AFL P.LTD, MUMBAI V. ASST CIT CEN CIR 13, MUMBAI

ITA 5697/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8412 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 10-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR SR
• Assessee Lawyers: SUNIL S JHUNJHUNWALA
• Keywords: Depreciation
• Section: 143(3); 14A

Judgement Text

P A G E | 1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI R.C. SHARMA , AM AND SHRI RAVISH SOOD, JM ./ I.T.A. NO. 5697 / MUM/201 4 ( / ASSESSMENT YEAR: 201 1 - 1 2 ,) AFL PRIVATE LIMITED AFL HOUSE, LOK BHARATI COMPLEX, MAROL MAROSHI ROAD, ANDHERI (E), MUMBAI - 400 059. / VS. THE ACIT, CENTRAL CIRCLE 13 10 TH FLOOR, CGO BUILDING, MUMBAI. ./ ./ PAN/GIR NO. AABCA 2213 P ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI NITESH JOSHI & SUNIL S. JHUNJHUNWALA. / RESPONDENTBY : SHRI. SAURABH KUMAR, SR. A.R / DATE OF HEARING : 10/02/2017 / DATE OF PRONOUNCEMENT : 17 /02/2017. P A G E | 2 / O R D E R PER RAVISH SOOD, JM : THE PRESENT APPEAL ARISES FROM THE ORDER OF THE CIT(A) - 37, DATED. 01.07.2014, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O U/S 143(3) OF THE INCOME - TAX ACT, 1961 (FOR SHORT ACT), DATED. 13.12.2013. THE ASSESSEE ASSAILING THE ORDER OF THE CIT(A) HAD C ARRIED THE MATTER IN APPEAL BEFORE US, THEREIN RAISING THE FOLLOWING GROUNDS OF APPEAL : - GROUNDS OF APPEAL: (THE GROUNDS OF APPEAL STATED HEREIN BELOW ARE WITHOUT PREJUDICE TO EACH OTHER) 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING DISALLOWANCE OF ADDITIONAL AMOUNT OF RS.47,90,000/ - (RS. 49,90,000/ - LESS RS. 2,00,000/ - ) U/ S 14 A OF THE ACT . 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE RE - COMPUTATION OF DISALLOWANCE UNDER SECTION 14A OF THE ACT BY INVOKING THE PROVISIONS OF RULE 8 D . HE FAILED TO APPRECIATE THAT THE PRE - CONDITIONS NECESSARY FOR INVOKING THE PROVISI ONS OF RULE 8 - D HAS NOT BEEN FUL FILLED IN ITS CASE. 3 ) THE APPELLANTS SUBMIT T HAT THE DISALLOWANCE COMPUTED U/ S 14A IS EXCESSIVE AND UNREASONABLE. 4 ) THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) ERRED IN CONFIRMING ADD ITION O F EXCESS OF LIABILITIES OVER ASSETS OF THE TWO DIVISIONS TO SALE CONSIDERATION FOR THE PURPOSES OF COMPUTATION OF LONG TERM CAPITAL GAINS. 5) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING RE - COMPUTATION OF LONG TERM CAPITAL GA IN ON SALE OF TWO DIVISIONS AT RS. 244,21,16,734/ - INSTEAD OF RS, 132,34,03,976/ - OFFERED BY THE APPELLANT IN ITS COMPUTATION OF INCOME. P A G E | 3 6) THE APPELLANTS CRAVE LEAVE, TO ALTER, AMEND AND/OR ADD ANY OTHER GROUND OF APPEAL. 2. BRIEFLY STATED, THE FACTS OF TH E CASE ARE THAT THE ASSESSEE COMPANY WHICH IS ENGAGED IN THE BUSINESS OF COURIER SERVICE, MONEY TRANSFER, DOMESTIC SURFACE DISTRIBUTION, FREIGHT FORWARDING, C ARTING FINANCIAL AND FOREX SERVICES, HAD E - F ILED ITS RETURN OF INCOME AS ON 30/09/11 DECLARING INCOME OF RS.32,33,94,350/ - , WHICH WAS REVISED AS ON 21/03/ 20 13 AT RS.31,98 ,33,844/ - . THE RETURN OF INCOME OF THE ASSESSEE WAS PROCESSED AS SUCH U/S 143(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT). THE CASE OF THE ASSESSEE WAS THEREAFTER TAKEN UP FOR SCRUTINY PROCEEDING U/S 143(2) OF THE ACT . THE A.O DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS NOT FINDING FAVOR WITH THE SUO MOTTO DISALLOWANCE OF RS. 2 LAC CARRIED OUT BY THE ASSESSEE U/S 14A IN ITS RETURN OF INCOME, THEREIN RE COMPUTED THE DISALLOW ANCE U/S 14A R.W RULE 8D AT RS. 49,90,000/ - , AS UNDER: - (AMOUNT IN LACS) PARTICULARS RS. RS. DISALLOWANCE UNDER SECTION(I) DISALLOWANCE UNDER SECTION (II) A. AMOUNT OF INTEREST 437.54 B. AVERAGE VALUE OF INVESTMENTS VALUE OF INVESTMENTS AS ON 31.03.2010 2655.30 VALUE OF INVESTMENTS AS ON 31.03.2011 397.05 TOTAL 3052.35 AVERAGE VALUE OF INVESTMENTS 1526.18 C. AVERAGE VALUE OF TOTAL ASSETS BOOK VALUE AS ON 31.03.2010 15114.08 BOOK VALUE AS ON 31.03.2011 12099.56 TOTAL 27213.64 AVERAGE VALUE OF TOTAL ASSETS 13606.82 DISALLOWANCE UNDER CLAUSE (II) [(A*B)/C] 49.08 P A G E | 4 DISALLOWANCE UNDER CLAUSE (III) 0.5% OF THE AVERAGE VALUE OF INVESTMENTS 0.82 TOTAL DISALLOWANCE (I)+(II)+(III) 49.90 , AND THUS MADE A CONSEQUENTIAL ADDITION OF RS.47.90 LACS OVER AND ABOVE RS.2,00,000/ OFFERED AS DISALLOWANCE BY THE ASSESSEE . 3. THE A.O DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS OBSERVED T HAT THE ASSESSEE COMPANY WHICH HAD IN ITS RETURN OF INCOME SHOWN CAPITAL GAIN OF RS.132,34,03,976/ - ON ACCOUNT OF SLUMP SALE OF BUSINESS OF LOGISTICS AND DOMESTIC COURIER DIVISION TO M/S FEDEX EXPRESS TRANSPORTATION AND SUPPLY CHAIN SERVICE (INDIA) PVT. LTD , HAD THOUGH WHILE COMPUTING THE INCOME UNDER SEC. 50B, W ORKED OUT THE NET WORTH OF THE DIVISION S AT ( - ) RS.111,87,12,758/ - , BUT THEREAFTER TAKING SUPPORT FROM THE ORDER OF THE TRIBUNAL IN THE C A SE OF : ZUARI INDUSTRIES LTD. VS. ACIT (2007) 105 ITD 569 (MUM) HAD TAKEN THE COST OF THE TWO DIVISIONS AT RS. NI L . THE A.O HOWEVER BEING OF THE VIEW THAT THE ITAT ORDER IN THE CASE OF : ZUARI INDUSTRIES LTD. (SUPRA) DID NO LONGER HOLD THE GROUND, AS THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DC1T VS. SUMMIT SECURITIES LTD. (2012) 135 ITD 0099 (SB) HAD HELD THAT THE NEGA TIVE FIGURE OF NET WORTH CANNOT BE IGNORED FOR WORKING OUT THE CAPITAL GAINS IN CASE OF SLUMP SALE UNDER SEC. 50B OF THE ACT, AND AS SUCH WOULD BE REQUIRED TO BE ADDED TO THE SALE CONSIDERATION FOR DETERMINING THE CAPITAL GAINS , THUS DID N OT FIND FAVOR WITH THE COMPUTATION OF CAPITAL GAIN BY THE ASSESSEE COMPANY. THE A.O IN THE BACKDROP OF HIS AFORESAID CONVICTION, THUS DECLINED TO ACCEPT THE WORKING OF THE CAPITAL GAIN BY THE ASSESSEE, WHEREIN THE LATTER HAD TAKEN THE N ET WORTH OF THE DI VISION S AT RS. NIL, DESPITE THE FACT THAT THE SAME WAS COMPUTED AT ( - ) RS. 111,87,12,758/ - , AND THUS GOING P A G E | 5 BY THE ORDER OF THE SPECIAL BENCH IN THE CASE OF : SUMMIT SECURITIES LTD. (SUPRA) , THERE IN RECOMPUTED THE CAPITAL GAIN IN THE HANDS OF THE ASSESSEE AT RS. 244,21,16,734/ - (I.E RS. 132,34,03,976/ - (+) RS. 111,87,12,758/ - ).THE A.O THEREAFTER DELIBERATING ON CERTAIN OTHER ISSUES, THEREIN ASSESSED THE INCOME OF THE ASSESSEE AT RS. 145,49,93,242/ - (I.E AFTER GIVING EFFECT TO THE B/FORWARD UNABSORBE D DEPRECIATION FOR EARLIER YEARS). 4. THE ASSESSEE ASSAILED THE ASSESSMENT ORDE R BEFORE THE CIT(A), WHO THOUGH PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BUT UPHELD THE COMPUTATION OF THE DISALLOWANCE U/S 14A R.W RULE 8D BY THE A.O AT RS. 49,90,000/ - , THER EIN LEADING TO SUSTAINING OF THE CONSEQUENTIAL ADDITION OF RS. 47.90 LACS OVER AND ABOVE THE DISALLOWANCE OF RS.2,00,000/ - OFFERED BY THE ASSESSEE IN ITS RETURN OF INCOME. THAT STILL FURTHER THE CIT(A) BEING OF THE VIEW THAT THE RECOMPUTING OF THE CAPITAL GAIN BY THE A.O WAS IN CONFORMITY WITH THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DC1T VS. SUMMIT SECURITIES LTD. (2012) 135 ITD 0099 (SB) , THUS FINDING NO REASON TO DISLODGE THE SAME, THEREFORE ALSO UPHELD THE COMPUTATION OF THE CAPIT AL GAIN BY THE A.O. 5. THE ASSESSEE BEING AGGRIEVED WITH THE ORDER OF THE CIT(A) HAD THEREIN CARRIED THE MATTER IN APPEAL BEFORE US. THAT AT THE VERY OUTSET OF THE HEARI N G OF THE APPEAL THE LD. AUTHORIZED REPRESENTATIVE (FOR SHORT A.R) FOR THE ASSESSEE ADVERTING TO THE GROUND OF APPEAL NO. 5 & GROUND OF APPEAL NO. 6, THEREIN ASSAIL ED THE ORDER OF THE CIT(A) WHO HAD UPHELD THE RECOMPUTATION OF THE CAPITAL GAIN BY THE A.O AT RS. 244,21,16,734/ - , AS AGAINST RS. 132,34,03 ,976/ - REFLECTED BY THE ASSESSEE IN ITS RETURN OF INCOME . THAT HOWEVER DURING THE COURSE OF HEARING OF THE APPEAL THE LD. A.R VERY FAIRLY ASSISTED THE BENCH AND THEREIN SUBMITTED THAT THE ISSUE UNDER P A G E | 6 CONSIDERATION, VIZ. THE TREATMENT TO BE ACCORDED TO A NEGA TIVE FIGURE OF NET WORTH FOR WORKING OUT THE CAPITAL GAINS IN CASE OF SLUMP SALE UNDER SEC. 50B OF THE ACT WAS COVERED AGAINST THE ASSESSEE BY THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF : DC1T VS. SUMMIT SECURITIES LTD. (2012) 135 ITD 0099 (SB) . THE LD. A.R ASSA ILING THE ORDER OF THE CIT(A) THEREIN SUBMITTED THAT THE COMPUTATION OF THE CAPITAL GAIN BY THE ASSESSEE DID NOT SUFFER FROM ANY INFIRMITY AND THE AUTHORITIES BELOW HAD ERRONEOUSLY DISLODGED THE SAME BY MISCONSTRUING THE SCOPE AND THE GAMUT OF MODE OF COMPUTATION AS STOOD CONTEMPLATED UNDER SEC. 50B OF THE ACT. THE LD. A.R FURTHER SUBMITTED THAT THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF : SUMMIT SECURITIES LTD. (SUPRA) WHICH HAD WEIGHED IN THE MIND OF THE LOWER AUTHORITIE S FOR DISLODGING THE COMPUTATION OF THE CAPITAL GAIN AS STOOD REFLECTED IN THE RETURN OF INCOME OF THE ASSESSEE HAD NOT ATTAINED FINALITY AND HAD BEEN ASSAILED BEFORE THE HONBLE HIGH COURT , WHICH AS ON DATE WAS PENDING ADJUDICATION. THAT ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENTATIVE (FOR SHORT D.R) HEAVILY RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND THEREIN AVERRED THAT THE A.O FOLLOWING THE ORDER OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF : SUMMIT SECURITIES LTD. (SUPRA) HAD RIG HTLY RECOMPUTED THE CAPITAL GAIN IN THE HANDS OF THE ASSESSEE, AND THE CIT(A) FINDING NO INFIRMITY IN THE ORDER OF THE A.O, H AD AS SUCH RIGHTLY DISMISSED THE APPEAL OF THE ASSESSEE. IT WAS THUS SUBMITTED BY THE LD. D.R THAT THE APPEAL OF THE ASSESSEE WAS S QUARELY COVERED BY THE SPECIAL BENCH OF THE TRIBUNAL, AND THUS BEING DEVOID OF ANY MERITS WAS LIABLE TO BE DISMISSED. 6. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PART I ES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL P A G E | 7 PRODUCED B EFORE US. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL, VIZ. THE TREATMENT TO BE ACCORDED TO A NEGA TIVE FIGURE OF NET WORTH FOR WORKING OUT THE CAPITAL GAIN S IN CASE OF SLUMP SALE UNDER SEC. 50B OF THE ACT HAD BEEN ADJUDICATED UPON BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF : DC1T VS. SUMMIT SECURITIES LTD. (2012) 135 ITD 0099 (SB) , WHEREIN THE TRIBUNAL AFTER DELIBERATING ON THE MANIFOLD CONTENTION S PUT FORTH BEFORE IT IN CONTEXT OF THE ISSUE UNDER CONSIDERATION, HAD THEREIN HELD AS UNDER: - IN VIEW OF THE DETAILED DISCUSSION MADE ABOVE, WE ARE WITH UTMOST RESPECT UNABLE TO CONCUR WITH THE VIEW EXPRESSED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ZUARI INDUSTRIES LTD. (SUPRA) AND DELHI BENCH OF THE TRIBUNAL IN THE CASE OF PAPER BASE CO. LTD. (SUPRA). THUS THE QUESTION REFERRED TO THE SPECIAL BENCH IS ANSWERED IN NEGATIVE BY HOLDING THAT THE ASSESSING OFFICER WAS NOT RIGHT IN ADDING THE AMOUNT OF LIABILITIES BEING REFLECTED IN THE NEGATIVE NET WORTH ASCERTAINED BY THE AUDITORS OF THE ASSESSEE TO THE SALE CONSIDERATION FOR DETERMINING THE CAPITAL GAINS ON ACCOUNT OF SLUMP SALE. HOWEVER, WE ALLOW GROUND NO.2 RAISED BY THE REVENUE IN ITS APPEAL BY HOLDING THAT THE CIT(A) WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT THE NEGATIVE FIGURE OF THE NET WORTH OF RS.157 CRORE SHOULD BE IGNORED FOR WORKING OUT THE CAPITAL GAINS IN CASE OF A SLUMP SALE. THE SUMMARY OF OUR CONCLUSION IS THAT THE AMOUNT OF NET WORTH WILL BE A NEGATIVE FIGURE OF RS.157 CRORE AND NOT ZERO. RESULTANTLY THE AMOUNT OF CAPITAL GAIN CHARGEABLE TO TAX WILL BE RS.300 CRORE AND NOT RS.143 CRORE AS DECLARED BY THE ASSESSEE. P A G E | 8 WE HAVE PERUSED THE AFORESAID ORDER OF THE SPECI AL BENCH OF THE TRIBUNAL IN THE CASE OF SUMMIT SECURITIES LTD. (SUPRA), AND IN THE ABSENCE OF ANY MATERIAL BEING PLACED ON OUR RECORD WHICH COULD PERSUADE US TO CONCLUDE THAT THE FACTS INVOLVED IN THE PRESENT APPEAL WERE IN ANY WAY DISTINGUISHABLE AS AG AINST THE FACTS INVOLVED IN THE C ASE BEFORE THE SPECIAL BENCH, ARE THUS UNABLE TO SUBSCRIBE TO THE CONTENTION OF THE LD. A.R WHO HAD ASSAILED THE DISLODGING OF THE COMPUTATION OF THE CAPITAL GAIN BY THE LOWER AUTHORITIES . WE ARE OF THE CONSIDERED VIEW TH AT AS THE ISSUE INVOLVED IN THE PRESENT CASE BEFORE US IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE ORDER OF THE SPECIAL BENCH IN THE CASE OF SUMMIT SECURITIES LTD. (SUPRA), THEREFORE WE ARE UNABLE TO ACCEPT THE CONTENTIONS OF THE LD. A.R. WHO HAD ASSAILED BEFORE US THE RECOMPUTATION OF THE CAPITAL GAIN BY THE LOWER AUTHORITES. T HAT IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS, AS NO INFIRMITY EMERGES FROM THE ORDER OF THE CIT(A) ON THE ISSUE UNDER CONSIDERATION BEFORE US, WE THEREFORE UPH OLD THE ORDER OF THE FIRST APPELLATE AUTHORITY TO THE SAID EXTENT AND DISMISS THE GROU N D OF APPEAL NO.5 AND GROUND OF APPEAL NO. 6 RAISED BEFORE US . 7. THE LD. A.R ADVERTING TO THE GROUND OF APPEAL NOS. 1 TO 3 , HAD AT THE VERY OUTSET SUBMITTED THAT THE ISSUE PERTAINING TO DISALLOWANCE UNDER SEC. 14A R.W RULE 8D HAD EARLIER CAME UP BEFORE A COORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSES OWN APPEAL FOR A.Y. 2008 - 09, TITLED AS : AFL PRIVATE LIMITED VS. ACIT, MUMBAI (ITA NO. 3123/MUM/2011; DATED. 14 .08.2013) (COPY PLACED ON RECORD) , WHEREIN THE TRIBUNAL OBSERVING THAT AS THE INTEREST BEARING BORROWED FUNDS OF THE ASSESSEE HAD ALREADY BEEN UTILIZED FOR THE SPECIFIED PURPOSE FOR WHICH THEY HAD BEEN AVAILED, P A G E | 9 HAD THUS RESTORED THE MATTER TO THE FILE OF T HE A.O FOR MAKING NECESSARY VERIFICATIONS, BY OBSERVING AS UNDER: - 6.7 SO HOWEVER, A MERE BROWSE OF THE ASSESSES BALANCE SHEET FOR THE RELEVANT YEAR END (PB PGS. 4 - 16), REVEALS TERM LOANS (FROM BANKS) AT RS. 2864.87 LACS AND WORKING CAPITAL ADVANCES (FROM BANKS) AT RS. 1401.12 LACS. THE CORRESPONDING YEAR END BALANCES OF FIXED ASSETS (NET OF DEPRECIATION) AND NET CURRENT ASSETS ARE AT RS. 5237.52 LACS AND RS. 3328.29 LACS RESPECTIVELY, SIGNIFYING COMPLETE ABSORPTION OF THE BORROWED FUNDS FOR THE SPECI FIED PURPOSES, I.E, FOR WHICH THEY STAND CONTRACTUALLY AVAILED. THE ASSESSEE, THEREFORE, IN OUR VIEW, HAS A STRONG PRIMA FACIE CASE OF ENTIRE BANK BORROWINGS BEING APPLIED FOR THE RESPECTIVE PURPOSES, SO THAT NO PART THEREOF COULD BE SAID TO HAVE BEEN INVE STED IN RELEVANT SECURITIES YIELDING TAX - FREE INCOME. IF SO, NO PART OF THE INTEREST EXPENDITURE THEREON COULD BE ATTRIBUTED TO THE SAID INVESTMENTS ON THE ASSUMPTION OF THE SAME COMPRISING THE GENERAL POOL OF FUNDS. THE MATTER, ACCORDINGLY, IS TO BE RESTO RED TO THE FILE OF THE A.O, WHO SHALL CONFIRM THE UTILIZATION OF THE BORROWED FUNDS FOR THE SPECIFIED PURPOSES FOR THE ENTIRE YEAR, RETURNING A FINDING IN THE MATTER. WE HAVE BEEN INFORMED BY THE LD. A.R THAT THE A.O GIVING EFFECT TO THE DIRECTI ONS OF THE TRIBUNAL, HAD VIDE HIS ORDER PASSED U/S. 143(3) R.W SEC. 254 OF THE ACT, DATED. 31.03.2015 , HAD T HEREIN HELD THAT THE INTEREST BEARING LOAN FUNDS HAD BEEN UTILIZED BY THE ASSESSEE FOR THE PURPOSE OF ITS BUSINESS AND NO PART OF IT WAS UTILIZED TOWARDS PURCHASE OF INVESTMENTS YIELDING TAX FREE INCOME. IN THE BACKDROP OF THE AFORESAID OBSERVATIONS OF THE A.O, IT WAS THUS AVERRED BY THE LD. A.R THAT NOW WHEN THE YEAR UNDER CONSIDERATION, VIZ. A.Y. 2011 - P A G E | 10 12 HAD WITNESSED REDUCTION OF THE SECURED LOAN S TO RS. NIL, AS IN COMPARISON TO A.Y. 2008 - 09 WHEREIN IT STOOD REFLECTED AT RS. 4,265.99 LACS, AND NO INTEREST BEARING BORROWINGS DURING THE YEAR UNDER CONSIDERATION WERE MADE FOR PURCHASE OF INVESTMENTS YIELDING TAX FREE INCOME, THEREFORE NO DISALLOWANCE OF ANY PART OF THE INTEREST WAS CALLED FOR IN THE HANDS OF THE ASSESSEE COMPANY UNDER SEC. 14A OF THE ACT. THAT ON THE OTHER HAND THE LD. D.R SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES FOR BOTH TH E PARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL PRODUCED BEFORE US. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS OF THE CASE AND FIND SUBSTANTIAL FORCE IN THE CONTENTION OF THE LD. A.R THAT AFTER THE CASE OF THE ASSESSEE CO MPANY FOR A.Y. 2008 - 09 WAS RESTORED TO THE FILE OF THE A.O , THE LATTER HAD VIDE HIS ORDER PASSED U/S 143(3) R.W SEC. 254, DATED. 31.03.2015, HAD RETURNED A FINDING THAT AS THE INTEREST BEARING LOAN FUNDS HAD BEEN UTILIZED BY THE ASSESSEE FOR THE PURPOSE OF ITS BUSINESS AND NO PART OF IT WAS UTILIZED TOWARDS PURCHASE OF INVESTMENTS YIELDING TAX FREE INCOME, THEREFORE NO DISALLOWANCE U/S 14A IN RESPECT OF THE INTEREST PAID WAS CALLED FOR IN THE HANDS OF THE ASSESSEE. WE THUS IN THE BACKDROP OF THE AFORESAID FACTS , KEEPING IN VIEW THE VERY FACT THAT THE YEAR UNDER CONSIDERATION, VIZ. A.Y. 2011 - 12 HAD WITNESSED REDUCTION OF THE SECURED LOANS TO RS. NIL AS IN COMPARISON TO A.Y. 2008 - 09 WHEREIN IT STOOD REFLECTED AT RS. 4,265.99 LACS, AND NO FRESH INTEREST BEARING BORROWINGS WERE RAISED DURING THE YEAR FOR PURCHASE OF INVESTMENTS YIELDING TAX FREE INCOME, THEREFORE ARE OF THE CONSIDERED VIEW THAT NO DISALLOWANCE OF ANY PART OF TH E INTEREST CHARGES WAS CALLED FOR IN THE HANDS OF THE ASSESSEE U NDER SEC. 14A OF THE ACT. WE THUS IN LIGHT OF OUR AFORESAID OBSERVATIONS HEREIN P A G E | 11 VACATE THE ADDITION OF RS.47.90 LACS OVER AND ABOVE RS.2,00,000/ - OFFERED AS DISALLOWANCE BY THE ASSESSEE IN I TS RETURN OF INCOME , AND CONSEQUENT THERETO ALLOW THE GROUND OF APPEAL NO. 1 TO 3 , AND DELETE THE DISALLOWANCE OF RS. 47.90 LACS WHICH HAD BEEN ASSAILED BY THE ASSESSEE BEFORE US. 5. THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN TERMS OF OUR AFORESAID OBSERVATIONS. ORDER PRON OUNCED IN THE OPEN COURT ON 17 /02/2017. SD/ - SD/ - (R.C SHARMA) (RAVISH SOOD) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 17 .02.2017 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI P A G E | 12