLOYEE COST AND OTHER GENERAL OVERHEAD EXPENSES. THEREFORE, THE CL AIM THAT NO EXPENSES WERE INCURRED FOR EARNING EXEMPT INCOME IN CLUDING INTEREST IS NOT CORRECT. ACCORDING TO THE AO, DISALLOWANCE CON TEMPLATED U/S 14A SHALL BE DETERMINED IN ACCORDANCE WITH PRESCRIBED M ETHOD PROVIDED U/R 8D OF INCOME-TAX RULES, 1962. 10. IT IS THE CONTENTION OF THE ASSESSEE THAT THE A O HAS NOT RECORDED HIS 10 ITA 5413/MUM/2015 SATISFACTION HAVING REGARD TO THE BOOKS OF ACCOUNT OF THE ASSESSEE IN RESPECT OF EXPENDITURE INCURRED IN RELATION TO EXEM PT INCOME WHICH IS A PRE-CONDITION FOR INVOKING RULE 8D(2) WHICH IS VERY CLEAR FROM THE PROVISIONS OF SUB SECTION (2) OF SECTION 14A OF I.T . ACT, 1961. UNLESS THE AO RECORDS HIS SATISFACTION ABOUT INCORRECTNESS OF CLAIM OF THE ASSESSEE OR THAT NO SUCH EXPENDITURE HAS BEEN INCURRED FOR E ARNING EXEMPT INCOME, THEN THE AO HAS TO CATEGORICALLY RECORD HIS SATISFACTION THAT THE ASSESSEE HAS INCURRED SUCH AND SUCH EXPENDITURE WHI CH IS DIRECTLY RELATABLE TO EARNING EXEMPT INCOME. THE ASSESSEE F URTHER CONTENDED THAT THERE IS NO IOTA OF EVIDENCE IN THE ASSESSMENT ORDER ABOUT AOS SATISFACTION IN RESPECT OF INCORRECTNESS OF CLAIM O F THE ASSESSEE. THE ASSESSEE HAS FILED RELEVANT EVIDENCES BEFORE THE AO TO PROVE THAT SHARE OF PROFIT EARNED FROM PARTNERSHIP FIRM WHICH IS CLA IMED EXEMPT U/S 10(2A) IS MADE OUT OF INTEREST FREE FUNDS AND ALSO NO SPEC IFIC EXPENDITURE HAS BEEN INCURRED TO EARN SUCH EXEMPT INCOME. WHEN THE ASSESSEE CLAIMS THAT NO PART OF EXPENDITURE IS RELATABLE TO EXEMPT INCOME, THEN THE AO HAS TO RECORD HIS SATISFACTION HAVING REGARD TO THE BOOKS OF ACCOUNT OF THE ASSESSEE THAT THE ASSESSEE HAS INCURRED PARTICU LAR EXPENDITURE TO EARN SUCH EXEMPT INCOME. IN THIS CASE, THE AO HAS NOT ARRIVED AT HIS SATISFACTION HAVING REGARD TO THE ACCOUNTS OF THE A SSESSEE, HENCE, DETERMINATION OF DISALLOWANCE CONTEMPLATED U/S 14A BY INVOKING RULE 11 ITA 5413/MUM/2015 8D(2) IS INCORRECT. 11. THE PROVISIONS OF SECTION 14A PROVIDES FOR DISA LLOWANCE OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME W HICH DOES NOT FORM PART OF TOTAL INCOME UNDER THIS ACT. SUB SECTION ( 2) OF SECTION 14A MAKES IT CLEAR THAT THE AO SHALL DETERMINE THE AMOU NT OF EXPENDITURE INCURRED IN RELATION TO SUCH INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME UNDER THIS ACT AND IN ACCORDANCE WITH SUCH M ETHOD, AS MAY BE PRESCRIBED, IF THE AO, HAVING REGARD TO THE ACCOUNT S OF THE ASSESSEE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE IN RESPECT OF