S.P. CORPORATION, MUMBAI V. ASST CIT RG 11(1), MUMBAI

ITA 5564/MUM/2014

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6998 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 03-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift; Opportunity of being heard; Earning of tax free income; Cost of acquisition; Rule 8D; Set aside
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E, BENC H MUMBAI BEFORE SHRI PAWAN SINGH, JM & SHRI G. MANJUNATHA, AM ITA NO.5564/MUM/2014 ( ASSESSMENT YEAR :2010-11 ) S.P. CORPORATION 65, STERLING THEATRE BASEMENT MURZABAN ROAD, FORT MUMBAI-400 001 VS. ACIT, RANGE-11(1) AAYAKAR BHAVAN MUNBAI-400 020 PAN/GIR NO. AAAFS1086L APPELLANT ) .. RESPONDENT ) ASSESSEE BY SONALI GODBOLE REVENUE BY SHRI MANOJ KUMAR SINGH DATE OF HEARING 1 1 / 07 /201 9 DATE OF PRONOUNCE ME NT 31 / 0 7 /201 9 / O R D E R PER G.MANJUNATHA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST ORDER OF THE COMMISSIONER OF INCOME TAX APPEALS3, MUMBAI DA TED 16/06/2014 AND IT PERTAINS TO THE ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN R EJECTING THE APPELLANT FIRM'S CLAIM OF CONSIDERING THE MUNICIPAL RATEABLE VALUE AS THE ANNUAL LETTING VALUE OF THE HOUSE PROPERTY AND INSTEAD, CO NSIDERING 10% OF THE ORIGINAL COST OF ACQUISITION AS THE ANNUAL LETTING VALUE. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN CONFIRMING THE DISALLOWANCE OF 20% OF THE BUSINESS PROMOTION EXPENSES CLAIMED BY THE APPELLANT BY CONCLUDING THAT THE EXP ENDITURE WAS PERSONAL IN NATURE. HAVING REGARD TO THE FACTS AND CIRCUMSTA NCES OF THE CASE, THE APPELLANT SUBMITS THAT THE DISALLOWANCE IS UNWARRAN TED AND REQUIRES TO BE DELETED. 3) WITHOUT PREJUDICE TO THE ABOVE GROUND AND IN A NY EVENT, THE APPELLANT SUBMITS THAT THE ABOVE DISALLOWANCE IS GR OSSLY EXCESSIVE AND ARBITRARY, AND THE SAME REQUIRES TO BE REDUCED SUBS TANTIALLY. ITA NO.5564/MUM/2014 M/S. S.P.CORPORATION 2 4) THE LEARNED COMMISSIONER OF INCOME TAX (APPEA L;,) ERRED IN HOLDING THAT INTEREST EXPENDITURE ON BORROWINGS UTILIZED FO R THE PURPOSES OF THE BUSINESS ACTIVITIES OF THE APPELLANT WAS NOT ALLOWA BLE UNDER SECTION 36(L)(III) OF THE ACT, AND IN CONFIRMING DISALLOWAN CE OF INTEREST EXPENDITURE UNDER SECTION 14A OF THE ACT AGGREGATING TO RS 41,1 07/- AS ATTRIBUTABLE TO BORROWINGS PURPORTEDLY UTILIZED FOR ACQUIRING INVES TMENTS, YIELDING EXEMPT DIVIDEND INCOME. HAVING REGARD TO THE FACTS AND CIR CUMSTANCES OF THE CASE, THE APPELLANT SUBMITS THAT THE UNWARRANTED AN D ARBITRARY DISALLOWANCE BE DELETED. 5) WITHOUT PREJUDICE TO THE APPELLANT'S CONTENTI ON THAT NO INTEREST IS ALLOCABLE TO THE EARNING OF EXEMPT DIVIDEND INCOME AND IN ANY VIEW OF THE MATTER, THE APPELLANT SUBMITS THAT THE DISALLOWANCE COMPUTED AT RS41,107/- IS ARBITRARY AND GROSSLY EXCESSIVE AND T HE SAME REQUIRES TO BE REDUCED SUBSTANTIALLY. 6) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN UPHOLDING DISALLOWANCE OF EXPENDITURE UNDER SECTION 14A OF THE ACT AGGREGATING TO RS. 2,24 , 037/- TOWARDS THE EARNING OF DIVIDEND INCOME BY PLACING RELIANCE ON CLAUSE 2(III) OF RULE 8D OF TH E I.T. RULES, 1962 WITHOUT OUT APPRECIATING THAT THE APPELLANT HAD SUO-MOTO DISALLOWED AN AMOUNT OF RS.6 4,505/- IN THE RETURN OF INCOME FURNISHED. HAVING REGARD TO THE FA CTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT SUBMITS TH AT THE UNWARRANTED AND ARBITRARY DISALLOWANCE BE DELETED, 7) WITHOUT PREJUDICE TO THE APPELLANT'S CONTENTI ON THAT NO EXPENDITURE IS ALLOCABLE TO THE EARNING OF EXEMPT DIVIDEND INCOME AND IN ANY EVENT, THE APPELLANT SUBMITS THAT THE DISALLOWANCE COMPUTED AT RS 2 , 24,037/- IS ARBITRARY AND GROSSLY EXCESSIVE AND THE SAME REQUIR ES TO BE REDUCED SUBSTANTIALLY 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF RUNNING CINEMA HOUS E, HOTEL AND RESTAURANT AND ALSO OWNERS AND MANAGEMENT OF PROPER TIES, FILED ITS RETURN OF INCOME FOR AY 2010-11 ON 08/10/2010 DECLA RING TOTAL INCOME OF RS.91,70,318/-. THE CASE HAS BEEN SELECTED FOR SCRU TINY AND THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE I.T .ACT, 1961 ON 29/01/2013, DETERMINING THE TOTAL INCOME AT RS. 1,0 6,49,860/- BY MAKING VARIOUS ADDITIONS INCLUDING DISALLOWANCE OF EXPENDI TURE INCURRED IN RELATION TO EXEMPT INCOME FOR RS. 3,40,029/- DETERM INATION OF ALV OF ITA NO.5564/MUM/2014 M/S. S.P.CORPORATION 3 HOUSE PROPERTY @10% OF VALUE OF PROPERTY, FOR RS. 8 ,61,353/-, ADHOC DISALLOWANCE OF BUSINESS PROMOTION EXPENSES OF RS. 2,78,160/-. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A) , THE ASSESSEE HAS CHALLENGED ADDITIONS MADE BY THE AO TOWARDS DETERMI NATION OF ALV OF HOUSE PROPERTY AT 10%, OF THE ORIGINAL COST OF ACQU ISITION OF ASSET, ADHOC DISALLOWANCE OF BUSINESS PROMOTION EXPENSES AMOUNTI NG TO RS. 2,78,160/- AND DISALLOWANCE OF EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME U/S 14A R.W.R.8D(II) OF THE I.T. RULES 1962. THE LD. CIT(A), FOR A DETAILED REASONS RECORDED IN ITS APPELLATE ORDER DA TED 16/06/2014 PARTLY ALLOWED APPEAL FILED BY THE ASSESSEE, WHERE SUSTAIN ED ADDITIONS MADE BY THE AO TOWARDS DETERMINATION OF ALV OF HOUSE PROPER TY @10% OF ORIGINAL VALUE OF PROPERTY HOWEVER, SCALED DOWN ADDITIONS MA DE BY THE AO TOWARDS ADHOC DISALLOWANCE OF BUSINESS PROMOTION EX PENSES AND ALLOWED PARTIAL RELIEF IN RESPECT OF DISALLOWANCE O F EXPENDITURE INCURRED IN RELATION EXEMPT INCOME, WHERE HE HAS SUSTAINED 15% OF TOTAL EXPENDITURE INCURRED ON THE SALARY OF SHRI. SUNIL NAIR AMOUNTI NG TO RS. 64,505/-, BY FOLLOWING HIS PREDECESSOR CIT(A) ORDER FOR AY 2009- 10. AGGRIEVED BY THE LD. CIT(A), ORDER, THE ASSESSEE IS IN AN APPEAL BEF ORE US. 4. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NO.1 OF ASSESSEE APPEAL IS DETERMINATION OF ALV OF HOUSE PROPERTY @10% OF ORIGINAL COST OF PROPERTY. THE ASSESSEE FIRM HAD RE NTED OUT ITS FLAT SITUATED ITA NO.5564/MUM/2014 M/S. S.P.CORPORATION 4 AT BAKHTAVAR BUILDING, OPP. COLABA POST OFFICE MUMB AI TO MS. SIMONE TATA AT RS. 600/- PER MONTH FROM AY 2005-6 TO 2008 -09 AND ALV OF THE PROPERTY WAS TAKEN AT RS. 12,32,505/- BY THE AO. SI MILARLY, FOR THE YEAR UNDER CONSIDERATION BY FOLLOWING HIS FINDING IN EAR LIER YEAR DETERMINED ALV OF THE PROPERTY AT RS. 12,30,505/- AND AFTER AL LOWING STANDARD DEDUCTION AT 30% MADE ADDITIONS OF RS. 8,62,243/- U NDER THE HEAD INCOME FROM HOUSE PROPERTY.. 5. THE LD. AR FOR THE ASSESSEE, AT THE TIME OF HEAR ING SUBMITTED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASS ESSEE BY THE DECISION OF ITAT, MUMBAI E BENCH IN ASSESSEES OWN CASE FOR A Y 2009-10 WHERE, UNDER IDENTICAL SET OF FACTS, THE TRIBUNAL HAS SET ASIDE THE ISSUE TO THE FILE OF THE AO TO DETERMINE ALV OF THE HOUSE PROPERTY IN LIGHT OF DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. TIP TOP TYPOGRAPHY (368 ITR 330). FACTS BEING IDENTICAL FOR THE YEAR UNDER CONSIDERATION, THE ISSUE MAY BE SET ASIDE TO THE AO TO DECIDE THE ALV OF THE HOUSE PROPERTY ON THE BASIS OF FINDINGS OF THE TRIBUNAL FOR AY 2009-10. THE LD. DR, ON THE OTHER HAND FAIRLY ACCEPTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT FOR AY 2009-10. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE TRIBUNAL HAS CONSIDERED IDENTICAL ISSUE FOR AY 2009-10 AND AFTER CONSIDERING RELEVANT FACTS AND AL SO BY FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. TIP TOP TYPOGRAPHY(SUPRA), HAS RESTORED THE ISSUE TO THE FI LE OF THE AO FOR ITA NO.5564/MUM/2014 M/S. S.P.CORPORATION 5 DENAVO ADJUDICATION IN LIGHT OF FINDINGS OF THE HON BLE BOMBAY HIGH COURT THAT THE AO IS NOT BOUND BY MUNICIPAL REATABLE VALU E, BUT HE CAN PROCEED TO DETERMINE ALV OF THE HOUSE PROPERTY ON THE BASIS OF MARKET RATE PREVAILING AS ON THE DATE. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER:- 24. IN THE CASE ON HAND BEFORE US, THE ASSESSING OF FICER MISERABLY FAILED TO MAKE ANY ENQUIRES IN RESPECT OF THE PROPERTY I.E HOW MUCH IS THE STANDARD RENT, HOW MUCH IS THE FAIR RENT, HOW MUCH IS THE MUNICIPAL RATEABLE VALUE AT THAT POINT OF TIME. THE ASSESSING OFFICER ALSO DID NOT BRING ON RECORD ANY COMPARABLE INSTANCES OF MARKET RENT OF THE PROPERTY AND THEREFORE IN VIEW OF THE DECISION OF THE JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT V. TIP TOP TYPOGRAPHY (SUPRA), THE ASSESSING OFFICER WITHOUT UNDER TAKING THE EXERCISE CONTEMPLATED BY T HE RENT CONTROL LEGISLATION FOR FIXING OF STANDARD RENT IS NOT JUST IFIED IN APPLYING ANY OTHER FORMULA OR METHOD TO DETERMINE THE ALV AT 10% OF TH E COST OF ACQUISITION. HENCE THE METHOD ADOPTED BY THE ASSESSING OFFICER I .E. 10% OF THE COST OF THE ACQUISITION AS ALV IS AGAINST THE PRINCIPLE LAID DOWN BY THE JURISDICTIONAL HIGH COURT. HENCE, THE SAME IS SET-A SIDE. AS THE ASSESSING OFFICER FAILED TO DETERMINE THE STANDARD RENT AND N O PROPER ENQUIRES WERE MADE TO DETERMINE THE ALV AS PER THE RENT CONTROL A CT, WE FEEL IT APPROPRIATE TO RESTORE THIS MATTER TO THE FILE OF T HE ASSESSING OFFICER WHO SHALL DETERMINE THE STANDARD RENT AS PER THE RENT C ONTROL ACT AND FAIR RENT BY CONDUCTING ENQUIRIES TO ASSESS THE ALV OF THE PR OPERTY DENOVO KEEPING IN VIEW THE GUIDELINES SET OUT BY THE HONB LE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. TIP TOP TYPOGRAPHY (SUP RA). THUS, WE RESTORE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER FO R DENOVO ADJUDICATION. ALL CONTENTIONS ARE LEFT OPEN. THE ASSESSING OFFICER SH ALL PROVIDE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND TO FURNISH FRESH EVIDENCES AND SUBMISSIONS IN SUPPORT OF ITS CONTENTIONS. THIS GRO UND IS ALLOWED FOR STATISTICAL PURPOSE. 7. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH V IEW TAKEN BY THE CO- ORDINATE BENCH IN ASSESSEES OWN CASE FOR EARLIER Y EAR, WE RESTORE THIS ISSUE TO THE FILE OF THE AO FOR DENOVO ADJUDICATION IN LIGHT OF FINDINGS OF THE TRIBUNAL ON THE BASIS OF DECISION OF HONBLE HIGH C OURT IN THE CASE OF CIT VS TIP TOP TYPOGRAPHY (SUPRA). ITA NO.5564/MUM/2014 M/S. S.P.CORPORATION 6 8. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N FROM GROUND NO. 2 AND 3 OF ASSESSEES APPEAL IS ADHOC DISALLOWANCE OF BUSINESS PROMOTION EXPENSES. THE AO HAS DISALLOWED BUSINESS PROMOTION EXPENSES AMOUNTING TO RS. 2,78,160/- ON THE GROUND THAT A SIMILAR DISALLOWANCE HAS BEEN MADE FOR AY 2006-07 BY CONSID ERING THE FACT THAT THE ASSESSEE HAS DEBITED VARIOUS BUSINESS PROMITON EXPENSES WHICH ARE IN PERSONAL NATURE LIKE HOTEL EXPENSES, ENTERTAINME NT EXPENSES, GIFTS AND RESTAURANT BILLS AND BY NO STRETCH OF IMAGINATION I T CAN BE CONSTRUED TO BE INCURRED FOR BUSINESS PURPOSE. 9. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT AN ID ENTICAL ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL FOR AY 2009-10 WHER E UNDER IDENTICAL SET OF FACTS DELETED ADDITIONS MADE BY THE AO AND SUSTA INED BY THE LD. CIT(A) TOWARDS BUSINESS PROMOTION EXPENSES, ON THE GROUND THAT THERE IS NO PERSONAL ELEMENT IN EXPENDITURE INCURRED BY MR. NEOL TATA AND WHATEVER EXPENDITURE INCURRED THROUGH ITS CREDIT CA RD IS ON ACCOUNT OF BUSINESS PURPOSE. 10. HAVING HEARD BOTH SIDES AND CONSIDERED MATERIAL ON RECORD, WE FIND THAT THE TRIBUNAL HAS CONSIDERED IDENTICAL ISSUE AN D AFTER CONSIDERING RELEVANT FACTS CAME TO THE CONCLUSION THAT CONSIDER ING NATURE OF BUSINESS OF THE ASSESSEE EXPENDITURE INCURRED TOWARDS BUSINE SS PROMOTION IS IN SIGNIFICANT AND ALSO IT IS A CUSTOMARY THAT THE ASS ESSEE WHICH IS IN THE ENTERTAINMENT BUSINESS HAS TO INCURR CERTAIN EXPEND ITURE FOR THE ITA NO.5564/MUM/2014 M/S. S.P.CORPORATION 7 CUSTOMERS/CLIENTS TO KEEP THEM IN GOOD RELATIONS. T HE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER: 36. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY REASON GIVEN BY THE ASS ESSING OFFICER FOR TREATING THE BUSINESS PROMOTION EXPENSES AS PERSONA L EXPENSES OF MR. NOEL TATA IS THAT THE PAYMENTS WERE MADE THROUGH HI S PERSONAL CREDIT CARD. ASSESSING OFFICER TREATED THE EXPENDITURE AS PERSONAL EXPENDITURE OF MR. NOEL TATA AND THE LD.CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE RESTRICTED THE DISALLOWANCE TO 20% AS ACCO RDING TO HIM THERE MAY BE SOME PERSONAL ELEMENT IN THE EXPENDITURE INC URRED. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHEREVE R THE EXPENDITURE INCURRED BY MR. NOEL TATA FOR THE ASSESSEE FIRM IT HAS BEEN DEBITED ONLY TO ASSESSEE FIRM AND WHEREVER MR. NOEL TATA INCURRE D ON HIS PERSONAL CREDIT CARDS IT HAS BEEN DEBITED TO HIS ACCOUNT AND REFLECTED IN HIS INCOME TAX RETURNS. IT IS ALSO SUBMITTED THAT THE EXPENDIT URE TOWARDS BUSINESS PROMOTIONS WHEN COMPARED TO THE INCOME RENDERED BY THE ASSESSEE FROM BUSINESS IS INSIGNIFICANT AND IT IS A CUSTOMAR Y PRACTICE THAT THE ASSESSEE WHICH IS IN THE ENTERTAINMENT BUSINESS HAS TO INCUR CERTAIN EXPENDITURE FOR THE CUSTOMERS/CLIENTS TO KEEP GOOD RELATIONS. WE FIND CONSIDERABLE MERIT IN THE SUBMISSIONS OF THE ASSESS EE. IN THE CIRCUMSTANCES, ACCEPTING THE SUBMISSIONS OF THE ASS ESSEE WE DELETE THE DISALLOWANCE MADE TOWARDS BUSINESS PROMOTION. GROUN D NO.4 IS ALLOWED. 11. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH VIEW TAKEN BY THE CO- ORDINATE BENCH, WE DIRECT THE AO TO DELETE THE ADDI TIONS TOWARDS BUSINESS PROMOTIONS EXPENSES. 12. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NO.4 TO 7 OF THE ASSESSEES APPEAL IS DISALLOWANCE OF EX PENDITURE INCURRED IN RELATION TO EXEMPT INCOME. THE AO HAS DISALLOWED EX PENDITURE INCURRED IN RELATION TO EXEMPT INCOME TOWARDS INTEREST EXPENDIT URE AND OTHER EXPENSES UNDER RULE 8D(2)(II)AND (III) FOR RS. 3,40 ,027/- ON THE GROUND THAT ALTHOUGH ASSESSEE CLAIMS HAVE NOT INCURRED ANY EXPENDITURE, BUT IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH COURT I N THE CASE OF GODREJ & BOYCE MANUFACTURING COMPANY PVT.LTD. VS. DCIT (S UPRA), IT IS ITA NO.5564/MUM/2014 M/S. S.P.CORPORATION 8 MANDATORY TO DETERMINE EXPENSES INCURRED IN RELATIO N TO EXEMPT INCOME UNDER THE PRESCRIBED METHOD PROVIDED U/S RULE 8D(2 )(II) OF I.T.RULES, 1962. ACCORDINGLY, HE HAS DETERMINED DISALLOWANCE O F RS. 3,40,029/- IN RESPECT OF INTEREST EXPENDITURE AND 0.5% OF THE AVE RAGE VALUE OF THE INVESTMENTS. 13. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F ITAT FOR AY 2009-10, WHERE UNDER IDENTICAL SET OF FACTS, THE TRIBUNAL HA S PARTLY ALLOWED THE GROUND IN FAVOUR OF THE ASSESSEE IN RESPECT OF INTE REST EXPENSES DISALLOWED UNDER RULE 8D(2)(II) HOWEVER, IN RESPECT OF OTHER EXPENSES, UNDER RULE 8D(2)(III), THE TRIBUNAL HAS CONFIRMED ADDITIONS MADE BY THE AO. 14. HAVING HEARD BOTH SIDES AND CONSIDERED MATERIAL ON RECORD, WE FIND THAT IN SO FAR AS DISALLOWANCE OF INTEREST EXPENDIT URE UNDER RULE 8D(2)(II), THE TRIBUNAL HAS RECORDED CATEGORICAL FINDING IN LI GHT OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RE LIANCE UTILITY AND POWER LIMITED 313 ITR 340 AND CIT VS HDFC BANK 363 ITR 505 THAT THE ASSESSEE IS HAVING SUFFICIENT OWN FUNDS IN FORM OF SHARE CAPITAL AND RESERVES IN EXCESS OF INVESTMENTS IN SHARES AND SEC URITIES WHICH YIELD EXEMPT INCOME AND HENCE, QUESTION OF DISALLOWANCE O F INTEREST EXPENDITURE DOES NOT ARISE. THIS YEAR, THE ASSESSEE HAS MADE OUT A CASE WITH NECESSARY DETAILS THAT ITS OWN FUNDS IS IN EXC ESS OF INVESTMENTS IN SHARES, THEREFORE, NO PART OF INTEREST BEARING FUND S HAS BEEN USED TO ITA NO.5564/MUM/2014 M/S. S.P.CORPORATION 9 MAKE INVESTMENTS IN SHARES CONSEQUENTLY, NO DISALLO WANCE COULD BE MADE IN RESPECT OF INTEREST EXPENDITURE. ACCORDINGL Y, WE DIRECT THE AO TO DELETE ADDITIONS MADE TOWARDS PROPORTIONATE INTERES T EXPENDITURE UNDER RULE 8D(2)(II) I.T. RULES 1962. IN SO FAR AS DISALL OWANCE OF EXPENDITURE UNDER RULE 8D(2)(III) @ 0.5% OF AVERAGE VALUE OF I NVESTMENTS, WE FIND THAT THE TRIBUNAL HAS SUSTAINED ADDITIONS MADE BY T HE AO TOWARDS OTHER EXPENSES ON THE GROUND THAT NO CONVINCING ARGUMENTS HAVE BEEN MADE EITHER BEFORE LOWER AUTHORITIES OR BEFORE US. FACTS REMAIN UNCHANGED. THE LD. AR FOR THE ASSESSEE FAILED TO CONTROVERT THE FI NDINGS OF FACTS RECORDED BY THE TRIBUNAL IS INCORRECT WITH ANY EVIDENCES. A CCORDINGLY, WE ARE OF THE CONSIDERD VIEW THAT THERE IS NO ERROR IN THE FINDIN GS OF FACT RECORDED BY THE CIT(A) IN RESPECT OF DISALLOWANCE OF OTHER EXPENSES BEING 0.5% OF AVERAGE VALUE OF INVESTMENTS AND HENCE, THE SAME IS CONFIRMED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31/07/20 19 SD/- (PAWAN SINGH) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 31/07/2019 THIRUMALESH SR.PS ITA NO.5564/MUM/2014 M/S. S.P.CORPORATION 10 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//