Lakshmi Cargo Company Limited, CHENNAI V. DCIT, CHENNAI

ITA 59/CHNY/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7673 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 11-01-2016
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER I.T.A.NO S . 58 AND 59/MDS/2016 ASSESSMENT YEAR S :200 7 - 08 AND 2008 - 09 M/S. LAKSHMI CARGO CO. LTD., UNIT 4, 3 RD FLOOR, RAJA ANNAMALAI BUILDING, 72, RUKMANI LAKSHMIPATHI ROAD, EGMORE, CHENNAI 600 008. [PAN: A A A C L3756D ] VS. THE DEPUTY COMMISS IONER OF INCOME TAX , CORPORATE CIRCLE 4(1), CHENNAI 600 0 34 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI SAROJ KUMAR PARIDA , ADVOCAT E / RESPONDENT BY : SHRI P. RADHAKRISHNAN , J CIT / DATE OF HEARING : 14 . 0 3 .201 6 / DATE OF P RONOUNCEMENT : 31 . 0 3 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : BOTH THE APPEAL S FILED BY THE SAME ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDER S OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 8 , CHENNAI , DATED 19 . 1 0 .20 1 5 RELEVANT TO THE ASSESSMENT YEAR S 200 7 - 08 AND 2008 - 09 . I.T.A. NO. 58/MDS/2016 [AY: 2007 - 08] 2. THE ASSESSEE HAS RAISED TWO GROUNDS AND THE FIRST GROUND RELATES TO CONFIRMATION OF DISALLOWANCE OF 2% OF .14,66,80,929/ - [ .7,01,03,921 + I.T.A. NO S . 58 & 59 /M/ 16 2 .7,65 ,77,008/ - ] TOWARDS CLEARING AND FORWARDING AND VEHICLE HIRE CHARGES AMOUNTING TO .29,33,619/ - ; AND SECOND GROUND IS WITH REGARD TO DISALLOWANCE OF 5% OF DIVIDEND INCOME UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT]. 3. BRIEF FACTS OF T HE CASE ARE THAT THE ASSESSEE IS ENGAGED IN CUSTOM HOUSE AGENT, FREIGHT FORWARDING, TRANSPORTATION, TRADING INDUSTRIAL MACHINERY & TOOLS, ETC. AND FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007 - 08 ON 30.10.2007 DECLARING AN INCOME OF .8,55,22,010 / - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 24.03.2009. NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 18.09.2008. IN RESPONSE TO NOTICE, THE ASSESSEE FILED VARIOUS DETAILS AS CALLED FOR. FROM THE SCHEDULES F ORMING PART OF PROFIT AND LOSS ACCOUNT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED CLEARING & FORWARDING EXPENSES TO THE TUNE OF .7,01,03,921/ - AND VEHICLE HIRE CHARGES TO THE EXTENT OF .7,65,77,008/ - . WHEN THE ASSESSEE WAS ASKED TO PRODUCE COMPLETE VOUCHERS AND BILLS FOR THE ABOVE CLAIMS, THE ASSESSEE COULD NOT PRODUCE THE VOUCHERS IN FULL FOR VERIFICATION. THEREFORE, THE ASSES SING OFFICER DISALLOWED 2% OF .14,66,80,929/ - [ .7,01,03,921 + .7,65,77,008/ - ] AMOUNTING TO .29,33,619/ - AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 4. FURTHER, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF .4,80,08,825/ - AND CLAIMED IT AS EXEMPT INCOME. I.T.A. NO S . 58 & 59 /M/ 16 3 HOWEVER, THE ASSESSEE HAS NEITHER DISALLOWED ANY EXPENDITURE FOR EARNING THIS EXEMPT INCOME NOR PRODUCED ANY SEPARATE ACCOUNT MAINTAINED BY THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER WORKED OUT THE EXPENDITURE BY APPLYING SECTION 14A R.W.R. 8D AND DISALLOWED .9,98,480/ - . 5. THE ASSESSEE CARRIED THE MATTERS IN APPEAL. EVEN BEFORE THE LD. CIT(A), THE ASSESSEE COULD NOT PRODUCE COMPLETE VOUCHERS/BILLS FOR CLAIMING CLEARING & FORWARDING EXPENSES AND VEHICLE HIRE CHARGES. THEREFORE, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE 2% OF TOTAL CLAIM BEING MEAGRE AND REASONABLE FOR NOT PRODUCING COMPLETE VOUCHERS/BILLS FOR VERIFICATION. WITH REGARD TO DISALLOWANCE UNDER SECTION 14A R.W.R. 8D, BY FOLLOWING VARI OUS DECISION, THE LD. CIT(A) HAS RESTRICTED 5% OF THE GROSS DIVIDEND INCOME RECEIVED WOULD BE REASONABLE AS EXPENDITURE RELATABLE TO EARNING OF EXEMPT INCOME AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 6. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WITH REGARD TO THE DISALLOWANCE TOWARDS CLEARING AND FORWARDING AND VEHICLE HIRE CHARGES, IN THE ABSENCE OF COMPLETE VOU CHERS/BILLS FOR VERIFICATION BEFORE THE ASSESSING OFFICER , WE FIND THAT THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE DISALLOWANCE OF 2% OF TOTAL I.T.A. NO S . 58 & 59 /M/ 16 4 EXPENDITURE CLAIMED BY THE ASSESSEE. WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). 8. WITH REGARD TO THE DISALLOWANCE OF 5% OF THE GROSS DIVIDEND INCOME AS EXPENDITURE TO EARN DIVIDEND INCOME, WE FIND THAT THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2007 - 08 AND THEREFORE, THE PROVISIONS OF RULE 8D R.W.S. 14A HAS NO APPLICATION SINCE THE APPLICATION OF T HE PROVISIONS OF RULE 8D HAS BEEN NOTIFIED WITH EFFECT FROM 24.03.2008 AND APPLICABLE WITH EFFECT FROM THE ASSESSMENT YEAR 2008 - 09 ONWARDS ONLY . ONCE THE DATE OF EFFECT OF THE SAID NOTIFICATION HAS BEEN FIXED, THE QUESTION OF RETROSPECTIVE OR PROSPECTIVE D OES NOT ARISE. HOWEVER, THE SAID NOTIFICATION CANNOT BE APPLIED TO THE ASSESSMENT YEAR PRIOR TO THE NOTIFICATION. IN THIS CASE, THE PREVIOUS FINANCIAL YEAR IS 2006 - 07 RELEVANT TO THE ASSESSMENT YEAR 2007 - 08, AVAILABLE PRIOR TO ISSUANCE OF THE ABOVE NOTIFIC ATION, T HE TRIBUNAL IS CONSISTENTLY RESTRICTING THE DISALLOWANCE AT 2% OF THE GROSS DIVIDEND INCOME AS EXPENDITURE RELATABLE TO EARNING OF EXEMPT INCOME IN THE ABSENCE OF MAINTAINING SEPARATE ACCOUNT /ADMISSION OF EXPENDITURE FOR EARNING EXEMPT INCOME BY FO LLOWING THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SIMPSON & CO. LTD. IN T.C.A. NO. 2621/2006 DATED 15.10.2012 . HENCE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE AT 2% OF THE GROSS DIVIDEND INCOME AS EXPENDITURE RELATABLE TO EARNING OF EXEMPT INCOME. I.T.A. NO S . 58 & 59 /M/ 16 5 9. ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2007 - 08 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO. 59/MDS/2016 [AY 2008 - 09] 10. FOR THE ASSESSMENT YEAR 2008 - 09, THE ONLY GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS WITH REGARD TO CONFIRMATION OF DISALLOWANCE OF .6,22,673/ - UNDER SECTION 14 A OF THE ACT BY APPLYING RULE 8D. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTICED TH AT THE ASSESSEE HAS SHOWN DIVIDEND INCOME OF .1,63,03,300/ - AND CLAIMED IT AS EXEMPT. HOWEVER, THE ASSESSEE HAS NOT DEBITED ANY EXPENDITURE TOWARDS EARNING OF THE ABOVE INCOME. THEREFORE, BY APPLYING RULE 8D, THE ASSESSING OFFICER INVOKED THE PROVISIONS O F SECTION 14A OF THE ACT AND WORKED OUT THE EXPENDITURE AT .6,22,673/ - RELATABLE TO EARNING OF EXEMPT INCOME AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ABOVE DISALLOWANCE BY FOLLOWING VARIOUS DECISIONS. 1 1. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 12. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE , BY RELYING ON THE DECISIO N IN THE CASE OF INAUTIX TECHNOLOGIES INDIA P. LTD. V. ACIT IN I.T.A. NO. 2277 & 2625/MD/2014 ORDER DATED I.T.A. NO S . 58 & 59 /M/ 16 6 19.06.2015 , PRAYED THAT THE DISALLOWANCE MAY BE RESTRICTED TO 2% OF EXEMPT INCOME AS EXPENDITURE RELATABLE TO EARNING OF EXEMPT INCOME. IN THIS CASE, THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2008 - 09. WITH REGARD TO APPLICATION OF RULE 8D, THE HON BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. V. DCIT [(2010) 328 ITR 81 ] HAS HELD AS UNDER: HELD, THAT THE PROVISIONS OF RULE 8D OF TH E RULES WHICH HAVE BEEN NOTIFIED WITH EFFECT FROM MARCH 24, 2008, WOULD APPLY WITH EFFECT FROM ASSESSMENT YEAR 2008 - 09. EVEN PRIOR TO ASSESSMENT YEAR 2008 - 09, WHEN RULE 8D WAS NOT APPLICABLE, THE ASSESSING OFFICER HAD TO ENFORCE THE PROVISIONS OF SUB - SECTI ON (1) OF SECTION 14A. FOR THAT PURPOSE, THE ASSESSING OFFICER IS DUTY BOUND TO DETERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. THE ASSESSING OFFICER MUST ADOPT A REASONABL E BASIS OR METHOD CONSISTENT WITH ALL THE RELEVANT FACTS AND CIRCUMSTANCES AFTER FURNISHING A REASONABLE OPPORTUNITY TO THE ASSESSEE TO PLACE ALL GERMANE MATERIAL ON THE RECORD. THE PROCEEDINGS FOR ASSESSMENT YEAR 2002 - 03 WOULD STAND REMANDED TO THE ASSESS ING OFFICER. THE ASSESSING OFFICER SHOULD DETERMINE AS TO WHETHER THE ASSESSEE HAD INCURRED ANY EXPENDITURE (DIRECT OR INDIRECT) IN RELATION TO DIVIDEND INCOME/INCOME FROM MUTUAL FUNDS WHICH DOES NOT FORM PART OF THE TOTAL INCOME AS CONTEMPLATED UNDER SECT ION 14A. THE ASSESSING OFFICER CAN ADOPT A REASONABLE BASIS FOR EFFECTING THE APPORTIONMENT. WHILE MAKING THAT DETERMINATION, THE ASSESSING OFFICER SHOULD PROVIDE A REASONABLE OPPORTUNITY TO THE ASSESSEE OF PRODUCING ITS ACCOUNTS AND RELEVANT OR GERMANE MA TERIAL HAVING A BEARING ON THE FACTS AND CIRCUMSTANCES OF THE CASE. I.T.A. NO S . 58 & 59 /M/ 16 7 11. IN VIEW OF THE ABOVE LAW LAID DOWN BY THE HON BLE MUMBAI HIGH COURT THAT THE APPLICATION OF PROVISIONS OF R ULE 8D NOTIFIED WITH EFFECT FROM 24.03.2008 WOULD APPLY WITH EFFECT FROM AS SESSMENT YEAR 2008 - 09 , WHICH WAS NOT FOUND TO HAVE BEEN REVERSED BY THE HIGHER COURT, THE QUESTION OF APPLICATION OF THE ABOVE SAID NOTIFICATION WHETHER FROM RE TRO SPECTIVELY OR PROSPECTIVELY DOES NOT ARISE. SINCE T HE ASSESSEE HAS NOT EXCLUDED ANY EXPENDITU RE RELATABLE TO EARNING EXEMPT INCOME DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2008 - 09 , BY INVOKING SECTION 14A OF THE ACT, THE ASSESSING OFFICER HAS RIGHTLY APPLIED RULE 8D AND WORKED OUT THE EXPENDITURE RELATA BLE TO EARNING OF EXEMPT INCO ME, WHICH WAS CONFIRMED BY THE LD. CIT(A). T HE REFORE, THE REQUEST FOR RESTRICTING THE DISALLOWANCE @ 2% OF THE DIVIDEND INCOME AS EXPENDITURE IS NOT PERMISSIBLE UNDER THE LAW. BY FOLLOWING THE ABOVE DECISION OF THE HON BLE BOMBAY HIGH COURT, IN THE CASE OF INDIAN BANK V. ACIT FOR THE ASSESSMENT YEAR 2008 - 09 IN I.T.A. NO. 1923/MD/2011 VIDE ORDER DATED 30.11.2015 [CONSOLIDATED ORDER IN I.T.A. NOS. I.T.A.NOS.880/MDS/2010, 1923/MDS/2011, 1871/MDS/2012, 1395, 1396 & 1397/MDS/2014 ] AT PARA 82 - 83, THE COORDINATE B ENCH OF THE TRIBUNAL HAS HELD AS UNDER: 82. THE FIFTH GROUND RAISED BY THE ASSESSEE RELATES TO DISALLOWANCE UNDER SECTION 14A. THE ASSESSING OFFICER MADE DISALLOWANCE OF .22,58,62,431/ - UNDER SECTION 14A OF THE ACT AND COMPUTED IN ACCORDANCE WITH RULE 8D IN RESPECT OF THE TAX FREE INCOME. ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BY OBSERVING THAT THE CLAIM OF THE ASSESSEE THAT 2 PER CENT OF EXEMPT INCOME CAN BE I.T.A. NO S . 58 & 59 /M/ 16 8 TAKEN AS EXPENDITURE INCURRED TO EARN TAX FREE INCOME CANNOT BE ACCEPTED. WHEN THE ACT HAS PRESCRIBED A METHOD FOR QUANTIFYING THE DISALLOWANCE WHERE THE ASSESSING OFFICER HAS NOT SATISFIED WITH THE DISALLOWANCE MADE BY THE ASSESSEE, THE SAME CANNOT BE OVERLOOKED. IN THE ASSESSEE S CASE, THE SECURITIES ARE HELD AS STOCK - IN - TRADE. 83. AFTER HEARING BOTH SIDES, WE HAVE CAREFULLY PERUSED THE ORDERS OF AUTHORITIES BELOW. IN V IEW OF THE DECISION OF THE HON BLE MUMBAI HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. V. DCIT (SUPRA) THAT RULE 8D IS APPLICABLE FROM THE ASSESSMENT YEAR 2008 - 09, WHEN THE ACT HAS PRESCRIBED A METHOD FOR QUANTIFYING THE DISALLOWANCE, THE SAME CA NNOT BE OVERLOOKED. SINCE RULE 8D IS NOT APPLICABLE PRIOR TO THE ASSESSMENT YEAR 2007 - 08, THE TRIBUNAL HAS SET ASIDE THE ORDER PASSED BY THE LD. CIT(A) AND DIRECTED THE ASSESSING OFFICER TO WORK OUT THE DISALLOWANCE @ 2%. HOWEVER, SINCE RULE 8D IS APPLICAB LE FROM THE ASSESSMENT YEAR 2008 - 09 ONWARDS, THE DISALLOWANCE SHOULD BE MADE BASED ON THE PRESCRIBED METHOD QUANTIFIED BY THE ACT. SINCE THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE UNDER SECTION 14A AND COMPUTED UNDER RULE 8D, WE CONFIRM THE DISALLOWAN CE MADE BY THE ASSESSING OFFICER. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 12. SIMILARLY, IN THE CASE OF INDIAN NIPPON ELECTRICALS LTD. V. DCIT IN I.T.A. NO. 459/MDS/2014 FOR THE ASSESSMENT YEAR 2008 - 09 VIDE ORDER DATED 17.02.2016, THE SAME BENCH OF THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER: 7. THE SECOND ISSUE RAISED IN THE APPEAL OF THE ASSESSEE RELATES TO CONFIRMATION OF DISALLOWANCE MADE UNDER SECTION 14A READ WITH RULE 8D. IT IS NOT DISPUTED THAT THE TOTAL INVESTMENTS MADE BY THE ASSESSEE IN THE FORM OF SHARES/FUNDS IS .99,61,87,000/ - AS ON 31.03.2008 AND EARNED DIVIDEND INCOME OF .5,17,68,002/ - DURING THE FINANCIAL YEAR 2007 - 08. IT IS ALSO NOT DISPUTED THAT THE ASSESSEE HAS BORROWED SUBSTANTIAL AMOUNTS OF FUNDS DURING THE FINANCIAL YEAR 2007 - 08 AND INTEREST AMOUNT PAI D ON THESE BORROWINGS STOOD AT .1,01,000/ - . FURTHER, IT WAS ALSO NOT DISPUTED THAT THE MAIN ACTIVITY OF THE ASSESSEE IS MANUFACTURING ELECTRONIC IGNITION SYSTEMS AND IN ADDITION THE ASSESSEE IS ALSO INVESTING AND TRADING IN SHARES/MUTUAL FUNDS, BUT THE AS SESSEE HAS NOT MAINTAINED ANY SEPARATE SETS OF BOOKS FOR THE INVESTMENT ACTIVITY AND THE MANUFACTURING ACTIVITIES. ALL THE FUNDS ARE POOLED UP I.T.A. NO S . 58 & 59 /M/ 16 9 AND UTILIZED FOR VARIOUS ACTIVITIES FROM A COMMON KITTY. THEREFORE, THE ASSESSING OFFICER HAS SEGREGATED THE PROB ABLE EXPENSES BY WAY OF FINANCIAL CHARGES AND OTHER OVERHEAD EXPENSES BETWEEN THE INVESTMENT ACTIVITY AND MANUFACTURING AND EXPORT ACTIVITIES. ACCORDINGLY, BY INVOKING THE PROVISIONS OF SECTION 14A OF THE ACT AND APPLYING RULE 8D, THE ASSESSING OFFICER APP ORTIONED THE EXPENSES AGAINST THE INCOME GENERATED FROM THE INVESTMENT ACTIVITY. THE LD. CIT(A), BY CONSIDERING VARIOUS DECISIONS AND SUBMISSIONS OF THE ASSESSEE, CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. FROM THE DECISION OF T HE HON'BLE BO MBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD V. DCIT (320 ITR 81), IT IS VERY CLEAR THAT THE APPLICATION OF PROVISIONS OF RULE 8D, WHICH HAS BEEN NOTIFIED WITH EFFECT FROM 24.03.2008, SHALL APPLY WITH EFFECT FROM ASSESSMENT YEAR 2008 - 09 ONWAR DS. 8. THE ASSESSEE HAS RELIED ON THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF ACIT V. SUN INVESTMENTS P. LTD. 8 ITR (TRI) 33, WHEREIN IT WAS HELD THAT UNLESS THE ASSESSING OFFICER ESTABLISHES THAT SPECIFIC EXPENDITURE HAS BEEN INCURRED B Y THE ASSESSEE FOR EARNING EXEMPT INCOME THERE CAN BE NO DISALLOWANCE UNDER SECTION 14A OF THE ACT, HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE BECAUSE IN THAT CASE THE ASSESSMENT YEAR RELATES TO 2005 - 06 AND THE ASSESSING OFFICER DISALLOWED 2% OF T HE DIVIDEND INCOME AS EXPENSES ATTRIBUTABLE FOR EARNING IT. 9. IN THE PRESENT CASE, THE ASSESSMENT YEAR UNDER CONSIDERATION IS 2008 - 09 AND IN VIEW OF THE DECISION IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD V. DCIT(SUPRA), THE APPLICATION OF PROVISIONS O F RULE 8D, WHICH HAS BEEN NOTIFIED WITH EFFECT FROM 24.03.2008, SHALL APPLY WITH EFFECT FROM ASSESSMENT YEAR 2008 - 09 ONWARDS. SINCE THE ASSESSEE HAS NOT MAINTAINED ANY SEPARATE SETS OF BOOKS FOR THE INVESTMENT ACTIVITY AND THE MANUFACTURING ACTIVITIES AND MOREOVER, ALL THE FUNDS ARE POOLED UP AND UTILIZED FOR VARIOUS ACTIVITIES FROM A COMMON KITTY. THEREFORE, THE ASSESSING OFFICER HAS SEGREGATED THE PROBABLE EXPENSES BY WAY OF FINANCIAL CHARGES AND OTHER OVERHEAD EXPENSES BETWEEN THE INVESTMENT ACTIVITIES A ND MANUFACTURING AND EXPORT ACTIVITIES. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER HAS RIGHTLY APPLIED THE PROVISIONS OF RULE 8D BY INVOKING SECTION 14 OF THE ACT, WHICH WAS CONFIRMED BY THE LD. CIT(A). THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND THUS, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. I.T.A. NO S . 58 & 59 /M/ 16 10 1 3 . IN VIEW OF THE ABOVE JUDICIAL PRECEDENTS OF THE COORDINATE BENCH OF THE TRIBUNAL, THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE TO RESTRICT THE DISALLOWANCE @ 2% CAN NOT BE ACCEPTED. THUS, WE FIND NO ERROR IN THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN I.T. A. NO. 58/MDS/2016 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND I.T.A. NO. 59/MDS/2016 IS DISMISSED. ORDER PRONOUNCED ON THE 31 ST MARCH , 201 6 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DAT ED, THE 31 . 0 3 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.