SUCH EXPENDITURE IN RELATION TO INCOME WHICH DOE S NOT FORM PART OF THE TOTAL INCOME UNDER THIS ACT. THE METHOD OF COMPUTA TION IS PROVIDED FOR DETERMINATION OF DISALLOWANCE CONTEMPLATED U/S 14A U/R 8D(2), BUT BEFORE RESORTING TO RULE 8D(2), THE AO HAS TO ARRIV E AT A SATISFACTION HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE THAT THE CLAIM OF THE ASSESSEE THAT NO EXPENDITURE HAS BEEN INCURRED IN R ELATION TO EXEMPT INCOME OR DISALLOWANCE MADE BY THE ASSESSEE IS INCO RRECT AND THE ASSESSEE HAS INCURRED EXPENDITURE WHICH IS DIRECTLY ATTRIBUTABLE TO EARNING EXEMPT INCOME. IN THE ABSENCE OF ANY SPECI FIC SATISFACTION BY THE AO IN THE ASSESSMENT ORDER, THEN INVOKING RULE 8D(2) TO COMPUTE DISALLOWANCE CONTEMPLATED U/S 14A IS INCORRECT. TH IS LEGAL PROPOSITION IS SUPPORTED BY THE JUDGEMENT OF HONBLE BOMBAY HIGH C OURT IN THE CASE 12 ITA 5413/MUM/2015 OF GODREJ BOYCE & MFG CO LTD VS CIT (SUPRA) WHEREIN THE HONBLE HIGH COURT OBSERVED THAT THE AO NEEDS TO RECORD HIS SATI SFACTION HAVING REGARD TO THE BOOKS OF ACCOUNT OF THE ASSESSEE THAT NO EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE IN RELATION TO EXEMPT INCOME IS INCORRECT. THIS LEGAL PROPOSITION IS FURTHER SUPPORTED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MAXXOPP INVESTMENTS LT D VS CIT (SUPRA) WHEREIN IN PARA 41 OF THE ORDER, THE HONBLE COURT OBSERVED THAT THE AO NEEDS TO RECORD SATISFACTION THAT HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE, SUO MOTO DISALLOWANCE U/S 14A WAS NOT COR RECT. IT WILL BE IN THOSE CASES, WHERE THE ASSESSEE, IN HIS RETURN HAS HIMSELF APPORTIONED BUT THE AO WAS NOT ACCEPTING THE SAID APPORTIONMENT . IN THAT EVENTUALITY HE HAS TO RECORD HIS SATISFACTION TO THIS EFFECT. FURTHER, WHILE RECORDING SUCH A SATISFACTION, NATURE OF LOAN TAKEN BY THE AS SESSEE FOR MAKING THE INVESTMENT IN SHARES IS TO BE EXAMINED BY THE AO. IN THIS CASE, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, THOUGH TH E AO IN A CRYPTIC MANNER SAID THAT I AM NOT SATISFIED WITH THE CLAIM OF THE ASSESSEE THAT NO EXPENSES WERE INCURRED FOR EARNING EXEMPT INCOME AND THE EXPENDITURE RELATES TO THE EXEMPT INCOME IS TO BE D ETERMINED AS PER RULE 8D(2) OF THE INCOME-TAX ACT, 1962, FILED TO R ECORD A SATISFACTION HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE THAT THE ASSESSEE HAS INCURRED PARTICULAR EXPENSE IN RELATION TO EARN EXE MPT INCOME. SINCE THE 13 ITA 5413/MUM/2015 AO HAS NOT RECORDED HIS SATISFACTION IN THE ASSESSM ENT ORDER BEFORE DETERMINING DISALLOWANCE CONTEMPLATED U/S 14A OF TH E ACT, INVOKING RULE 8D(2) TO COMPUTE SUCH DISALLOWANCE IS NOT IN A CCORDANCE WITH LAW. 12. COMING TO THE ALTERNATIVE ARGUMENT OF THE ASSES SEE, THE ASSESSEE MADE AN ALTERNATIVE ARGUMENT THAT ITS OWN INTEREST FREE FUNDS IN THE FORM OF SHARE CAPITAL AND RESERVES, INTEREST FREE UNSECU RED LOANS AND ADVANCES RECEIVED FROM CUSTOMERS IS MORE THAN VALUE OF INVESTMENTS MADE IN PARTNERSHIP FIRM WHICH YIELDED EXEMPT INCOM E AND HENCE, ONCE THE ASSESSEE HAS PROVED THAT ITS OWN FUNDS ARE MORE OR IT IS HAVING A MIXED FUND, INCLUDING INTEREST BEARING FUNDS, THEN A GENERAL PRESUMPTION IS DRAWN THAT INVESTMENT IN TAX EXEMPT SECURITIES / SHARE OR INVESTMENTS IS OUT OF INTEREST FREE FUNDS. THEREFORE, NO DISAL LOWANCE CAN BE MADE U/S 14A R.W.R. 8D(2)(III). WE FIND THAT THE HONBL E BOMBAY HIGH COURT IN THE CASE OF CIT VS RELIANCE UTILITIES & POWER LTD ( SUPRA) HAS TAKEN A VIEW THAT IF THERE ARE FUNDS AVAILABLE BOTH INTERES T FREE AND OVERDRAFT AND / OR LOANS, THEN A PRESUMPTION WOULD ARISE THAT INV ESTMENT WOULD BE OUT OF THE INTEREST FREE FUNDS GENERATED OR AVAILABLE W ITH THE COMPANY, IF THE INTEREST FREE FUNDS ARE SUFFICIENT TO MEET THE INVE STMENTS. IN THIS CASE, THE ASSESSEE HAS FILED NECESSARY EVIDENCES TO PROVE THAT ITS INTEREST FREE FUNDS ARE MORE THAN ITS INVESTMENTS IN PARTNERSHIP FIRM WHICH YIELDED EXEMPT INCOME AND ACCORDINGLY, THE AO WAS ERRED IN DETERMINING 14 ITA 5413/MUM/2015 DISALLOWANCES BY INVOKING RULE 8D(2)(II) OF INCOME- TAX RULES, 1962 IN RESPECT OF INTEREST EXPENDITURE. 13. IN THIS VIEW OF THE MATTER AND RESPECTFULLY FOL LOWING THE DECISIONS OF GODREJ & BOYCE MFG CO LTD VS CIT (SUPRA) AND THE HO NBLE SUPREME COURT IN THE CASE OF MAXXOPP INVESTMENTS LTD VS CIT (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT DISALLOWANCES COMPUTED BY THE AO BY INVOKING RULE 8D(2) OF INCOME-TAX RULES, 1962 WITHOUT RECORD ING HIS SATISFACTION AS REQUIRED U/S 14A(2) OF THE ACT IS INCORRECT. HE NCE, WE DIRECT THE AO TO DELETE ADDITION MADE TOWARDS DISALLOWANCE OF EXP ENSES INCURRED IN RELATION TO EXEMPT INCOME U/S 14A OF THE INCOME-TAX ACT, 1961. 14. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITION TOWARDS UNPAID SERVICE TAX LIABILITY U/S 43B OF THE INCOME-TAX ACT, 1961. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAS CHARGED SERVICE TAX FROM ITS CUSTOMERS TO WHOM IT HAS SOLD FLATS UNDER CONSTRUCTION AND COLLECTED SERVICE TAX THEREON; HOWEVER, THE SAME HAS NOT BEEN PAID TO THE GOVERNMENT ACCOUN T, THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY UNPAID SERVI CE TAX LIABILITY SHALL NOT BE DISALLOWED UNDER THE PROVISIONS OF SECTION 4 3B OF THE ACT. IN RESPONSE TO SHOW CAUSE NOTICE, ASSESSEE VIDE LETTER DATED 22-02-2014 SUBMITTED THAT THOUGH IT HAS COLLECTED SERVICE TAX FROM FEW CUSTOMERS ON SALE OF FLATS, THE SAME HAS NOT BEEN REMITTED TO TH E GOVERNMENT ACCOUNT 15 ITA 5413/MUM/2015 FOR THE REASON THAT THE LEVY OF SERVICE TAX ON BUIL DERS HAS BEEN CHALLENGED BEFORE THE JURISDICTIONAL HIGH COURT, BY MAHARASHTRA CHAMBER OF HOUSING INDUSTRY AND THE HONBLE HIGH CO URT VIDE ITS ORDER DATED 23-07-2010 GRANTED INTERIM STAY FROM COERCIVE COLLECTION OF TAX BY THE DEPARTMENT TILL THE REGULAR APPEAL FILED BY THE ASSOCIATION ON THE CONSTITUTIONAL VALIDITY OF LEVY OF SERVICE TAX IS D ECIDED. SINCE THE HONBLE BOMBAY HIGH COURT HAS SEIZED THE MATTER AND ALSO GR ANTED INTERIM STAY FROM RECOVERY OF TAXES, THE ASSESSEE HAS TREATED SE RVICE TAX COLLECTED FROM CUSTOMERS AS CURRENT LIABILITY; HOWEVER, THE S AME HAS BEEN PAID IN THE SUBSEQUENT FINANCIAL YEAR AS SOON AS THE HONBL E HIGH COURT HAS DECIDED THE ISSUE OF CONSTITUTIONAL VALIDITY OF LEV Y OF SERVICE. THE ASSESSEE FURTHER SUBMITTED THAT IT HAS TREATED SERV ICE TAX COLLECTED FROM ITS CUSTOMERS AS LIABILITY WITHOUT CLAIMING IT AS E XPENDITURE IN THE P&L ACCOUNT, THEREFORE, THE SAME CANNOT BE DISALLOWED U /S 43B. 15. THE AO, AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE AND ALSO RELYING UPON THE DECISION OF HONBLE SUPRE ME COURT IN THE CASE OF CHOURINGHEE SALES BUREAU PVT LTD VS CIT 87 ITR 5 42 (SC) OBSERVED THAT SERVICE TAX COLLECTED FROM CUSTOMER IS A TRADI NG RECEIPT WHICH NEEDS TO BE TREATED AS PART OF ITS BUSINESS RECEIPTS AND ALSO TO BE ROUTED THROUGH P&L ACCOUNT. MERE TREATMENT OF SUCH RECEIP TS IN ITS BOOKS OF ACCOUNT UNDER THE HEAD CURRENT LIABILITY IS NOT A GROUND FOR THE ASSESSEE 16 ITA 5413/MUM/2015 TO TAKE SHELTER FROM PAYMENT OF SERVICE TAX TO THE GOVERNMENT. THOUGH THE JURISDICTIONAL HIGH COURT GAVE INTERIM STAY FRO M COERCIVE COLLECTION OF TAXES, DID NOT SPECIFICALLY ASKED ASSESSES NOT TO P AY COLLECTED TAXES TO THE GOVERNMENT ACCOUNT. SINCE THE ASSESSEE HAS COL LECTED SERVICE TAX FROM ITS CUSTOMERS, IRRESPECTIVE OF WHETHER THE ASS ESSEE HAS ROUTED THE SERVICE TAX THROUGH P&L ACCOUNT, THE SERVICE TAX CH ARGED AND COLLECTED BY THE ASSESSEE FROM ITS CUSTOMERS IS IN THE NATURE OF BUSINESS RECEIPTS AND HENCE, IF ASSESSEE FAILS TO REMIT SUCH RECEIPTS ON OR BEFORE THE DUE DATE SPECIFIED U/S 43B, THEN IT IS LIABLE FOR DISAL LOWABLE AND ACCORDINGLY MADE ADDITION OF RS.54,78,681. 16. THE LD.AR FOR THE ASSESSEE REFERRING TO THE JUD GEMENT OF HONBLE BOMBAY HIGH COURT ON THE ISSUE OF CONSTITUTIONAL VA LIDITY OF LEVY OF SERVICE TAX ON BUILDERS SUBMITTED THAT THERE IS A V ALID AND SOUND REASON FOR THE ASSESSEE TO TREAT SERVICE TAX COLLECTED FRO M ITS CUSTOMERS AS CURRENT LIABILITY FOR THE IMPUGNED YEAR, THEREFOR E, THE AO WAS INCORRECT IN HOLDING THAT SUCH SERVICE TAX LIABILITY IS A TRA DING RECEIPT FOR THE YEAR UNDER CONSIDERATION WITHOUT APPRECIATING THE FACT T HAT THE ISSUE HAS BEEN CHALLENGED BEFORE THE HONBLE HIGH COURT AND THE HI GH COURT GRANTED INTERIM STAY FROM COERCIVE COLLECTION OF TAXES. TH E LD.AR FURTHER SUBMITTED THAT THE ASSESSEE NEVER TREATED SERVICE T AX COLLECTED AS ITS TRADING RECEIPTS AND ALSO NO CLAIM HAS BEEN MADE TO WARDS SUCH LIABILITY, 17 ITA 5413/MUM/2015 THEREFORE, THE SAME CANNOT BE CONSIDERED AS UNPAID LIABILITY AND DISALLOWED U/S 43B. IN THIS REGARD RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS NOBLE & HEWI TT INDIA PVT LTD (2008) 305 ITR 324 AND THE DECISION OF HONBLE BOMB AY HIGH COURT IN THE CASE OF CIT VS OVIRA LOGISTICS PVT LTD (2015) 3 77 ITR 129 (BOM). 17. ON THE OTHER HAND, THE LD.DR STRONGLY SUPPORTIN G THE ORDER OF THE CIT(A) SUBMITTED THAT THE LOWER AUTHORITIES HAVE BR OUGHT OUT CLEAR FACTS IN THE LIGHT OF DECISION OF HONBLE SUPREME COURT I N THE CASE OF CHOURINGHEE SALES BUREAU PVT LTD VS CIT (SUPRA) THA T SERVICE TAX COLLECTED FROM CUSTOMERS IS A TRADING RECEIPT WHICH OUGHT TO HAVE BEEN ROUTED THROUGH P&L ACCOUNT. IRRESPECTIVE OF THE FA CT THAT WHETHER SUCH LIABILITY IS ROUTED THROUGH P&L ACCOUNT OR NOT AS L ONG AS IT IS IN THE NATURE OF TRADING RECEIPT, THE ASSESSEE NEEDS TO TREAT SUC H LIABILITY THROUGH ITS P&L ACCOUNT AND ALSO PAID SUCH TAXES ON OR BEFORE T HE DUE DATE SPECIFIED UNDER RESPECTIVE PROVISIONS. SINCE ASSES SEEE HAS FAILED TO PAY TAXES BEFORE THE DUE DATE, AO HAS RIGHTLY DISAL LOWED UNPAID SERVICE TAX LIABILITY U/S 43B AND HIS ORDER SHOULD BE UPHEL D. 18. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE HAS NOT PAID SERVICE TAX COLLECTED FROM FEW CUSTOME RS. THE ASSESSEE CLAIMS THAT IT HAS COLLECTED SERVICE TAX FROM ITS C USTOMERS UNDER PROTEST 18 ITA 5413/MUM/2015 ON THE PRETEXT OF RETURN OF SUCH SERVICE TAX TO THE CUSTOMERS, IF THE JURISDICTIONAL HIGH COURT HAS DECIDED THE ISSUE OF CONSTITUTIONAL VALIDITY OF SERVICE TAX LIABILITY ON BUILDERS IN FAVOUR OF THE BUILDERS ASSOCIATION. THE ASSESSEE FURTHER CLAIMED THAT IT HAS TREATED SERVIC E TAX COLLECTED FROM CUSTOMERS UNDER THE HEAD CURRENT LIABILITY BECAUS E THE HONBLE HIGH COURT HAS GRANTED INTERIM STAY FOR COERCIVE COLLECT ION OF TAX TILL DISPOSAL OF THE REGULAR APPEAL FILED BY THE ASSOCIATION CHAL LENGING CONSTITUTIONAL VALIDITY OF LEVY OF SERVICE TAX. THE ASSESSEE FURT HER CLAIMED THAT IT HAS PAID SERVICE TAX COLLECTED FROM CUSTOMERS IN THE NE XT FINANCIAL YEARS AS SOON AS THE BOMBAY HIGH COURT HAS DECIDED THE ISSUE ON LEVY OF SERVICE TAX ON BUILDERS, THEREFORE, ARGUED THAT THERE IS A VALID AND SOUND REASON FOR TREATING SERVICE TAX COLLECTED FROM CUSTOMERS A S CURRENT LIABILITY FOR THE IMPUGNED FINANCIAL YEAR. THE AO DISALLOWED SER VICE TAX LIABILITY ON THE GROUND THAT SERVICE TAX COLLECTED FROM CUSTOMER S IS IN THE NATURE OF TRADING RECEIPTS WHICH NEEDS TO BE ROUTED THROUGH P &L ACCOUNT AND ALSO PAID ON OR BEFORE THE DUE DATE PRESCRIBED UNDER THE PROVISIONS OF THE ACT TO THE GOVERNMENT ACCOUNT. THE AO FURTHER OBSERVED THAT IRRESPECTIVE OF THAT, THE FACT THAT WHETHER THE ASSESSEE HAS ROUTED SERVICE TAX COLLECTED FROM CUSTOMERS THROUGH P&L ACCOUNT OR NOT, THE CHAR ACTER OF RECEIPT DOES NOT CHANGE AS LONG AS IT IS IN THE NATURE OF T RADING RECEIPTS AND THE ASSESSEE OUGHT TO HAVE ROUTED IT THROUGH P&L ACCOUN T AND ALSO PAID 19 ITA 5413/MUM/2015 SUCH TAXES ON OR BEFORE THE DUE DATE. 19. THE AO HAS DISALLOWED UNPAID SERVICE TAX LIABIL ITY UNDER THE PROVISIONS OF SECTION 43B FOR THE REASON THAT THE A SSESSEE HAS NOT REMITTED SERVICE TAX COLLECTED FROM ITS CUSTOMERS B EFORE DUE DATE OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE ACT. THE ASSESSEE CLAIMS THAT IT HAS APPROPRIATED SERVICE TAX COLLECTED FROM ITS CUSTOMERS UNDER THE HEAD CURRENT LIABILITIES AND SUCH TREATMENT I S ON THE BASIS OF INTERIM STAY GRANTED BY HONBLE BOMBAY HIGH COURT ON A CASE FILED BY MAHARASHTRA CHAMBER OF HOUSING INDUSTRY CHALLENGING THE CONSTITUTIONAL VALIDITY OF LEVY OF SERVICE TAX. SINCE THE HONBLE HIGH COURT HAS GRANTED INTERIM STAY FROM COERCIVE COLLECTION OF TAX, THE A SSESSEE HAS TREATED SERVICE TAX COLLECTED FROM ITS CUSTOMERS AS CURREN T LIABILITY UNDER THE PRETEXT OF PROMISING ITS CUSTOMERS TO REFUND SUCH S ERVICE TAX COLLECTED FROM THEM IN CASE THE LEVY OF SERVICE TAX HAS BEEN QUASHED BY THE JURISDICTIONAL HIGH COURT. THEREFORE, THERE IS A V ALID REASON FOR TREATING SUCH LIABILITY AS CURRENT LIABILITY FOR THE IMPUG NED YEAR. 20. HAVING HEARD BOTH SIDES, WE FIND FORCE IN THE A RGUMENTS OF THE ASSESSEE FOR THE REASON THAT IT IS NOT A CASE OF TH E AO THAT THE ASSESSEE HAS COLLECTED SERVICE TAX FROM ITS CUSTOMERS ON SAL E OF FLATS AND NOT REMITTED SUCH SERVICE TAX TO THE GOVERNMENT ACCOUNT EVEN THOUGH SUCH RECEIPTS HAS BEEN TREATED AS PART OF ITS BUSINESS R ECEIPTS. THE ASSESSEE 20 ITA 5413/MUM/2015 HAS CATEGORICALLY PROVED THAT IT HAS NOT CLAIMED DE DUCTION TOWARDS SERVICE TAX IN ITS BOOKS OF ACCOUNT. ONCE, ANY TAX ES OR DUTIES, WHICH IS NOT ROUTED THROUGH P&L ACCOUNT AND ALSO NOT CLAIMED ANY DEDUCTION TOWARDS SUCH TAXES, THEN THERE IS NO REASON FOR THE AO TO DISALLOW SUCH TAXES UNDER THE PROVISIONS OF SECTION 43B OF THE IN COME-TAX ACT, 1961. THIS LEGAL PROPOSITION IS SUPPORTED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS OVIRA LOGISTICS PV T LTD (SUPRA) WHEREIN THE HONBLE HIGH COURT, AFTER CONSIDERING THE JUDGE MENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS NOBLE & HEWI TT INDIA PVT LTD (SUPRA) HELD THAT SECTION 43B DOES NOT CONTEMPLATE LIABILITY TO PAY SERVICE TAX BEFORE ACTUAL RECEIPT OF THE FUNDS IN T HE ACCOUNTS OF THE ASSESSEE. THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS NOBLE & HEWITT INDIA PVT LTD (SUPRA) HELD THAT WHEN ASSESSE E DID NOT DEBIT THE AMOUNT IN THE P&L ACCOUNT AS AN EXPENDITURE AND NOR HE MADE THE CLAIM OF DEDUCTION IN RESPECT OF THE SAID AMOUNT, T HE QUESTION OF DISALLOWING THE DEDUCTION NOT CLAIMED WOULD NOT ARI SE. IN THIS CASE, ON PERUSAL OF FACTS AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE HAS TREATED SERVICE TAX COLLECTED FROM CUSTOMERS UNDER THE HEAD CURRENT LIABILITY AND SUCH TREATMENT IS BASED ON THE INTER IM ORDER PASSED BY THE HONBLE JURISDICTIONAL HIGH COURT IN WRIT PETITION NO.1456 OF 2010. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS A VALID AND SOUND 21 ITA 5413/MUM/2015 REASON FOR THE ASSESSEE TO KEEP SERVICE TAX COLLECT ED FROM ITS CUSTOMERS UNDER THE HEAD CURRENT LIABILITY. WE FURTHER OBS ERVE THAT THE ASSESSEE HAS REMITTED SERVICE TAX COLLECTED FROM CUSTOMERS I N THE SUBSEQUENT ASSESSMENT YEAR AS SOON AS THE ISSUE OF CONSTITUTIO NAL VALIDITY HAS BEEN DECIDED BY THE HONBLE HIGH COURT. THEREFORE, WE A RE OF THE CONSIDERED VIEW THAT THE AO WAS ERRED IN DISALLOWING UNPAID SE RVICE TAX LIABILITY U/S 43B. HENCE, WE DIRECT THE AO TO DELETE ADDITION MA DE TOWARDS UNPAID SERVICE TAX LIABILITY. 21. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE, 2018. SD/- SD/- (JOGINDER SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 20 TH JUNE, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI