Sayaji Industries Ltd., Ahmedabad V. The ACIT., (OSD)Circle-8, Ahmedabad

ITA 581/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0056 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 07-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SANJAY R SJHAH
• Keywords: Depreciation; Earning of tax free income
• Section: 143(3); 142(1); 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI R.P. TOLANI, JM, & SHRI MANISH BORAD , AM. ITA NOS. 581 & 1752/AHD/2012 ASST. YEAR: 2008-09 & 2009-10 SAYAJI INDUSTRIES LTD., P.O. KATHWADA, AHMEDABAD. VS. ACIT (OSD), CIRCLE-8, AHMEDABAD. APPELLANT RESPONDENT PAN AADCS0861R ITA NO. 2247/AHD/2012 ASST. YEAR: 2009-10 DCIT, CIRCLE-8, AHMEDABAD. VS. SAYAJI INDUSTRIES LTD., P.O. KATHWADA, AHMEDABAD. APPELLANT RESPONDENT APPELLANT BY SHRI SANJAY R. SJHAH, AR RESPONDENT BY SHRI K. MADHUSUDAN, SR. DR DATE OF HEARING: 7/11/2016 DATE OF PRONOUNCEMENT: 11/11/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THESE THREE APPEALS, ONE BY ASSESSEE FOR ASST. YEA R 2008-09 AND CROSS APPEALS BY ASSESSEE AND REVENUE FOR ASST. YEAR 2009-10 ARE DIRECTED AGAINST THE ORDERS OF LD. CIT(A) XIV, AHMEDABAD DATED 10.01.2012 AND 6/7/2012 ARISING OUT OF ORDERS U/S 143(3) OF THE IT ACT, 1961 (IN SHORT THE ACT) FRAMED ON 10/12/2010 A ND 4/11/2011 BY ACIT(OSD) CIRCLE-8, AHMEDABAD FOR ASST. YEAR 2008-0 9 & 2009-10 ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 2 RESPECTIVELY. AS THE ISSUES RAISED IN THESE APPEALS ARE COMMON AND THE ASSESSEE IS THE SAME, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. 2. FIRST WE WILL TAKE ASSESSEES APPEALS FOR ASST. YEAR 2008-09 & 2009-10 VIDE ITA NO. ITA NOS. 581 & 1752/AHD/2012 R AISING COMMON GROUNDS CHALLENGING THE ORDERS OF LD. CIT(A) WHEREIN SUSTAINING DISALLOWANCE U/S 14A OF THE ACT AND ALSO CONFIRMING THE DISALLOWANCE U/S 14A OF THE ACT TO BE CONSIDERED W HILE COMPUTING BOOK PROFIT U/S 115JB OF THE ACT HAVE BEEN CHALLENG ED. 3. FOR THE PURPOSE OF ADJUDICATING WE TAKE THE FACT S FOR ASST. YEAR 2008-09 BRIEF FACTS ARE THAT ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING OF STA RCH AND ITS DERIVATIONS. RETURN OF INCOME WAS FILED ON 27.09.20 08 DECLARING TOTAL LOSS OF RS.8478701/- AND DECLARING TOTAL INCOME U/S 115JB OF THE ACT AT RS.13948978/-. THE CASE WAS SELECTED FOR SCRUTIN Y ASSESSMENT. NOTICE U/S 143(2) FOLLOWING BY NOTICE U/S 142(1) OF THE ACT WERE DULY ISSUED AND SERVED. NECESSARY DETAILS WERE CALLED FO R AND SUPPLIED BY THE ASSESSEE. ASSESSED LOSS STOOD AT RS.2732096/- A ND PROFITS FOR THE PURPOSE OF MAT WAS ASSESSED AT RS.15864575/-. 4. APPEAL BEFORE FIRST APPELLATE AUTHORITY BROUGHT PART RELIEF TO THE ASSESSEE. 5. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 3 6. GROUND NO.1 IS GENERAL IN NATURE, WHICH NEEDS NO ADJUDICATION. 7. GROUND NO.2 READS AS UNDER :- 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISAL LOWANCE U/S 14A READ WITH RULE 8D TO THE EXTENT OF RS. 6,97,078 OUT OF THE DISALLOWAN CE OF RS. 19,46,597/- MADE BY THE AO. IT BE SO HELD NOW. 2.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT DI SALLOWING U/S. 14A, THE AO OUGHT TO HAVE SATISFIED THAT EXPENDITURE DISALLOWED BY THE APPELLANT HI RETURN OF INCOME IS NOT CORRECT. IT BE SO HELD NOW. 2.2. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING T HE FACT THAT THERE WAS NO FRESH INVESTMENT DURING THE YEAR AND HI THE IMMEDIATELY PRECEDING YEAR, IT HAS BEEN ACCEPTED THAT NO EXPENDITURE FOR INTEREST HAS BEEN INCURRED FOR EARNING DIVIDEND INCOME, IT IS SUBMITTED IN THE FACTS OF TH E CASE THAT THE LEARNED C1T(A) OUGHT TO HAVE DELETED THE DISALLOWANCE MADE. 8. LD. AR SUBMITTED THAT TOTAL EXEMPT DIVIDEND IS R S.18,02,832/-; OUT OF WHICH DIVIDEND FROM SAYAJI SETHNESS LTD. IS RS.18.00,000/-. INVESTMENT IN SAYAJI SETHNESS LTD. AMOUNTING TO RS. 120 LACS WAS MADE IN A.Y 1995-96 AND 1996-97 OUT OF ITS OWN FUND S I.E., IN BOTH THE YEARS INTEREST FREE FUNDS WERE MORE THAN THE IN VESTMENTS MADE. NO DISALLOWANCE WAS MADE U/S. 36( 1 )(III) IN THOSE YEARS. RELIANCE IS PLACED ON :- - CIT VS. UTI BANK LTD. 32 TAXMANN.COM 370 (GUJ.) - CIT VS. GUJARAT NARMADA VALLEY FERTILI ZERS CO. LTD. 42 TAXMANN.COM 270 (GUJ.} - CIT V. RELIANCE UTILITIES & POWER LTD. 313 ITR 3 40 (BOM.) - CIT V. HERO CYCLES LTD. 323 ITR 518 (PUNJ & HAR) A) LD. AR FURTHER SUBMITTED THAT HON'BLE TRIBUNAL I N APPELLANT'S OWN CASE FOR AY 2007-08 HAS HELD THAT IT IS UNDISPU TED FACT THAT THE ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 4 INVESTMENTS IN SAYAJI SETHNESS LTD. WHICH FORMS A S UBSTANTIAL CHUNK OF INVESTMENTS WERE MADE IN AY 1995-96 & 1996-97 OUT OF APPELLANT'S OWN FUNDS IN FORM OF CAPITAL AND RESERV ES AND PROFITS FROM OPERATIONS AND DELETED DISALLOWANCE TOWARDS PROPORT IONATE INTEREST U/S 14A; THOUGH THEY UPHELD THE DISALLOWANCE OF RS. 25,000/- TOWARDS OTHER EXPENSES. B) FURTHER IN SUPPORT OF HIS CONTENTION SUBMITTED T HAT IF NO NEXUS IS PROVED BY AO TO ESTABLISH THAT BORROWED FUNDS AR E USED FOR TAX FREE INVESTMENT NO DISALLOWANCE CAN BE SUSTAINED U/S 14 A OF THE ACT AS HELD IN - - CIT V. RELIANCE UTILITIES AND POWER LTD 313 ITR 340 (BOM.) CIT V. SUZLON ENERGY LTD 33 TAXMANN.COM 151 (GUJ.) - CIT VS GUJARAT NARMADA VALLEY FERTILI ZERS CO LTD. 42 TAXMANN.COM 270 (GUJ.) C) NO FURTHER INVESTMENT HAD BEEN MADE DURING THE Y EAR UNDER CONSIDERATION. DISALLOWANCE CANNOT BE MADE IF NO DI SALLOWANCE WAS MADE IN EARLIER YEARS AND NO FRESH INVESTMENT HAS B EEN MADE DURING THE YEAR. (RELIED ON CIT V. SRIDEV ENTERPRISES 192 ITR 165(KAR.) THERE IS NO REQUIREMENT TO ALLOCATE RS.25,000 AS AD MINISTRATIVE EXPENSE TO EXEMPT INCOME AS THERE ARE NO ACTIVITY I NCURRING ANY EXPENSE EXCEPT RECEIPT OF YEARLY DIVIDEND WHICH HAP PENS ONCE IN YEAR. RELIANCE IS PLACED ON GODREJ & BOYCE VS. DCIT 328 ITR 81 (BOM.) WITHOUT PREJUDICE TO THE ABOVE, IN CASE THE AO'S ORDER IS UPHELD THEN INTEREST EXPENSE NOT ATTRIBUTABLE T O EXEMPT INCOME SHOULD NOT BE CONSIDERED FOR RULE 8D(II) PURPO SES AS BORROWED ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 5 FUNDS WERE USED FOR SPECIFIC PURPOSES I.E FOR PUR CHASE OF FIXED ASSETS AND TO MEET WORKING CAPITAL REQUIREMENTS. RE LIANCE IS PLACED ON FOLLOWING DECISIONS: - ITO V. NARAIN PRASAD DALMIA 52 TAXMANN.COM 83 (K OL. IT AT) ACIT VS. CHAMPION COMMERCIAL COMPANY LTD. 26 TAXMANN.COM 342 (KOL. ITAT) ACIT VS BEST & CROMPTON ENGINEERING LIMITED 36 TAXM ANN.COM 555 (CHENNAI 1TAT) D) EVEN IN A.Y. 2003-04, THE APPELLANT'S CLAIM FOR DEDUCTION U/S 80M WAS ALLOWED IN THE REGULAR ASSESSMENT BY THE DE PARTMENT AND NO ADJUSTMENT WAS CARRIED OUT REGARDING INTEREST OR OTHER EXPENSES DUE TO THE FACT THAT THERE WAS NO EXPENDITURE INCUR RED FOR EARNING EXEMPT INCOME. INVESTMENT IN SUBSIDIARY COMPANIES I S STRATEGIC INVESTMENT FOR THE PURPOSE OF ACQUIRING CONTROLLING INTEREST. RELIANCE IS PLACED ON - GARWARE WALL ROPES LTD. V CTT 46 TAXMANN.COM 18 (M UM ITAT) - E1H ASSOCIATES HOTELS LTD. V DCIT IN ITA NO. 1503 /MDS/2012 - JM FINANCE LTD. V ACIT IN ITA NO. 4521/MUM/2012 - INTERGLOBE ENTERPRISES LTD. V DCIT ITA NO. 1362 & 1032/DEL/2013 E) ONLY INVESTMENTS WHICH HAVE EARNED EXEMPT DIVIDE ND INCOME SHOULD BE CONSIDERED FOR COMPUTATION OF DISALLOWANC E U/S 14A R.W.R 8D. RELIANCE IS PLACED ON - - CORRTECH ENERGY PVT LTD 45 TAXMANN.COM 116 (GU J.) - CIT VS. ACB INDIA LTD IN ITA 615 OF 2014 [TS-1 76-HC-2015] (DEL.) ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 6 F) LD. AR FURTHER IN SUPPORT OF HIS ARGUMENTS SUBMI TTED THAT ASSESSEE HAS SUFFICIENT INTEREST FREE FUNDS FOR MAK ING INVESTMENTS IN SHARES AND MUTUAL FUNDS AND POST AMENDMENT IN RULE 8D OF THE IT RULES, 1962 R.W.S. 14A OF THE ACT FOR ASST. YEAR 20 08-09 ALSO HON. JURISDICTIONAL HIGH COURT IN THE CASE OF PRINCIPAL CIT VS. INDIA GELATINE AND CHEMICALS LTD. (2016) 66 TAXMANN.COM 3 56 (GUJARAT) HAS UPHELD THE TRIBUNALS DECISION DELETING THE EN TIRE DISALLOWANCE FOR ASST. YEAR 2009-10 MADE BY ASSESSING OFFICER ON THE GROUND THAT ASSESSEE HAS SUFFICIENT INTEREST FREE FUNDS. 9. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS O F LOWER AUTHORITIES. HE COULD NOT CONTROVERT THE SUBMISSION S OF LD. AR AND COUNTER JUDGMENT. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THROUGH THIS GROUND ASSESSEE HAS CHALLEN GED THE ACTION OF LD. CIT(A) SUSTAINING THE DISALLOWANCE U/S 14A O F THE ACT. WE OBSERVE THAT DURING THE COURSE OF ASSESSMENT PROCEE DINGS IT WAS OBSERVED BY ASSESSING OFFICER THAT ASSESSEE EARNED DIVIDEND INCOME OF RS.1802832/-. THERE STOOD INVESTMENTS OF RS.1292 5000/- IN QUOTED AND UNQUOTED SHARES AND GOVERNMENT SECURITIE S. ASSESSEE PAID INTEREST OF RS.54,44,2000/- AGAINST LOAN OF RS .35.27 CRORES. BASED UPON THESE FACTS AND FIGURES LD. ASSESSING OF FICER APPLIED RULE 8D OF THE IT RULES 1962 R.W.S.14A OF THE ACT A ND CALCULATED DISALLOWANCE AT RS.1946597/- (RS.20,000/- ADMITTED BY ASSESSEE + INTEREST DISALLOWANCE OF RS.1798062/- + 0.5% OF AVE RAGE INVESTMENT AT RS.128535/-). FURTHER WHEN THE MATTER CAM UP BEF ORE FIRST ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 7 APPELLATE AUTHORITY, DISALLOWANCE ADMITTED BY ASSES SEE AT RS.20,000/- WAS DELETED AND FOR THE REMAINING DISAL LOWANCE METHOD FOLLOWED BY ASSESSING OFFICER WAS SUSTAINED BUT THE MATTER WAS RESTORED TO THE ASSESSING OFFICER FOR RE-CALCULATIO N AS SOME FIGURES WERE WRONGLY INSERTED IN THE METHOD PROVIDED UNDER RULE 8D. ACCORDINGLY, LD. ASSESSING OFFICER RECOMPUTED THE D ISALLOWANCE AT RS.697078/- U/S 14A OF THE ACT FOR WHICH ASSESSEE I S NOW IN APPEAL BEFORE THE TRIBUNAL. 11. FROM GOING THROUGH THE SUBMISSIONS OF LD. AR WE FIND THAT THE IMPUGNED INVESTMENTS AS ON 31.3.2008 AT RS.129.25 L ACS MAINLY INCLUDES INVESTMENT OF RS.120.00 LACS INVESTED IN E QUITY SHARES OF SAYAJI SETHNESS LTD. BROUGHT FORWARD FROM 1996-97. IF THIS INVESTMENT OF RS.120 LACS BROUGHT FORWARD FROM ASST. YEAR 1996 -97 IS KEPT APART THE REMAINING INVESTMENT LEFT AT RS.9.25 LACS ONLY. FURTHER ON GOING THROUGH THE AUDITED BALANCE SHEET AT PAGE 50 OF THE PAPER BOOK, WE FIND THAT ASSESSEE POSSESSED SHARE CAPITAL AND RESE RVE AND SURPLUS I.E. INTEREST FREE FUNDS AT RS.2029.00 LACS AND INV ESTMENT AGAINST INTEREST FREE FUNDS WAS ONLY RS.129.25 LACS WHICH I N PERCENTAGE TERM IS APPROXIMATELY 6%. FURTHER IN ORDER TO VERIFY SUC H MAJOR INVESTMENT OF RS.120.00 LACS INVESTMENT IN SHARES OF SAYAJI SE THNESS LTD. BEING BROUGHT FORWARD FROM 1996-97, WE FIND THAT AT PAGE 70-123 OF PAPER BOOK ASSESSEE HAS FILED COPY OF ANNUAL REPORT FOR A SST. YEARS 1994- 95 AND 1995-96, (MORE SPECIFICALLY AT PAGE 111) THA T INVESTMENT OF RS.120.00 LACS STOOD INVESTED AND AS ON 31.3.1996 A LSO ASSESSEE WAS HAVING INTEREST FREE FUNDS IN THE FORM OF SHARE CAPITAL RESERVE AND SURPLUS AT RS.1730.53 LACS. FURTHER THE FACT TH AT INVESTMENT IN ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 8 SAYAJI SETHNESS LTD. WHICH FORMED SUBSTANTIAL CHUNK OF INVESTMENT MADE IN ASST. YEARS 1995-96 & 1996-97 HAS BEEN DECI DED BY THE CO- ORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NO.376 /AHD/2012 FOR ASST. YEAR 2007-08 BY OBSERVING AS UNDER :- 5.5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL AVAILABLE ON RECORD. IT IS AN UNDISPUTED FACT THAT THE INVESTMENTS IN SAYAJI SETHNESS LTD. WHICH FORMS A SUBSTANTIAL CHUN K OF INVESTMENTS WERE MADE IN AY 1995-96 AND 1996-97. FROM THE COPY OF CASH FLOW STATEMENTS OF THOSE YEARS IT IS SEEN THAT IN THOSE YEARS, ASSESSEE WAS HAVING SUBSTANTIAL INTEREST FREE FUNDS IN THE F ORM OF CAPITAL AND RESERVES AND PROFITS FROM OPERATIONS. IN THE CASE O F CIT VS. RELIANCE UTILITIES AND POWER LTD. (SUPRA) THE HON. HIGH COUR T HAS HELD THAT IF THERE ARE INTEREST FREE FUNDS AVAILABLE TO AN ASSES SEE SUFFICIENT TO MEET ITS INVESTMENTS AND AT THE SAME TIME THE ASSES SEE HAS RAISED A LOAN, IT CAN BE PRESUMED THAT THE INVESTMENTS WERE FROM INTEREST FREE FUNDS AVAILABLE. IT IS ALSO A FACT THAT HON. BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE LTD., HAS HELD THAT PROVISIO NS OF RULE 8D ARE APPLICABLE FROM AY 2008-09 AND IN EARLIER YEARS THO UGH PROVISIONS OF RULE 8D ARE NOT APPLICABLE BUT REASONABLE DISALLOWA NCE U/S 14A BE MADE BY THE AO. CONSIDERING THE AFORESAID FACTS WE FIND NO FAULT IN THE ORDER OF CIT (A) WITH RESPECT TO THE DELETING T HE DISALLOWANCE ON ACCOUNT OF INTEREST WHILE COMPUTING THE DISALLOWANC E U/S 14A IS CONCERNED. AS FAR AS DISALLOWANCE ON ACCOUNT OF ADM INISTRATIVE EXPENSES IS CONCERNED, WE FIND THAT CIT(A) AFTER NO TING THAT THE PROVISIONS OF RULE 8D ARE NOT APPLICABLE TO THE YEA R UNDER CONSIDERATION, BUT AFTER CONSIDERING THE FACTS, HAD RESTRICTED THE DISALLOWANCE TO RS.25,000/- AS AGAINST RS.64,000/- MADE BY THE AO WHICH IN OUR VIEW, IN THE PRESENT FACTS AND CIRCUMS TANCES SEEMS TO BE REASONABLE. IN VIEW OF THE AFORESAID FACTS WE FI ND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). THUS THE GR OUND OF REVENUE AND THE GROUND RAISED BY ASSESSEE CO ARE DISMISSED. 12. FROM THE ABOVE DISCUSSION WE COME TO THE FINDIN G THAT ASSESSEE ON ONE HAND IS HAVING SUFFICIENT INTEREST FREE FUNDS TO MEET THE INVESTMENTS AND SECONDLY THE MAJOR PORTION OF E XEMPT INCOME AT ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 9 RS.18 LACS OUT OF TOTAL EXEMPT INCOME AT RS.1820.83 LACS IS ONLY OUT OF DIVIDEND OF SAYAJI SETHNESS LTD. AND THESE INVES TMENTS WERE MADE WAY BACK IN 1995-96 AND 1996-97. IN THESE FACTS WE FIND THAT THE JUDGMENT OF HON. JURISDICTIONAL HIGH COURT IN THE C ASE OF PRINCIPAL CIT VS. INDIA GELATINE AND CHEMICALS LTD. (SUPRA) I S SQUARELY APPLICABLE TO THE ASSESSEES CASE WHEREIN HON. JURI SDICTIONAL HIGH COURT HAS UPHELD THE ORDER OF THE TRIBUNAL DELETING THE ENTIRE DISALLOWANCE MADE BY ASSESSING OFFICER ON THE GROUN D THAT ASSESSEE HAD SUFFICIENT INTEREST FREE FUNDS OUT OF WHICH INV ESTMENT WAS MADE. THE RELEVANT PORTION OF THE JUDGMENT OF HON. JURISD ICTIONAL HIGH COURT IS REPRODUCED BELOW :- 5.1 NOW, SO FAR AS THE DELETION OF DISALLOWANCE OF INTE REST EXPENSES UNDER SECTION 14A OF THE ACT BY THE LEARNED TRIBUNAL CIT( A) IS CONCERNED, IT IS REQUIRED TO BE NOTED THAT THE AO MADE THE DISALLOWA NCE UNDER SECTION 14A OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS NOT ABL E TO JUSTIFY THAT THE INVESTMENTS MADE IN THE SHARES AND MUTUAL FUNDS AMO UNTING TO RS. 21,14,07,850/- WAS MADE OUT OF THE INTEREST-FREE FU NDS. HOWEVER, IT IS REQUIRED TO BE NOTED THAT BOTH, THE LEARNED CIT(A) AS WELL A S THE LEARNED TRIBUNAL HAVE CATEGORICALLY FOUND ON THE BASIS OF THE MATERIAL ON RECORD THAT AS SUCH THE ASSESSEE WAS HAVING INTEREST-FREE FUNDS OUT OF WHIC H THE INVESTMENT WAS MADE. THEREFORE, BY OBSERVING IN PARAS 6 TO 9 EXTRACTED H EREINBELOW, THE LEARNED TRIBUNAL HAS DELETED THE ENTIRE DISALLOWANCE OF RS. 12,06,934/- MADE BY THE AO UNDER SECTION 14A OF THE ACT '6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF BWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. THE U NDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT T HE ASSESSEE HAS MADE INVESTMENT OF RS. 21,14,07,850/- AND THE ASSESSEE H AS PAID INTEREST ON BORROWED FUNDS OF RS. 40,10,8617-. HE ALSO OBSERVED THAT THE ASSESSEE HAS NOT MADE DISALLOWANCE OF INTEREST EXPENDITURE A CCORDING TO SECTION 14A READ WITH RULE 8D OF THE ACT HE THEREFORE COMPU TED THE PROPORTIONATE DISALLOWANCE OF INTEREST EXPENDITURE AT RS. 5,84,706/- AND DISALLOWED THE SAME. BEFORE THE COMMISSIONER OF INC OME TAX (APPEALS), THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD , BORROWED FUNDS ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 10 FOR THE PURPOSES OF VEHICLE AND OLD LOAN OF RS. 200 5/- FOR CAPTIVE POWER PLANT, AND THEREFORE NO BORROWED FUNDS WERE USED FO R NON-BUSINESS PURPOSES. FURTHER, THE ASSESSEE RELIED UPON THE DEC ISION OF THE HORIBLE SUPREME COURT IN THE CASE OF S A BUILDERS (SUPRA) AND MUNJAL SALES CORPORATION (SUPRA) AND THE DECISION OF HON'BLE MUMBAI HIGH COURT IN THE CASE OF RELIANCE UTILITY &, POWER LTD. (SUPRA) WHERE IT WAS HELD THAT IF THE INTEREST FREE FUNDS OF THE ASSESSEE WERE SUF FICIENT FOR MAKING INVESTMENTS, NO DISALLOWANCE OF INTEREST EXPENDITUR E WAS CALLED FOR. THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE FINDING OF THE ASSESSING OFFICER WAS NOT CORRECT THAT THE ASSESSEE HAS NOT CHARGED ANY INTEREST FREE LOAN TO ASSOCIATE CONCERNS. HE HELD T HAT THE ASSESSEE IN FACT EARNED INTEREST INCOME AT THE RATE VARYING FROM 9% TO 12.5% FROM THE ASSOCIATED CONCERNS DEPENDING UPON THE AVAILABILITY OF SURPLUS FUNDS AND THEREBY EARNED INTEREST INCOME OF APPROXIMATELY RS. 50.74 LAKHS DURING THE YEAR. HE, THEREFORE, HELD THAT DISALLOWANCE MAD E BY THE ASSESSING OFFICER U/S. 36(I)(III) WAS OF RS. 40,10,861/- WAS NOT JUSTIFIED. 7. THE DEPARTMENTAL REPRESENTATIVE HAS MERELY RELIE D UPON THE ORDER OF THE ASSESSING OFFICER. HE HAS NOT POINTED OUT ANY S PECIFIC ERROR IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). HE COULD NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE CO ULD NOT HAVE ADVANCED INTEREST FREE LOANS OR LOANS AT LOWER RATE OF INTEREST TO THE SISTER CONCERNS OUT OF ITS INTEREST FREE FUNDS AVAILABLE W ITH IT. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX APPEALS) WHICH IS CONFIRMED AND THE GROUND NO. 1 OF APPEAL OF THE REVENUE IS DISMISSED. 8. FURTHER, THE ASSESSING OFFICER ALSO MADE DISALLO WANCE OF RS. 8,22,228/- OUT OF ADMINISTRATIVE EXPENSES, BUT HAD RESTRICTED THE DISALLOWANCE MADE TO RS. 6,22,228/- AS THE ASSESSEE HIMSELF HAD ' MADE DISALLOWANCE OF RS. 2,00,000/- AS EXPENSES INCURRED FOR EARNING TAX FREE DIVIDED INCOME. THE COMMISSIONER OF INCOME TAX (APP EALS) OBSERVED THAT THE SAID EXPENSES MUST HAVE BEEN INCURRED BY T HE ASSESSEE IN MAKING THE INVESTMENTS AND THEREFORE CONFIRMED THE DISALLO WANCE OF RS. 6,22,228/-MADE BY THE ASSESSING OFFICER. THE AUTHOR IZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE A SSESSEE HAS EARNED DIVIDED INCOME OF RS. 12,200/- AS WILL BE EVIDENCED FROM THE STATEMENT OF ACCOUNTS OF THE ASSESSEE AT PAGE 26 OF THE PAPER BOOK FOR WHICH DISALLOWANCE OF RS. 6,22,228/-CANNOT BE MADE. ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 11 9. WE FIND THAT THE ASSESSING OFFICER AS WELL AS TH E COMMISSIONER OF INCOME TAX (APPEALS) COULD NOT PINPOINT ANY ERROR I N THE COMPUTATION OF DISALLOWANCE MADE BY THE ASSESSEE OF RS. 2,00,000/- IN EARNING TAX FREE DIVIDED INCOME. IN THE CIRCUMSTANCES, IN OUR CONSID ERED OPINION, DISALLOWANCE OF RS. 6,22,228/- COULD NOT HAVE BEEN MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS). OUR ABOVE VIEW FINDS SUPPORT FROM THE DE CISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. CONSOLIDATED PHOTO & FINVEST LTD. (2012) 211 TAXMAN 184 (DEL) THEREFORE, WE SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE DISALLOW ANCE OF RS. 6,22,228/-. THUS, GROUND NO. 1 OF APPEAL OF THE ASSESSEE IS ALL OWED.' WE ARE IN COMPLETE AGREEMENT WITH THE VIEW TAKEN BY THE LEARNED TRIBUNAL AND THE REASONS GIVEN BY THE LEARNED TRIBUNAL WHILE DEL ETING THE DISALLOWANCE OF INTEREST EXPENSES UNDER SECTION 14A OF THE ACT. 13. RESPECTFULLY FOLLOWING THE JUDGMENT OF HON. JUR ISDICTIONAL HIGH COURT, WE ARE OF THE VIEW THAT NO DISALLOWANCE OUT OF THE INTEREST EXPENDITURE IS TO BE MADE IN THE CASE OF ASSESSEE U /S 14A OF THE ACT. HOWEVER, SUO MOTU DISALLOWANCE MADE BY ASSESSEE AT RS.20,000/- AND 0.5% OF AVERAGE INVESTMENT AS RECALCULATED AT R S.64215/- BY ASSESSING OFFICER RS.64215/- IS SUSTAINED AS DISALL OWANCE U/S 14A OF THE IT ACT. ACCORDINGLY THIS GROUND OF ASSESSEE IS PARTLY ALLOWED. 14. GROUND NO.3 IS - THE LEARNED CIT(A) ERRED IN CO NFIRMING THE DISALLOWANCE U/S. 14A MADE BY THE AO WHILE, COMPUTI NG BOOK PROFIT U/S. 115JB OF THE ACT. 15. AT THE OUTSET LD. AR SUBMITTED THAT THE ISSUE H AS BEEN HELD AGAINST ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASST. YEAR 2007-08 AND, THEREFORE, DISALLOWANCE, IF ANY, TO BE SUSTAINED AFTER ADJUDICATION OF GROUND NO.2 MAY ALSO BE ADDED TO THE BOOK PROFIT FOR THE PURPOSE OF CALCULATING MAT. ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 12 16. LD. DR SUPPORTED THE ORDERS OF LOWER AUTHORITIE S. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED IN THIS GROUND IS WITH RESPECT TO ADDITION OF DISALLOWANCE MADE U/S 14A OF THE ACT TO THE BOOK PR OFIT FOR COMPUTATION OF BOOK PROFIT U/S 115JB OF THE ACT. WE FIND THAT THE CO- ORDINATE BENCH IN ITA NO.376/AHD/2012 IN ASSESSEES OWN CASE FOR ASST. YEAR 2007-08 HAS ADJUDICATED THIS ISSUE AND D ECIDED IN FAVOUR OF REVENUE BY OBSERVING AS BELOW :- 6.3 WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPE CT TO THE ADDITION OF DISALLOWANCE MADE U/S. 14A TO THE BOOK PROFITS FOR COMPUTATION OF BOOK PROFIT U/S. 115JB OF THE ACT. WE FIND THAT THE CO-O RDINATE BENCHES OF THE TRIBUNAL WHILE DECIDING THE ISSUE IN FAVOUR OF ASSE SSEE IN THE CASE OF M/S. ESSAR TELEHOLDINGS LTD., (SUPRA) AND QUIPPO TELECOM INFRASTRUCTURE LTD.,(SUPRA) HAD PLACED RELIANCE ON THE DECISION OF DELHI BENCH IN THE CASE OF GOETZE (IDIA) LTD. V/S. CIT [2009] 32 SOT 101 (D EL.)- WE FIND THAT THE AFORESAID DECISION OF DELHI TRIBUNAL WAS CHALLENGED BY THE REVENUE .AND THE MATTER WAS CARRIED BEFORE THE HON'BLE DELHI HIG H COURT. DELHI HIGH COURT WHILE DECIDING THE ISSUE IN THE CASE OF CIT V /S. GOETZE LRDIA'LTDR:(SUP:RA),DECFDM-'THE ISSUE IN FAVOUR OF REVENUE. THE RELEVANT PORTION OF THE ORDER READS AS UNDER;- 35. BY ORDER DATED 16 TH MAY, 2012, THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW WERE FRAMED IN THE PRESENT APPEALS :- (I) WHETHER THE INCOME TAX APPELLATE TRIBUNAL WAS RIGHT IN HOLDING THAT WHILE COMPUTING BOOK PROFIT UNDER SECT ION 115JB OF THE INCOME TAX ACT 1961 NO DISALLOWANCE UNDER SECTION 1 4A WAS REQUIRED TO BE MADE? (II) WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS RIGHT IN DELETING INTEREST U/S 234D OF THE INCOME TAX ACT, 1 961? ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 13 37. LD. COUNSEL FOR THE RESPONDENTS-A SSESSEE, DURING THE COURSE OF HEARING, HAS FAIRLY CONCEDED, THAT THE FIRST QUESTI ON HAS TO BE ANSWERED' IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE IN VIEW OF THE PROVISIONS IN THE EXPLANATION 1 BELOW S EC. 115JB(2) AND CLAUSE (F), THE ASSESSING OFFICER IT IS STATED HAD MADE AN ADDITION OF RS.88,292/- TO THE BOOK PROFITS TOWARDS EXPENDITURE INCURRED HA VING NEXUS WITH DIVIDEND INCOME, WHICH WERE EXEMPT UNDER SECTION 10(33). RECORDING THE SAID STATEMENT, THE FIRST QUE STION IS ANSWERED IN FAVOUR OF THE APPELLANT REVENUE AND AGAINST THE RESPONDENT- ASSESSEE. 6.4 WE THUS FIND THAT HON. DELHI HIGH COURT IN THE CASE OF GOETZE INDIA (SUPRA) HAS DECIDED THE ISSUE IN FAVOUR OF THE REVE NUE. BEFORE US LD. AR HAS NOT BROUGHT ANY CONTRARY BINDING DECISION IN IT S SUPPORT. IN VIEW OF THE AFORESAID FACTS WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) WHEREBY HE HAS DIRECTED THE AO TO CONSIDER THE FIGU RE OF DISALLOWANCE OF RS.25,000/- FOR CALCULATING THE BOOK PROFIT U/S 115 JB OF THE ACT. THUS, THIS GROUND OF THE REVENUE AND OF ASSESSEE ARE DISMISSED . 18. RESPECTFULLY FOLLOWING THE DECISION OF CO-ORDIN ATE BENCH, WE ARE OF THE VIEW THAT DISALLOWANCE U/S 14A OF THE AC T HAS TO BE CONSIDERED FOR CALCULATING BOOK PROFIT U/S 115JB OF THE ACT. THEREFORE, DISALLOWANCE SUSTAINED BY US IN GROUND NO.2 ABOVE A T RS.84215/- IS TO BE ADDED TO ARRIVE AT THE BOOK PROFIT U/S 115 JB OF THE ACT. 19. GROUND NO.4 READS AS UNDER :- 4. THE LEARNED CIT(A) ERRED IN NOT DELETING INTERES T CHARGED U/S 234C. IT IS SUBMITTED THAT INTEREST U/S 234C CANNOT BE LEVIED W HEN ASSESSMENT WAS MADE U/S 115JB. 4.1. WITHOUT PREJUDICE TO ABOVE, INTEREST U/S 23 4C OUGHT TO B<= CHARGED ON RETURNED INCOME AND NOT ON ASSESSED INCOME. IT BE SO HELD NO W. 20. LD. AR SUBMITTED THAT ASSESSEE HAS CALCULATED I NTEREST U/S 234C ON THE RETURNED INCOME WHEREAS LD. ASSESSING O FFICER HAS COMPUTED ON THE ASSESSED INCOME. LD. AR FURTHER SUB MITTED THAT ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 14 WHEN INTEREST IS COMPUTED U/S 115JB OF THE ACT PROV ISIONS OF SECTION 234C ARE NOT APPLICABLE. IN ANY CASE, THE INTEREST WOULD BE COMPUTED ON THE RETURNED INCOME AND NOT ON THE ASSESSED INCO ME. 21. LD. DR SUPPORTED THE ORDERS OF LOWER AUTHORITIE S. 22. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THROUGH THIS GROUND ASSESSEE HAS CHALLENGED THE ORD ER OF LD. CIT(A) FOR NOT DELETING THE INTEREST CHARGED U/S 234C OF T HE ACT WHEN ASSESSMENT WAS MADE U/S 115JB OF THE ACT AND ALSO N OT DIRECTING THE ASSESSING OFFICER TO CHARGE INTEREST U/S 234C OF TH E ACT ON THE RETURNED INCOME RATHER THAN ASSESSED INCOME. WE ARE OF THE VIEW THAT IN THE GIVEN FACTS AND CIRCUMSTANCES ASSESSEE IS LIABLE TO PAY INTEREST U/S 234C ONLY ON THE RETURNED INCOME WHERE INCOME IS ASSESSED AS BOOK PROFIT U/S 115JB OF THE ACT AS THE NORMAL INCOME IS LOSS THEN NOT ON THE ASSESSED INCOME. 23. OTHER GROUNDS OF GENERAL NATURE, WHICH NEED NO ADJUDICATION. 24. NOW WE TAKE UP ASSESSEES APPEAL IN ITA NO. IT A NO. 1752/AHD/2012 FOR ASST. YEAR 2009-10 ON FOLLOWING G ROUNDS ARE - 1. THE ORDER PASSED BY THE LEARNED CIT(A) IS ERRONE OUS AND CONTRARY TO THE PROVISIONS OF LAW & FACTS OF THE CASE AND THEREFORE NEEDS TO BE SUITABLY MODIFIED. IT IS SUBMITTED THAT IT BE SO HELD NOW. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISAL LOWANCE MADE BY AO U/S 14A READ WITH RULE 8D OF RS.661353/- NET OF DISALLO WANCE MADE BY APPELLANT OF RS.20000/-. IT BE SO HELD NOW. ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 15 2.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT WH ILE MAKING DISALLOWANCE U/S. 14A READ WITH RULE 8D, THE AO OUGHT TO HAVE SATISFI ED HIMSELF THAT EXPENDITURE DISALLOWED BY THE APPELLANT IN RETURN O F INCOME WAS NOT CORRECT. IT BE SO HELD NOW. 2.2 THE LEARNED CIT(A) ERRED IN NOT APPRECIATING TH E FACT THAT THERE WAS NO FRESH INVESTMENT DURING THE YEAR AND IN A.Y. 2007-08, IT HAD BEEN ACCEPTED BY HIM THAT NO EXPENDITURE FOR INTEREST HAS BEEN INCURRED FOR EARNING DIVIDEND INCOME, IT IS SUBMITTED IN THE FACTS OF THE CASE THAT THE L EARNED CIT(A) OUGHT TO HAVE DELETED THE DISALLOWANCE MADE. 3. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISAL LOWANCE U/S. 14A MADE BY THE AO WHILE COMPUTING BOOK PROFIT U/S. 115JB OF TH E ACT. IT BE SO HELD NOW. YOUR APPELLANT PRAYS FOR LEAVE TO ADD, ALTER AND/OR AMEND ALL OR ANY OF THE GROUNDS BEFORE THE FINAL HEARING OF APPEAL. 25. IN THIS APPEAL MAINLY TWO GROUNDS ARE EFFECTIVE . FIRSTLY DISALLOWANCE SUSTAINED U/S 14A OF THE ACT AND SECON DLY CONSIDERING DISALLOWANCE U/S 14A OF THE ACT FOR THE PURPOSE OF SEC.115JB OF THE ACT. WE FIND THAT THESE TWO GROUNDS ARE SIMILAR TO THOSE ADJUDICATED BY US FOR ASST. YEAR 2008-09 IN ITA NO.581/AHD/2012 WHEREIN WE HAVE HELD THAT NO DISALLOWANCE IS CALLED FOR OUT OF THE INTEREST EXPENDITURE U/S 14A OF THE ACT AS THE ASSESSEE POSS ESSES SUFFICIENT INTEREST FREE FUNDS TO COVER THE INVESTMENTS MADE, BY RESPECTFULLY FOLLOWING THE JUDGMENT OF HON. JURISDICTIONAL HIGH COURT IN THE CASE OF PRINCIPAL CIT VS. INDIA GELATINE & CHEMICALS (SUPRA ). HOWEVER, FOLLOWING OUT DECISION FOR ASST. YEAR 2008-09 WE SU STAIN DISALLOWANCE OF RS.20,000/- BEING SUO MOTU MADE MADE BY ASSESSEE AND DISALLOWANCE BEING 0.5% AT RS.64215/-, IN TOTAL DIS ALLOWANCE U/S 14A OF THE ACT IS AT RS.84,625/-. ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 16 26. SIMILARLY AS REGARDS THE SECOND GROUND WE HAVE FOLLOWED THE DECISION OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR ASST. YEAR 2007-08 WHEREIN IT WAS HELD THAT DISALLOWANCE U/S 14A OF THE ACT IS TO BE CONSIDERED AFTER CONSIDERING BOOK PROFIT U /S 115JB OF THE ACT. RELYING ON THE SAME DECISION FOR ASST. YEAR 2009-10 , WE SUSTAIN THE DISALLOWANCE AND DIRECT THE ASSESSING OFFICER TO AD D DISALLOWANCE OF RS.84,625/- AS HELD ABOVE IN GROUND NO.1 FOR ASST. YEAR 2009-10 AND ADD THE SAME TO THE NET PROFIT OF THE ASSESSEE FOR THE PURPOSE OF CALCULATION OF BOOK PROFIT U/S 115JB OF THE ACT. AC CORDINGLY GROUND NO.2 IS PARTLY ALLOWED AND GROUND NO.3 IS DISMISSED . 27. OTHER GROUNDS ARE OF GENERAL NATURE, WHICH NEED NO ADJUDICATION. 28. NOW WE TAKE UP REVENUES APPEAL IN ITA NO. 2247 /AHD/2012 FOR ASST. YEAR 2009-10. 30. GROUND NO.1 READS AS UNDER :- 1) THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWA NCE OF RS.51,45,493/- MADE BY THE ASSESSING OFFICER U/S..2(24)(X) R.W.S. 36(1)(VA) OF THE ACT. 31. LD. DR SUPPORTED THE ORDER OF ASSESSING OFFICER . 32. ON THE OTHER HAND, LD. AR SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION ASSESSEE HAS CLAIMED DEDUCTION FOR EM PLOYEES CONTRIBUTION TO PF PAID WITHIN THE DUE DATE AFTER T AKING INTO CONSIDERATION OF GRACE PERIOD GIVEN UNDER THE RESP ECTIVE ACT. HOWEVER, LD. ASSESSING OFFICER HAS DISALLOWED RS.51 ,45,493/- ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 17 TOWARDS EMPLOYEES CONTRIBUTION TO PF AS ACCORDING T O HIM THE SAME WAS NOT PAID WITHIN THE DUE DATE. LD. AR FURTHER SU BMITTED THAT THERE ARE TWO DATES FOR DEPOSITING PF CONTRIBUTION AS THE FIRST 15 DUE DATE AND THE OTHER IS GRACE PERIOD. DUE DATE IS 15 OF TH E MONTH AND GRACE PERIOD IS OF 5 DAYS AS GIVEN BY THE DEPARTMENT ITSE LF. DURING ASST. YEAR 2009-10 ALL THE PAYMENTS HAVE BEEN MADE BEFORE THE EXPIRY OF GRACE PERIOD AND AT FEW INSTANCE FALLS AFTER THE DA TE BUT FINALLY PAID BEFORE THE END OF THE GRACE PERIOD. FURTHER UNDER A SST. YEAR 2004-05 THE TRIBUNAL HAS ALLOWED THE CLAIM OF ASSESSEE AND EVEN IN THE MATTER WHEN THE MATTER TRAVELLED TO THE HON. JURISD ICTIONAL HIGH COURT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE AN D AGAINST THE REVENUE. 33. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THROUGH THIS GROUND REVENUE IS AGGRIEVED WITH THE O RDER OF LD. CIT(A) DELETING THE DISALLOWANCE OF RS.51,45,493/- DISALLOWED BY THE ASSESSING OFFICER U/S 2(24)(X) R.W.S. 36(1)(VA) OF THE ACT. WE OBSERVE FROM THE FACTS PLACED BEFORE US THAT FOR ASST. YEAR 2009-10 ASSESSEE HAS DEPOSITED THE PF CONTRIBUTION BEFORE THE LAPSE OF GRACE PERIOD I.E. 20 TH OF THE NEXT MONTH. GRACE PERIOD IS THE TIME FOR 5 DAYS WHICH IS GIVEN BY PF DEPARTMENT TO THE EMPLOYER FOR MAKIN G THE PAYMENT AFTER THE COMPLETION OF DUE DATE OF 15 TH . THIS FACT IS DULY SUPPORTED BY ANNEXURE 5 TO TAX AUDIT REPORT PLACED AT PAGE 25 OF THE PAPER BOOK. FURTHER WE OBSERVE THAT CO-ORDINATE BENCH HAS ADJUD ICATED SIMILAR ISSUE FOR ASST. YEAR 2007-08 IN ITA NO.376/AHD/2010 BY OBSERVING AS FOLLOWS :- ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 18 8.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. ON PERUSING THE ANNEXURE OF TAX AUDIT RE PORT WHICH IS PLACED ON PAGE 7 OF THE PAPER BOOK IT IS SEEN THAT THE EMPLOYEES CONTRIBUTION TO PF HAVE BEEN PAID WITHIN THE DUE DA TES AFTER TAKING INTO CONSIDERATION THE GRACE PERIOD ALLOWED UNDER T HE PF ACT. WE FURTHER FIND THAT CIT(A) WHILE DELETING THE ADDITIO N HAS NOTIED, THAT IN EARLIER YEARS ON IDENTICAL FACTS THE ADDITION MADE BY THE A.O. WERE DELETED. BEFORE US REVENUE HAS NOT PLACED ANY MATER IAL ON RECORD TO CONTROVERT THE FINDINGS OF CIT(A) NOR COULD DEMONST RATE THAT THE PAYMENTS HAVE NOT BEEN MADE BY THE ASSESSEE WITHIN THE DUE DATES INCLUDING THE GRACE PERIOD PRESCRIBED BY THE PF ACT . IN VIEW OF THE AFORESAID FACTS WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). THUS THIS GROUND IS DISMISSED. 34. WE FURTHER OBSERVE THAT HON. JURISDICTIONAL HIG H COURT IN ASSESSEES OWN CASE FOR ASST. YEAR 2005-06 & 2006-0 7 HAS HELD IN FAVOUR OF ASSESSEE BY UPHOLDING THE ORDER OF THE TR IBUNAL BY OBSERVING THAT TRIBUNAL WAS JUSTIFIED IN DELETING T HE DISALLOWANCE MADE UNDER THE PROVISIONS OF SEC.36(1)(X) OF THE AC T WITH REGARD TO DELAYED EMPLOYERS CONTRIBUTION TO P.F. RESPECTFULL Y FOLLOWING THE JUDGMENT OF HON. JURISDICTIONAL HIGH COURT AND THE DECISION OF THE TRIBUNAL AND IN THE GIVEN FACTS AND CIRCUMSTANCES F OR THE YEAR UNDER APPEAL WE FIND NO REASON TO INTERFERE WITH THE ORDE R OF CIT(A). WE UPHOLD THE SAME. ACCORDINGLY, THIS GROUND OF REVENU E IS DISMISSED. 35. GROUND NO.2 READS AS UNDER :- ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 19 2) THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWA NCE AMOUNTING TO RS. 13,29,334/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF DEPRECIATION ON FLAT. 36. BRIEF FACTS ARE THAT WHILE FRAMING THE ASSESSME NT ORDER ASSESSING OFFICER OBSERVED THAT ASSESSED INCOME BY ALLOWING DEPRECIATION ON RESIDUAL BUILDING @ 5% AS AGAINST 1 0% CLAIMED BY ASSESSEE AS THE ASSESSEE FAILED TO FURNISH ANY EVID ENCE THAT THE BUILDING WAS EXCLUSIVELY USED FOR THE PURPOSE OF BU SINESS AND NO OTHER ACTIVITIES. HOWEVER, IN APPEAL BEFORE THE FIR ST APPELLATE AUTHORITY, ASSESSEE SUCCEEDED AS ASSESSEE DELETED THE DISALLOWANCE. 37. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNA L. 38. LD. DR DULY SUPPORTED THE ORDER OF ASSESSING OF FICER AND ALSO APPRAISED THAT THE ISSUE RAISED IN THIS GROUND HAS BEEN DECIDED BY THE CO-ORDINATE BENCH IN ASST. YEAR 2007-08 AGAINST THE ASSESSEE. LD. AR COULD NOT CONTROVERT THE SUBMISSIONS MADE BY LD. DR AND DULY ACCEPTED THAT THE ISSUE HAS BEEN DECIDED AGAINST TH E ASSESSEE. 39. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. REVENUE HAS CHALLENGED THE ORDER OF CIT(A) FOR DELE TING THE DISALLOWANCE OF DEPRECIATION BY ALLOWING DEPRECIATI ON @ 10% AS AGAINST 5% MADE BY THE ASSESSING OFFICER. WE OBSERV E THAT THIS ISSUE OF CHARGING DEPRECIATION ON THE FLAT CAME UP BEFORE THE CO- ORDINATE BENCH AHMEDABAD FOR ASST. YEAR 2007-08 IN ITA ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 20 NO.376/AHD/2010 WHEREIN THE BENCH HAS HELD IN FAVOU R OF REVENUE BY OBSERVING AS BELOW :- 9.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RE SPECT TO THE ALLOWING THE DEPRECIATION @ 5% OR 10% PM THE FLAT. BEFORE US APART FROM REITERATING THE SUBMISSIONS MADE BEFORE ASSESS ING OFFICER AND LD. CIT(A), THE LD. AR HAS NOT PLACED ANY MATERIAL ON RECORD TO SUPPORT ITS CONTENTION THAT ASSESSEE IS ELIGIBLE FO R HIGHER DEPRECIATION. THE LD. AR HAS ALSO NOT PLACED ANY MATERIAL ON RECO RD TO DEMONSTRATE THAT THE MUNICIPAL TAXES FOR THE AFORESAID FLAT WHI CH IS BEING PAID BY THE ASSESSEE HAS BEEN PAID FOR COMMERCIAL USE AND N OT FOR RESIDENTIAL USE. WE FURTHER FIND THAT THE COPY OF C ORRESPONDENCE PLACED AT PAGE 103 & 104 OF THE PAPER BOOK AND WHIC H HAS BEEN RELIED UPON BY LD. AR IS ADDRESSED TO MAIZE PRODUC TS AND NOT TO ASSESSEE. NO MATERIAL HAS BEEN PLACED ON RECORD TO SHOW THAT THE REFERENCE TO MAIZE PRODUCTS IS TO THE ASSESSEE OR SOME OTHER PARTY. IN VIEW OF THE AFORESAID FATS WE ARE OF THE VIEW TH AT ASSESSING OFFICER WAS FULLY JUSTIFIED IN ALLOWING DEPRECIATION @ 5%. WE THUS SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS GROUND AND UPHO LD THE ORDER OF ASSESSING OFFICER. THUS THIS GROUND OF REVENUE IS A LLOWED. 40. WE FIND THAT THE ISSUE IS SQUARELY DECIDED AGAI NST THE ASSESSEE FOR ASST. YEAR 2007-08 AND EVEN FOR THE YEAR UNDER APPEAL ASSESSEE HAS BEEN UNABLE TO PLACE ANY RECORD TO DEMONSTRATE THAT THE FLAT HAS BEEN USED FOR COMMERCIAL PURPOSES AND NOT FOR RESID ENTIAL USE AND ALSO FAILED TO PROVIDE ANY EVIDENCE THAT THE BUILDI NG WAS EXCLUSIVELY ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 21 USED FOR BUSINESS AND NOT FOR THE USE OF STAY OF DI RECTORS AND OTHER EMPLOYEES. IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, WE ARE OF THE VIEW THAT ASSESSEE SHOULD BE ALLOWED DEPRECIATION @ 5% AS AGAINST 10% CLAIMED IN THE RETURN OF INCOME. ACCORDINGLY, T HIS GROUND OF REVENUE IS ALLOWED. 41. OTHER GROUNDS ARE OF GENERAL NATURE, WHICH NEED NO ADJUDICATION. 42. IN THE RESULT, ASSESSEES APPEALS ARE PARTLY AL LOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF REVENUE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH NOVEMBER, 2016 SD/- SD/- (R.P. TOLANI) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 11/11/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 581, 1752 & 2247/AHD/2012 ASST. YEAR 2008-09 & 2009-10 22 1. DATE OF DICTATION: 7/11/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 10/11/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 11/11/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: