THE ACIT RG 11(1), MUMBAI V. M/S. SHRI ADHIKARI BROTHERS TELEVISION, MUMBAI

ITA 5728/MUM/2007

• Counselvise Citation: 572819914 RSA 2007
• Duration Of Justice: 4 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-03-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 03-09-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN VARMA P C MOURYA
• Assessee Lawyers: INDRA G ANAND
• Keywords: Business income; Audit objection; Earning of tax free income; Revised return; Reason to believe; Revenue expenditure
• Section: 143(3); 14A; 115JB; 147; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI. J. SUDHAKAR REDDY (A .M.) AND SHRI. S.S. GODARA (J.M.) ITA NO.4679/M/2006 (AY: 2000-01) ITA NO.5728/M/2007 (AY: 2002-03) ITA NO.4347/M/2008 (AY:2003-04) ITA NO.4136/M/2009 (AY: 2004-05) ACIT, CIRCLE-11(1), ROOM NO.439, AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400 020. VS. M/S. SRI ADHIKARI BROS. TELEVISION NETWORK LTD., ADHIKARI CHAMBERS, OBEROI COMPLEX, NEW LINK ROAD, ANDHERI (W), MUMBAI 400 053. PAN: AACCS4452P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRAVIN VARMA / P.C. MOURYA RESPONDENT BY : SHRI. INDRA G ANAND & MADHUR AGARWAL DATE OF HEARING: 21.3.2012 DATE OF PRONOUNCEMENT: 20.04.2012 O R D E R PER S.S. GODARA, J.M. ITA NO. 4679/M/2006 (AY: 2000-01) THE REVENUE HAS FILED TH E INSTANT APPEAL AGAINST THE IMPUGNED ORDER DATED 15.6.2006 PASSED BY THE LEARNED CIT (A ) FOR THE ASSESSM ENT YEAR 2000-01. 2. BRIEF FACTS OF THE INSTANT CASE ARE THAT THE ASSESSEE FILED INCOME TAX RETURN UNDER THE PROVISIONS OF INCOME TAX ACT, 1961 (HEREINA FTER TO BE REFERRED AS THE ACT) DECLARING ITS INCOME AS RS. 9,75,307/-. THEREAFT ER, ON 31.3.2003, THE ASSESSING OFFICER 2 ITANOS. 4679,5728,4347,4136 M/S SRI ADHIKARI BROS COMPLETED ASSESSMENT U/S 143(3) OF THE ACT AND COMPUTED ASSESSEES TOTAL INCOME AS RS. 10,09,23,600/-. 3. HOWEVER, ON 31.3.2005, THE ASSESSING OFFICER IS SUED NOTICE U/S 148 FOR REOPENING ASSESSMENT FINALIZED ON 31. 3.2003 FOR THE FOLLO WING REASONS. I) FROM SCHEDULE-D ANNEXED WITH THE AU DIT REPORT FOR THE YEAR RELEVANT TO AY 2000-01, IT WAS SEEN THAT THE ASSE SSEE COMPANY HAS CHANGED ITS ACCOUNTING METHOD WITH RESPECT TO WRITING OFF OF THE PRODUCTION EXPENSES. THIS HAS RESULTED IN DEFERMENT OF PRODUCTION EXPENSES AND UNDER ASSESSMENT OF PROFITS TO THE EXTENT OF RS. 157.96 LACS. II) IT IS FURTHER OBSERVED THAT TH E ASSESSEE COMPANY HAS BEEN ALLOWED DEDUCTION OF RS.79,79,314/- U/S 35D OF I.T. ACT, 1961, WHEREIN THE ASSESSEE HAS INCREASED THE CAPITAL FROM RS. 500 LAKH S TO RS. 841 LAKHS DU RING THE RELEVANT ASSESSMENT YEAR. IT IS ALSO OBSERVED FROM SCHEDULE M THAT RS. 28203/- IS PRELIMINARY EXPENSES AND BALANCE IS AMORTIZED EXPENDITURE INCURRED TOWARDS INCREASE OF CAPITAL BASE AND NOT FOR SE TTING UP A NEW INDUSTRIAL UNDERTAKING, HENCE, AMOUNT OF RS. 79,51,111/- (79, 79,314 28,203) HAS ESCAPED INCOME. III) THE DEDUCTION U/S 80HHF HAS BEEN CA LCULATED ON THE NET PROFIT OF RS. 17,95,406/- AS PER P & L A/C. AGAINST TH E INCOME COMPUTED UNDER THE HEAD BUSINESS INCOME AS PER THE PROVISIONS OF IT ACT OF RS. 16,71,56,063/-. FURTHER THE AO HAS REDUCED TOTAL TURNOVER BY RS. 44,55,66,915/- BEING THE AMOUNT NOT REALIZED. SINCE THE ASSESSEE COMPANY IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, TURNOVER MEANS RAISED AS WE LL AS REALIZABLE AMOUNT. THIS HAS RESULTED IN EXCESS DEDUCT ION OF RS. 63,88,900/-. IV) IT IS REVEALED FROM THE DIRECTORS RE PORT ATTACHED TO THE FINAL ACCOUNT THAT THE FINAL DIVIDEND OF RS. 1.80 PER SHARE IN ADDITION TO AN INTERIM DIVIDEND HAS BEEN DECLARED. THE INTERI M DIVIDEND OF RS. 1,19,86,6 98/- AND PROVISIONS FOR TAX OF RS. 26,30,074/- WAS MADE IN ACCOUNTS. HOWEVER, THE ACTUAL DATE OF PAYMENT OF TAX NOR PROOF OF PAYMENT OF DIVIDEND IS FURNISHED BY THE ASSESSEE COMPANY. NEITHER THE AUDIT REPORT SPECIFIES THE DATE S OF PAYMENTS. THE DETAILS NEEDS TO BE VERIFIED. 4. THE ASSESSEE FILED RETURN IN FURTHERAN CE TO THE NOTICE ON 31. 9.2005. THIS TIME, INCOME WAS DECLARED AS RS. 97,53,031/-. THE MATTER DID NOT END THERE. ON 3 ITANOS. 4679,5728,4347,4136 M/S SRI ADHIKARI BROS 17.10.2005, NOTICE U/S 148 WAS ISSUED. AFTE R HEARING THE ASSESSEE, THE ASSESSING OFFICER VIDE ORDER DATED 30.1.2006 COMPLETE D REASSESSMENT. THIS TIME COMPUTED ASSESSEES INCOME AS RS. 4,62,27,539/-. 5. THE ASSESSEE PREFERRED APPEAL AGAINS T THE ASSESSING OFFICERS ORDER DATED 30.3.2006 (SUPRA). VIDE THE IMPUGNED ORDER, THE LEARNE D CIT (A) HAS ALLOWED THE ASSESSEES APPEAL THEREBY SETTING ASIDE THE A SSESSING OFFICERS ORDER OF REASSESSMENT. AS PER PARA 6.1 OF THE LEARNED CIT ORDER, FOLLOWING FINDINGS HAVE BEEN ARRIVED AT:- (I) NO INCOME OF THE ASSESSEE HAD ESCAPED THE ASSESSMENT BEFORE THE ASSESSING OFFICER. (II) REOPENING IN QUESTION WAS BASE D ONLY ON AUDIT OBJECTION WHICH IS IMPERMISSIBLE. (III) REGARDING THE SAME VERY ASSESSM ENT, PROCEEDINGS U/S 263 HAD ALREADY BEEN DROPPED BY THE CIT. (IV) THERE WAS NO REASON TO BELIEVE BEFO RE THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT. 5.1. IT IS AGAINST THIS ORDER OF LEARNED CI T (A) THAT THE REVENUE HAS FILED THE INSTANT APPEAL. IN THE INSTANT APPEAL, ONLY ONE GR OUND HAS BEEN RAISED. WE ARE THEREFORE, DECIDING THE SAME HEREUNDER. 6. IN SUPPORT OF THE GROUND RAISED, THE LEARNED DR HAS REFERRED TO THE ORDER OF ASSESSING OFFICER DATED 30.1.2006. STATED TH AT THE SAME IS A SELF-SPEAKING. FURTHER STRESSED THAT THE LEARNED CIT (A) HAS COMMI TTED ILLEGALITY IN SETTING ASIDE THE WELL REASONED ORDER OF ASSESSING OFFICER. 6.1. THE LEARNED DR HAS ALSO SUBMITTED THAT ORDER PASSED BY THE LD. CIT IN PROCEEDINGS U/S 263 IS AT PAGE NO.93 OF TH E PAPER BOOK. IN THE LIGHT OF THE SAME, LEARNED DR STATED THAT THE LEARNED CIT HAD NOT ONLY DROPPED THE PR OCEEDINGS, BUT ALSO 4 ITANOS. 4679,5728,4347,4136 M/S SRI ADHIKARI BROS OBSERVED THAT THE SAID ORDER WAS WITHOUT PREJUDICE TO ANY AC TION MAY BE TAKEN U/S 147. LEARNED DR HAS ALSO TAKEN US TO PAGE NO.79 I.E., NOTICE ISSUED BY LEARNED CIT (A) U/S 263 PROCEEDINGS. BY REFERRING TO THE SAME, LD. DR STATED THAT THERE ARE ALTOGETHER DIFFERENT REASONS IN ISSUANCE OF NOTICE U/ S 263 AND U/S 147 OF TH E ACT. THE SAME CANNOT BE READ IN CONSONANCE WITH EACH OTHER AS THE A SSESSING OFFICER AND LD. CIT EXERCISE THEIR JURISDICTION WH ICH IS ALTOGETHER DIFFERENT. 7. FURTHER MORE, IN SUPPORT OF THE CONTEN TION THE LD. DR HAS ALSO RELIED ON CASE LAWS I.E., 197 TAXMAN 415 AS WELL AS 202 TAXMAN 625 (KER). 8. REPLYING TO THE ARGUMENTS, LD. AR BEFORE US HAS ALSO REFERRED TO PAGE NO.93 I.E., THE ORDER OF DROPPING SEC. 263 PROCEEDINGS PASSED BY LD. CI T. STATED THAT IN THE INSTANT CASE, ALL THE MATERIAL WAS THERE BEFORE THE LD. CIT (A). ALSO DREW OUR ATTENTION TO THE NOTICE U/S 263 PROCEEDINGS AT PAGE NO .79 OF THE PAPER BOOK. SUBMITTED THAT THE MATERIAL RELIED UPON BY THE LD. CIT (A) IN S EC. 263 AS WELL AS THE REASONS CONTAINED IN REOPENING ARE SAME. ACCORDINGLY, LD. AR EMPHASIZED THAT ONCE THE LD. CIT HAS EXAMINED THE REASONS AND DROPPED 263 PROCEEDIN GS (SUPRA), QUA THE SAME VERY ISSUES, THE ASSESSING OFFICER LOSES THE JURI SDICTION TO REOPEN THE CASE. 9. IN ADDITION, THE LEARNED AR HAS ALSO AR GUED THAT IN THE INST ANCE CASE, NO INCOME EARNED BY THE ASSESSEE HAD ESCAPED ASSESSME NT AT THE TIME OF ORDER DATED 31.3.2003. THEREFORE, THE REOPENING IN QUES TION IS ONLY CHANGE OF OPIN ION WHICH IS IMPERMISSIBLE IN LAW. ALSO ARGUED THAT THE REASON FOR REOPENING IS ONLY AUDIT OBJECTION WHICH CANNOT FORM A GROUND TO PRO CEED U/S 147 OF THE ACT. 10. SO FAR AS MERITS OF REOPENING ARE CONCERNED, THE LD. AR HAS REFERRED TO THE NOTICE DATED 17.1.2003 ISSUED BY THE ASSESSING OFFICER AT THE TIME OF INITIAL ASSESSMENT I.E., CLAUSE 14 & 16 AT PAGE NOS. 42 AND 43 OF THE PAPER BOOK. ALSO INVITED OUR ATTENTION TO THE CLARIFICATION SUBMITTED BY TH E ASSESSEE BEFORE THE ASSESSING OFFICER AT PAGE NO. 44 (CLAUSE-7), PAGE NO. 45 (CLAUSES 14 & 16) AND PAGE NOS. 47 & 48. RELYING 5 ITANOS. 4679,5728,4347,4136 M/S SRI ADHIKARI BROS ON THE SAME, THE LEARNED AR HAS SUBMI TTED THAT NEITHER ANY INCOME HAD BEEN CONCEALED BY THE ASSESSEE NOR IT HAD ESCAPE D THE ASSESSMENT AT THE HANDS OF ASSESSING OFFICER. RATHER, PER LD.AR, THE AO HAD FORM ED AN OPINION IN TH E ORIGINAL ASSESSMENT AND REOPENING AFORESAID IS ONLY CHANGE IN OP INION OF AO WHICH IS NOT PERMISSIBLE UNDER INCOME-TAX ACT. IN SUPPORT THERETO, HE HAS MADE US TO PERUSE PARA NO.3.1, PAGE NO. 50 OF THE ORIGINAL ASSESSMENT ORDER. SO FAR AS CASE LAW IS CONCERNED THE LEARNED AR HAS RELIED ON 325 ITR 429. PRAYED FO R REJECTION OF THE APPEAL. 10.1. IN REBUTTAL, LEARNED DR HAS RELIE D ON CASE LAW REPORTED IN 281 ITR 394. SUBMITTED THAT IN THE INSTANT CASE, SINCE THE INCOME HAD ESCAPED ASSESSMENT AT THE TIME OF ORIGINAL A SSESSMENT, SO, THE REOPENING IN QUESTIONS IS AS PER LAW. 11. WE HAVE HEARD BOTH THE LEARNED REPRES ENTATIVES. ALSO PERUSED THE PAPER BOOK AVAILABLE ON RECORD OF THE CA SE. SO FAR AS THE CASE LA W IS CONCERNED, WE ARE IN CONFIRMITY THAT THE VARIOUS HO NBLE COURTS THAT IF THE ASSESSING OFFICER HAS REASONS TO BELIEVE THAT ANY INCOME OF THE ASSESSEE IN QUESTION HAS ESCAPED ASSESSMENT; HE CAN ALWAYS REOPEN THE ASSESSMENT BY TAKING RECOUR SE OF THE RELEVANT PROVISIONS OF THE ACT. THEREFORE, IN THE INSTANT CASE, THE ISSUE BEFORE US IS AS TO WHETHER THE ASSESSING OFFICER HAS RIGHTLY REOPENED THE ASSESSMENT IN QUESTION OR NOT? 12. UNDISPUTED FACTS OF THE CASE ARE TH AT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD DULY INTIMATED THE ASSESSING OFFI CER ABOUT THE INCOME AND OTHER DETAILS IN FURTHERANCE TO THE SHOW CAUSE NOTICE WITH A LL CLARIFICATIONS I.E., PAGE NOS. 44 TO 48 (SUPRA). THEREAFTER, THE ASSESSMENT WAS FINA LIZED. FURTHER, EVEN IN 263 NOTICE (SUPRA) THE LEARNED CIT CALLED FOR THE SAME VERY PARTICUL ARS. NOTICE IN THIS REGARD BEFORE US IS AT PAGE NO.79. THIS ULTIMATELY LED TO DROP PING OF 263 PROCEEDINGS VIDE ORDER OF THE LD. CIT DATED 29.3.2005 WHIC H READS AS UNDER: THE PROCEEDINGS INITIATED U/S 263 OF THE I. T. ACT IN THE ABOVE CASE ARE DROPPED. THIS IS WITHOUT PREJUDICE TO ANY ACTION MAY BE TAKEN U/S 147 IN THIS CASE. 6 ITANOS. 4679,5728,4347,4136 M/S SRI ADHIKARI BROS 13. IN OUR OPINION, ONCE THE LD. CIT HAS DROPPED THE PROCEEDINGS U/S 263, THEN IT CAN ALWAYS BE SAFELY PRESUMED THAT THE ASSESSMENT ORDER HAS BEEN PASSED WITHOUT ANY ERROR CAUSING PREJUDICE TO RE VENUE AND IS IN ACCORDANCE WI TH LAW. SO, THE SECOND PORTION OF THE ORDER LOSES SIGNIFICANCE IN VIEW OF THE FACT THAT REASONS OF REOPENING AS REPRODUCED HEREINABOVE ALSO STOOD DULY CLARIFIED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. THUS, REOPENING IN QUESTION IS BASED ON A MERE CHANGE IN OPINION, THAT TOO WITHOUT ANY FRESH MATERIAL WHICH CAME TO NOTICE OF AO. THE SAME VERY REASONS WERE CLARIFIED BEFORE THE LD.C IT. HENCE, THE REOPENING IS BA D IN THE EYES OF LAW. 13.1. FURTHER, THE LD. CIT (A) HAS RETURNED A CATEGORICAL FINDING THAT THE ASSESSMENT HAS BEEN REOPENED IN VIEW OF AUDIT OBJECTION. NO MATERI AL HAS BEEN PRODUCED BEFORE US TO CONTROVERT THE SAID FINDING OF FACT. IN THE ABSENCE OF ANY SUCH MATERIAL TO NEGATE THE FINDING, WE ALSO CONCUR WITH THE LD. CIT (A) THAT MERELY ON THE BASIS OF AUDIT OBJECTION, NO REOPENING CAN BE DONE AS THE SAME IS NOT A GROUND TO PROCEED UNDER THE PROVISIONS OF THE ACT. THEREFOR E, THE APPEAL OF THE REVENUE FAILS. ACCORDINGLY DISMISSED. ITA NO.5728/M/2007 (AY: 2002-03) THE REVENUE HAS FILED THE INSTANT APPEAL AGAINST THE ORDER OF LD. CIT (A)-XI, MUMBAI DATED 5.6.2007 FOR THE ASSESSMENT YEAR 2002-03. 14. BRIEF FACTS LEAD TO FILING OF INSTANT APPEAL BEFORE US ARE THAT ON 31.10.2002, THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING INCOME AS RS. (-9,25,00,570/-). ALSO DECLARED INCOME U/S 115JB AS RS. 46,49,669/-. IT WAS FO LLOWED BY A REVISED RETURN DATED 12.12.2003. THIS TIME INCOME WAS D ECLARED AS RS. 75,43,200/ - WITH INCOME U/S 115JB OF RS. 7,93,12,797/-. 7 ITANOS. 4679,5728,4347,4136 M/S SRI ADHIKARI BROS 15. THE ASSESSING OFFICER ISSU ED A SHOW CAUSE NOTICE FOR CL ARIFICATION. THEREAFTER PASSED ASSESSMENT ORDER ON 24.3.2005. MADE DISALLOWANCE U/S 35D ON THE GROUND THAT THE ASSESSEE COMPANY CAME INTO BEING W.E.F., 19.12.1994. IN VIEW OF THE SAID FACT, THE ASSESSING OFFICER HELD THAT THE EXPENDITURE IN QUESTI ON HAD BEEN INCURRED AFTER COMMENCEMENT OF BUSINESS WHICH WAS NOT ALLOWA BLE. IT IS ALSO NOT OUT OF PLACE TO MENTION HERE THAT THE ASSESSEE UNDER THE SAID CLAIM HAD RAISED ALLOWANCE OF SHARE ISSUANCE EXPENSES. BUT THE ASSESSING OFFICER RELIED ON THE CASE OF BOOKE BOND INDIA LTD. VS. CIT 91 TAXMAN 26 (SC). ACCORDINGLY, THE ASSESSING OFFICER MADE AN ADDITION OF RS. 57,90,828/-. 15.1. IN ADDITION TO THE ABOVE DISALLOWA NCE, THE ASSESSING OFFICER ALSO MADE DISALLOWANCE OF INTEREST U/S 14A QUA THE IN TEREST WHICH THE ASSESSEE HAD EARNED FROM INVESTMENT IN SHARES. REGARDING THE SAID INTEREST AMOUNT; THE COMPANY TOOK STAND THAT IT HAD NOT UTILIZED BARROWED FUNDS. BUT THE ASSESSING OFFICER PROCEEDED TO ATTRIBUTE PART OF THE BORROWED FUNDS TOWA RDS INVESTMENT IN SHARES FOR WANT OF EXPLANATION. ACCORDINGLY, CA LCULATED AN AMOUNT OF RS. 14.18 LAKHS DISALLOWANCE U/S 14A INVESTMENT WHICH FETCHED EXEMPTED INCOME. 16. IN APPEAL, THE LD. CIT (A) VIDE IMPU GNED ORDER DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 35D OF THE ACT. HELD IN PARA NO.5 THAT CLAIM IN HAND RAISED BY THE ASSESSEE PERTAINED TO THE EARLIER A SSESSMENT YEARS AND NOT THE ASSESSMENT YEAR UNDER CONSIDERATION. 17. SIMILARLY, REGARDING SEC. 14A DISALLO WANCE ALSO, THE LD. CIT HELD THAT THE ASSESSEE DID NOT HAVE ANY EXPENDITURE RELATA BLE TO EXEMPT INCOME FOR THE YEAR UNDER CONSIDERATION. IN VIEW OF THE SAID FINDING, HE HELD THAT APPLICAT ION OF SEC.14A IN THE ASSESSMENT ORDER WAS NOT BASED ON MATERIAL FACT S. IN VIEW THEREOF, LD. CIT (A) DELETED BOTH ADDITIONS MADE BY THE ASSESSING OFFICER I. E., U/S 35D AS WELL AS U/S 14A OF THE ACT. HENCE, THE REVENUE HAS FILED TH E INSTANT APPEAL BEFORE US. 8 ITANOS. 4679,5728,4347,4136 M/S SRI ADHIKARI BROS 18. IN THE INSTANT APPEAL, THERE ARE 4 GROU NDS. GROUND NO.3 & 4 ARE GENERAL IN NATURE. GROUND NO.1 PERTAINS TO DISALLOW ANCE U/S 35D. GROUND NO.2 IS REGARDING DISALLOWANCE U/S 14A. OUR FINDINGS ARE AS UNDER. 19. GROUND NO.1:- THIS GROUND IS REGARD ING APPLICABILITY OF S EC. 35D. THE LD. DR HAS RELIED ON BROOKE BOND INDIA LIMITED VS. CIT (SUPRA), CASE LAW DECIDED BY THE HONBLE SUPREME COURT AND 41 SOT 348 IN THE CASE OF DC IT VS. AXIS AND T LTD. IN LIGHT THEREOF, THE LD. DR HAS SUBMITTED BEFORE US THAT THE LD. CIT (A) HAS COMMITTED ILLEGALITY IN SETTING ASIDE THE ORDER OF A SSESSING OFFICER. HENCE, HE PRAYED FOR THE ACCEPTANCE OF THE GROUND. 20. ON THE OTHER HAND, THE LD. AR HAS RELIE D ON CASE LAWS REPORTED IN 216 ITR 548 AND 213 ITR 669. SUBMITTED THAT QUA THE FA CTS AND CIRCUMSTANCES OF THE CASE, CASE LAW OF BOOKE BOND INDIA LTD. (SUPRA) IS NO T APPLICABLE. ACCORDIN GLY, HE PRAYED FOR REJECTION OF THE INSTANT APPEAL ON THE GROUNDS IN HAND I. E., REGARDING EXPENDITURE U/S 35D. 21. WE HAVE HEARD BOTH THE LD. REPRESEN TATIVES. ALSO PERUSED THE RECORD. THE LD.CIT(A) HAS HELD THAT ONCE THE CLAIM IS ACCEPTED U/S 35D OF THE ACT, THE SAME CANNOT BE ALLOWED TO BE WITHDRAWN IN LATTER YEARS. AS THE CLAIM IS EXAMINED WITH DOCUMENTS ONLY IN YEAR ONE. SO FAR AS THE CASE LAW OF HONBLE SUPREME COUR T IN BOOKE BOND INDIA LTD. VS. (91) TAXMANN PAGE 26 (SC) IS CO NCERNED, IN OUR OPINION, THE SAME IS NOT APPLICABLE QUA THE ISSUE IN HAND. THE SAID CASE LAW OF HONBLE SUPREME COURT PERTAINED TO ASSESSMENT YEAR 1969-70. WH EREAS, SECTION 35D OF THE ACT HAS BEEN INCORPORATED WITH EFFECT FROM 01.04.1971. FURTHER, IT IS NOBO DYS CASE THAT EXPENDITURE IN QUESTION IS REVENUE EXPENDITURE. ACCORDINGLY, WE ARE INCO NFORMITY WITH THE FIND INGS OF LD.CIT(A). HENCE, REJECT THIS GROUND. 9 ITANOS. 4679,5728,4347,4136 M/S SRI ADHIKARI BROS 22. GROUND NO.2: IN THIS GROUND, THE REVENUE HAS CHALLENGED THE OR DER OF THE LD. CIT (A) WHEREIN THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 14A HAS BEEN DELETED. 22.1. IN SUPPORT OF THE GROUND THE LD. DR HAS RELIED ON THE ORDER OF THE ASSESSING OFFICER. STATED THAT THE LD. CIT (A) HA S COMMITTED ILLEGALITY IN SETTING ASIDE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/ S 14A OF THE ACT. HE NCE, HE PRAYED FOR ACCEPTANCE OF THE GROUND. 23. REPLYING TO THE ARGUMENTS, LD. AR FOR THE ASSESSEE HAS RELIED ON THE ORDER OF LD. CIT (A). PRAYED FOR REJ ECTION OF THE GROUND. 23.1 AFTER HEARING BOTH THE LD. REPRESENTA TIVES AND HAVING PERUSED THE FINDINGS IN QUESTION OF THE LD.CIT(A), WE ARE OF THE OP INION THAT SINCE INVESTMENTS IN SHARES IN QUESTION WERE MADE MUCH BEFORE THE ACCEPT ANCE OF DEPOSITS, THEREFORE, THE SAME WAS NOT OUT OF INTEREST BEARING FUND S. IT IS FOR THIS REASON, THAT THE LD.CIT(A), HAS EXERCISED JURISDICTION. THE REVENUE HAS NO T BEEN ABLE TO CONTROVERT TH E SAID FINDINGS ON THE BASIS OF RECORD AVAILABLE. HEN CE WE REJECT THIS GROUND. 24. CONSEQUENTLY, ITA NO.5728/ M/2007 FILED BY THE REVENUE ALSO STANDS DISMISSED. ITA NO. 4347/M/2008 (AY:2003-04) ITA NO.4136/M/2009 (AY: 2004-05) 25. BOTH THE LEARNED REPRESENTATIVES HAVE MA DE A FAIR STATEMENT THAT GROUND NOS. 2 & 3 IN ITA NO.4347/M/2008 AS WELL AS GRO UND NOS. 3 & 4 IN ITA NO.4136/M/2009 ARE GENERAL IN NATURE. GROUND NO.1 IN ITA NO. 4347/M/2008 AND GROUND NOS. 1 & 2 IN ITA NO. 4136/M/2009 RELATE TO THE VERY SAME ISSU E I.E., AMORTIZED EXPE NDITURE U/S 35D OF THE ACT. THEY HAVE ALSO STATED THAT THE FINDING ON THIS VERY ISSUE IN ITA NO. 10 ITANOS. 4679,5728,4347,4136 M/S SRI ADHIKARI BROS 5728/M/2007 (GROUND NO.1) WOULD ALSO COVER THE ISSUE INVOLVED IN THESE APPEALS. SINCE, IN ABOVE SAID APPEAL I.E., IN ITA NO. 5728/M/2007 WE HAVE DECIDED THE GROUND SEC. 35D IN FAVOUR OF THE ASSESSEE AND AG AINST THE REVENUE, THEREFORE, THE INSTANT APPEALS FILED BY THE REVE NUE ARE ALSO DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF APRIL, 2012. SD/- SD/- ( J. SUDHAKAR REDDY) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE : 20.04.2012 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), MUMBAI CONCERNED 4. THE CIT, MUMBAI CONCERNED 5. THE DR B BENCH, ITAT, MUMBAI // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI