M/s. Mayuka Investment Ltd., New Delhi V. ITO, New Delhi

ITA 6088/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97122 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 22-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 11-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJHA SENIOR
• Assessee Lawyers: M L DUJARI
• Keywords: Depreciation; Opportunity of being heard; Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI A.T. VARKEY, JUDICIAL MEMBER ITA NO.6088/DEL./2013 (ASSESSMENT YEAR : 2010-11) M/S. MAYUKA INVESTMENT LIMITED, VS. ITO, WARD 6 (3 ), 4, SCINDIA HOUSE, NEW DELHI. NEW DELHI. (PAN : AAACM2614B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.L. DUJARI, CA REVENUE BY : SHRI P. DAM. KANUNJHA, SENIOR DR DATE OF HEARING : 22.07.2015 DATE OF PRONOUNCEMENT : 26.08.2015 O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER DATED 20.03.2013 PASSED BY THE LD. COMMISSIONER OF INCOME -TAX (APPEALS) IX, NEW DELHI FOR THE ASSESSMENT YEAR 2010-11. 2. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE READ AS UNDER :- 1. THAT THE ORDER OF THE LEARNED COMMISSION OF INC OME TAX (APPEALS) CONFIRMING ADDITIONAL DISALLOWANCE OF RS. 7,59,498/- MADE BY THE ASSESSING OFFICER U/S 14A OF THE INCOME -TAX ACT, 1961 WITHOUT APPRECIATING THE DETAILED REASONING GI VEN BY THE APPELLANT ONLY ON THE GROUND THAT THE APPELLANT HAS IMPLIEDLY 2 ITA NO.6088/DEL/2012 ACCEPTED THE METHOD OF COMPUTATION APPLIED BY THE A SSESSING OFFICER. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED IN HOLDING THAT THE EXPENSES OF THE TWO T RANSFEROR COMPANIES MERGED WITH THE ASSESSEE COMPANY W.E.F. 1 ST APRIL, 2009 IN TERMS OF ORDER OF THE DELHI HIGH COURT DATE D 20 TH MAY, 2010, WHEREIN INCOME NOT CHARGEABLE TO TAX HAS BEEN EARNED HAS TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF DIS ALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS FURTHER ERRED IN NOT TAKING INTO ACCOUNT INVEST MENT IN FIXED ASSETS AND INVESTMENT AGAINST PROPERTY FOR ALLOCATI NG EXPENSES U/S 14A OF THE INCOME TAX ACT, 1961. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS FURTHER ERRED IN ALSO ALLOCATING STATUTORY EXPE NSES IN RELATION TO EARNING OF INCOME NOT FORMING PART OF TOTAL INCO ME NECESSARILY REQUIRE TO BE INCURRED WHETHER THE INCO ME IS EARNED OR NOT. 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED IN NOT APPRECIATING THE FACT THAT FOR PUR POSES OF DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961 AL LOCATION HAS TO BE MADE ONLY OUT OF EXPENDITURE OF RS.92,444 /-. 2. THE FACTUAL MATRIX, LEADING TO THE PRESENT APPEA L, IS AS FOLLOWS :- 2.1 ASSESSEE IS A NON BANKING FINANCIAL INSTITUTION , CARRYING ON THE BUSINESS OF PURCHASE AND SALE OF SHARES, ADVANCING LOANS AND INVESTING FUNDS IN SHARES SECURITIES AND UNITS OF MUTUAL FUNDS. THE ASSESSEE COMPANY HAD AMALGAMATED WITH SOARMA VINIMAY PVT. LTD. AND KIRAN SECURITIES PVT. LTD. WITH EFFECT FROM 1 ST APRIL, 2009, VIDE ORDER PASSED BY HON'BLE DELHI HI GH COURT DATED 20 TH MAY, 2010. ACCOUNTS OF THE ASSESSEE COMPANY AND THE TRA NSFEROR COMPANIES, FOR FINANCIAL YEAR 2009-10 RELEVANT TO ASSESSMENT YEAR 2010-11, WERE SEPARATELY 3 ITA NO.6088/DEL/2012 PREPARED, BUT FINAL ACCOUNTS OF THE ASSESSEE COMPAN Y WAS MADE BY INCORPORATING THE ACCOUNTS OF TWO TRANSFEROR COMPAN IES. 2.2 FOR THE FINANCIAL YEAR RELEVANT TO THE ASSESSME NT YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS FILED RETURN ON 23.09.2010 , DECLARING TOTAL INCOME OF RS.36,701/-. THE CASE WAS SELECTED FOR SCRUTINY AN D ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3) OF THE INCOME-TAX ACT, 1961 ( HEREINAFTER THE ACT). THE ASSESSING OFFICER PASSED ASSESSMENT ORDER DATED 08. 01.2013, WHEREIN, AN ADDITION OF RS.7,96,200/- WAS MADE UNDER SECTION 14 A OF ACT, VIS-A-VIS SUO MOTU DISALLOWANCE OF RS.50,000/- OFFERED BY THE ASS ESSEE COMPANY ON AD-HOC BASIS. 2.3. THE AO MADE DISALLOWANCE U/S 14A TO THE TUNE O F RS.7,59,498/-. AGGRIEVED BY THE ORDER PASSED BY THE A.O. THE ASSES SEE PREFERRED APPEAL BEFORE C1T(A). THE ASSESSEE SUBMITTED BEFORE CIT (A) THAT THE CALCULATION MADE BY THE A.O. IN RESPECT OF 14A DISALLOWANCE IS INCORREC T AS THE SAME IS NOT IN ACCORDANCE TO RULE 8D OF THE INCOME-TAX RULES, 1962 . THE LD. CIT (A) FOUND REASONABILITY IN THE SUBMISSION THAT NO DISALLOWANC E CAN BE MADE BEYOND THE EXPENSES CLAIMED. HOWEVER, THE CIT (A) UPHELD THE ORDER PASSED BY THE ASSESSING OFFICER VIDE HIS ORDER DATED 29.09.2013. HENCE THE PRESENT APPEAL. 2.4. FROM THE RECORDS AND THE PAPER BOOK FILED BEFO RE US, THE LD. COUNSEL FOR THE ASSESSEE, CONTENDED THAT AS PER PROFIT AND LOSS ACCOUNT OF THE COMPANY, ASSESSEE EARNED A DIVIDEND INCOME OF RS. 5,59,20,43 1/- ON THE INVESTMENTS HELD 4 ITA NO.6088/DEL/2012 BY ERSTWHILE MAYUKA INVESTMENTS LTD. IT HAD ALSO EA RNED INTEREST INCOME OF RS.5,90,255/-. THE ASSESSEE HAD INVESTED RS.3,62,86 2/- IN THE FIXED ASSETS (GROSS BLOCK), RS.92,84,82,654/- IN INVESTMENTS AND RS.3,9 7,40,088/- AS ADVANCE FOR PURCHASE OF IMMOVEABLE PROPERTIES IN ADDITION TO AD VANCE GIVEN TO OTHER COMPANIES TO THE TUNE OF RS.44,60,035/-. AS PER SCH EDULE 11 AND 12 ATTACHED TO THE PROFIT AND LOSS ACCOUNT, ASSESSEE PAID SALARY O F RS.2,59,835/- AND INCURRED OTHER EXPENSES OF RS.15,74,196/-, WHICH ACCORDING T O IT INCLUDED AMALGAMATION EXPENSES OF RS.11,69,242/- (INCURRED BY ALL THE THR EE COMPANIES), AND CAPITAL INCREASE EXPENSES OF RS.70,000/- IN MAYUKA INVESTME NTS LTD. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT OUT OF SOME OF THE EXPENSES, ASSESSEE HAD ALREADY ADDED BACK IN ITS COMPUTATION OF INCOME CAP ITAL INCREASE EXPENSES OF RS.70,000/- AND AMALGAMATION EXPENSES OF RS.9,35,39 4/-. SALARY OF RS. 2,59,835/- WAS INCURRED BY THE TWO AMALGAMATING COM PANIES. BREAK UP OF RS. 15,74,196/- WAS GIVEN AT PAGE 57 OF THE PAPER BOOK . THE LD. COUNSEL SUBMITTED THAT TOTAL EXPENDITURE OF RS.15,74,196/- AND RS.2,2 2,728/- WAS INCURRED BY M/S KIRAN SECURITIES PVT. LTD. AND RS.3,17,679/- WAS IN CURRED BY SOARMA VINIMAY PVT. LTD. ACCORDING TO AR, THERE WAS NEITHER ANY IN VESTMENT MADE, NOR ANY DIVIDEND THAT WAS EARNED, IN EITHER OF THESE TWO CO MPANIES. THEREFORE, IT WAS SUBMITTED THAT NO PART OF EXPENSES INCURRED BY THES E TWO COMPANIES COULD BE CONSIDERED FOR DISALLOWANCE U/S 14A OF THE ACT. 5 ITA NO.6088/DEL/2012 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT EXPENDITURE OF RS.10,33,789/- INCURRED IN MAYUKA INVESTMENTS LTD. BEFORE MERGER INCLUDED RS.9,28,617/- AMALGAMATION AND CAPITAL INCREASE EXP ENSES, THEREFORE, ANY DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961 CO ULD HAVE BEEN MADE ON THE BALANCE AMOUNT OF RS.1,05,172/-. THE LD. COUNS EL FOR THE ASSESSEE SUBMITTED THAT DIVIDEND INCOME OF RS.5,59,20,318/- HAS BEEN EARNED ONLY ON THE INVESTMENT HELD BY MAYUKA INVESTMENT LTD., AND DISA LLOWANCE IF ANY, U/S 14A OF THE INCOME TAX ACT, 1961 SHOULD BE RESTRICTED TO EXPENSES INCURRED BY THE MAYUKA INVESTMENT LTD., PRE-MERGER WHICH CAN BE ONL Y TAKEN INTO ACCOUNT. 3.1 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE HAS BEEN NO FRESH INVESTMENT MADE BY THE ASSESSEE AND INCREASE IN THE INVESTMENT WAS DUE TO THE MERGER OF ACCOUNTS OF SOARMA VINIMAY PVT. LTD. AND KISEN SECURITIES PVT. LTD. FURTHER IT WAS SHOWN THAT ADVANCES MADE BY THE ASSE SSEE WERE FROM THE FUNDS AVAILABLE WITH THE ASSESSEE COMPANY AND THAT INTERE ST BEARING LOANS HAVE BEEN TAKEN BY ASSESSEE DURING THE RELEVANT YEAR. THE ID. COUNSEL FURTHER DEMONSTRATED THAT THE ASSESSEE HAS ADDED RS.9,35,39 4/- BEING AMALGAMATION EXPENSES. FURTHER SCHEDULE 11, 12 OF THE P & L ACCO UNT GIVES THE BIFURCATION OF THE EXPENSES WHICH ACCORDING TO THE ASSESSEE CANNOT BE CONSIDERED FOR DISALLOWANCE U/S 14A OF THE ACT. 3.2 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADMIN. EXPENSES IN SCHEDULE 11 AND A FEW STATUTORY EXPENSES INCURRED B Y THE ASSESSEE AS PER 6 ITA NO.6088/DEL/2012 SCHEDULE 12, WHICH HAS BEEN MORE PARTICULARLY NARRA TED HEREIN ABOVE HAS NOT BEEN CONSIDERED FOR THE PURPOSES OF ARRIVING AT DIS ALLOWANCE TO BE MADE UNDER SECTION 14 A. IT WAS, THEREFORE, SUBMITTED BY THE L D. COUNSEL THAT EVEN AD-HOC DISALLOWANCE OF RS. 50,000/- MADE U/S 14A OF THE IN COME TAX ACT, 1961 IS EXCESSIVE AND IN NO CASE ADDITIONAL DISALLOWANCE ON THIS ACCOUNT COULD BE MADE. THE LD. COUNSEL FURTHER SUBMITS THAT THE DISALLOWAN CE U/S 14A CANNOT EXCEED THE EXPENDITURE AND IN THE CASE OF THE ASSESSEE. 4. THE LD. D.R IN HIS SUBMISSION SUPPORTS THE ORDER OF THE LOWER AUTHORITIES. 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD. THE ONLY CONTROVERSY AS EMERGING FROM THE APPEAL BEFORE US RELATES TO DISALLOWANCE OF RS.7,59,498/- U/S 14A OF THE ACT. THE AO HAS MA DE THE DISALLOWANCE BY OBSERVING THAT ASSESSEE COMPANY MADE INVESTMENT OF RS.94.44 CRORES IN SHARES AND EARNED DIVIDEND OF RS.5.59 CRORES WHICH IS NOT INCLUDABLE IN THE INCOME OF THE ASSESSEE. HE THUS HELD ASSESSEES COMPANIES VE RSION THAT DISALLOWANCE MADE OF RS.50,000/- (SUO MOTU) IS EXCESSIVE, CANNOT BE ACCEPTED. HE, THEREFORE, RECOMPUTED THE DISALLOWANCE AT RS.8,09,498/- IN THE MANNER HEREUNDER :- TOTAL EXPENSES X INVESTMENT IN SHARES CAPITAL EMPLOYED I.E. RS.8,16,942 X 92.44 93.29 = RS.8,09,498/- 7 ITA NO.6088/DEL/2012 ON APPEAL BEFORE THE CIT (A), WE FIND THAT THE ASSE SSEE HAD MADE THE FOLLOWING SUBMISSIONS :- 3.2 IN ITS COMPUTATION OF INCOME PLACED AT PAGE 3 OF THE PAPER BOOK APPELLANT OFFERED AN AMOUNT OF RS.50,000/- FOR DISALLOWANCE U/S 14A OF THE INCOME TAX ACT,1961 ON AN AD-HOC BAS IS. 4. AS PER PROFIT AND LOSS ACCOUNT OF THE COMPANY AS SESSEE EARNED A DIVIDEND INCOME OF RS.5,59,20,431/- ON THE INVESTMENTS HELD BY THE ERSTWHILE MAYUKA INVESTMENTS LTD. IT HA D ALSO EARNED INTEREST INCOME OF RS.5,90,255/-, PLUS RS.1,52,997/ -. THE ASSESSEE HAD INVESTED RS.3,16,862/- IN THE GROSS BLOCK, RS.9 2,84,82,654/- IN INVESTMENTS AND RS.3,97,40,088/- AS ADVANCE FOR PUR CHASE OF IMMOVEABLE PROPERTIES IN ADDITION TO LOANS OF RS.44 ,60,035/-. AS PER SCHEDULE 11 AND 12 ATTACHED TO THE PROFIT AND L OSS ACCOUNT ASSESSEE PAID SALARY OF RS.2,59,835/- AND INCURRED OTHER EXPENSES OF RS.15,74,196/-, WHICH INCLUDED AMALGAMATION EXPENSE S OF RS.11,69,242/- (INCURRED BY ALL THE THREE COMPANIES ) AND CAPITAL INCREASE EXPENSES OF RS.70,000/- IN MAYUKA INVESTME NTS LTD. OUT OF THESE TWO EXPENSES ASSESSEE HAD ALREADY ADDED BACK IN ITS COMPUTATION OF INCOME CAPITAL INCREASE EXPENSES OF RS.70,000/- AND AMALGAMATION EXPENSE OF RS.9,35,394/-. 4.2 SALARY OF RS.2,59,835/- WAS INCURRED BY THE TWO AMALGAMATING COMPANIES, WHEREAS THE BREAK UP OF RS. 15,74,196/- IS GIVEN AT PAGE 59 OF THE PAPER BOOK. IT WILL KINDLY BE SEEN THAT OF THE TOTAL EXPENDITURE OF RS.15,74,196/-, RS.2,22,728/- WAS INCURRED BY M/S KIRAN SECURITIES PVT.LTD. AND RS.3,17,679/- WAS INCURRED BY SOARMA VINIMAY PVT.LTD. THERE WAS NO DIVIDEND EARNI NG IN EITHER OF THESE TWO COMPANIES. THEREFORE, IT WAS CLAIMED THAT NO PART OF EXPENSES INCURRED BY THESE TWO COMPANIES COULD BE C ONSIDERED FOR DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961. 4.3 EXPENDITURE OF RS.10,33,789/- INCURRED IN MAYUK A INVESTMENTS LTD. BEFORE MERGER INCLUDED RS.9,28,617 /- AMALGAMATION AND CAPITAL INCREASE EXPENSES. THUS, T HE NET EXPENDITURE INCURRED AND CLAIMED AS DEDUCTION IN MA YUKA INVESTMENTS LTD., WHERE DIVIDEND INCOME HAS BEEN EA RNED WAS RS.1,05,172/- ONLY. ANY DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961 COULD HAVE BEEN MADE FROM THIS AMOUNT OF RS.1,05,172/- ONLY. APART FROM THE ABOVE, IT WAS ALSO SUBMITTED AS UNDE R :- 8 ITA NO.6088/DEL/2012 7. FROM THE ABOVE NARRATION OF FACTS IT WILL KINDL Y BE SEEN THAT OUT OF TOTAL EXPENSES OF RS.18,34,031/- DETAILED IN SCHEDULE 11 AND 12 ATTACHED TO THE PROFIT AND LOSS ACCOUNT AGGREGAT E EXPENSES OF RS.8,00,242/- COMPRISING OF SALARY OF RS.2,59,835/- AND OTHER EXPENSES OF RS.2,22,728/- RELATING TO KIRAN SECURI TIES PVT. LTD. AND EXPENSES OF RS.3,17,679/- RELATING TO SOARMA VINIMA Y PVT.LTD. CANNOT BE CONSIDERED FOR ANY DISALLOWANCE U/S 14A O F THE INCOME TAX ACT, 1961, BECAUSE THESE TWO COMPANIES NEITHER HELD ANY INVESTMENT, NOR RECEIVED ANY DIVIDEND DURING THE YE AR. THEY DID NOT EARN ANY INCOME, WHICH DOES NOT FORM PART OF THE TO TAL INCOME. OF THE REMAINING EXPENDITURE OF RS.10,33,789/-, SHARE ISSUE EXPENSES OF RS.70,000/-, LOSS ON SALE OF INVESTMENT RS.11,695/- , DEPRECIATION RS.1033/- AND AMALGAMATION EXPENSES RS.8,58,617/- H AVING ALREADY BEEN ADDED BACK BY THE APPELLANT ASSESSEE IN THE CO MPUTATION OF INCOME, THESE COULD NOT HAVE BEEN CONSIDERED FOR MA KING DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961. T HUS, AFTER IGNORING THESE EXPENSES AT THE MOST RS.92,444/- COU LD HAVE BEEN CONSIDERED FOR MAKING DISALLOWANCE U/S 14A OF THE I NCOME TAX ACT, 1961. ASSESSING OFFICER, WAS, THEREFORE, IN AN ERRO R IN CONSIDERING RS.8,16,942/- FOR WORKING OUT PROPORTIONATE DISALLO WANCE U/S 14A OF THE INCOME TAX ACT, 1961. 8. BESIDES, FOR ALLOCATING EXPENSES IN PROPORTION T O INVESTMENT IN SHARES TO TOTAL CAPITAL EMPLOYED ASSESSING OFFIC ER HAS CONSIDERED ONLY INVESTMENTS IN SHARES AND SECURITIES AND LOANS . HE HAS NOT CONSIDERED INVESTMENT IN FIXED ASSETS RS.3.63 LAKHS AND INVESTMENT IN IMMOVEABLE PROPERTY AS ADVANCE RS.3.97 CRORES. T HIS AMOUNT OF RS.3.97 CRORES IS REFLECTED IN THE DETAILS OF LOANS AND ADVANCES IN SCHEDULE 7 ATTACHED TO THE BALANCE SHEET. THEREFORE , FOR ALLOCATING EXPENSES ASSESSING OFFICER OUGHT TO HAVE TAKEN THE DIVIDER AT RS.97.29 CRORES INSTEAD OF RS.93.29 CRORES (RS.93.2 9 CRORES + RS.3.97 CRORES + RS.3.63 LACS). BY TAKING THIS DIVI DER DISALLOWANCE U/S 14A OF THE INCOME TAX ACT, 1961 CANNOT EXCEED R S.87,636/- AGAINST RS.50,000/- ALREADY OFFERED BY THE ASSESSEE APPELLANT ON AN AD-HOC BASIS. 8.2 IT WILL ALSO NOT BE OUT OF PLACE TO SUBMIT HERE THAT OUT OF EXPENSES RS.92,444/- STATUTORY EXPENSES SUCH AS AUD IT FEES, FILING FEES ETC., WHICH ARE NECESSARILY REQUIRED TO BE INC URRED BY THE APPELLANT, WHETHER ANY INCOME IS EARNED OR NOT NEED S TO BE IGNORED. IN THAT SITUATION SUCH DISALLOWANCE WILL BE STILL L OWER. THE CIT (A), HOWEVER, REJECTED THE CLAIM OF THE ASS ESSEE AND UPHELD THE DISALLOWANCE MADE BY THE AO. 9 ITA NO.6088/DEL/2012 6. IN THE ABOVE FACTUAL MATRIX, THE FUNDAMENTAL ASP ECT WHICH CLEARLY EMERGES IS THAT AO HAS REJECTED THE SUO MOTU DISALL OWANCE OF RS.50,000/- BY SUBSTITUTING A METHOD WHICH IS NOT PRESCRIBED BY TH E ACT READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962 (HEREINAFTER THE RULES ). THUS APPARENTLY, ON THIS GROUND ALONE, COMPUTATION AS MADE IS NOT IN ACCORDA NCE AS PER RULES. HOWEVER, THE LD. COUNSEL HAS POINTED OUT THAT IF RU LE 8D IS APPLIED THEN DISALLOWANCE WOULD WORK OUT AT RS.37,08,098/- WHICH IS ALMOST FOUR TIMES THE ACTUAL EXPENDITURE CLAIMED BY THE ASSESSEE. SO, AC CORDING TO LD. AR, THE DISALLOWANCE HAS TO BE MADE, IT SHOULD BE CONFINED TO THE ACTUAL EXPENDITURE INCURRED AND CLAIMED FOR EARNING EXEMPT INCOME. IN THIS CONTEXT, THE FIRST SUBMISSION OF ASSESSEE IS TOTAL EXPENDITURE CLAIMED AS PER P&L ACCOUNT. PAGE 3 PB IS RS.18,35,064 (PAGE 13 OF ANNUAL REPORT). I T HAS BEEN STATED THAT OUT OF THIS AMOUNT, RS.2,59,835/- IS THE ADMINISTRATIVE EX PENSES AND RS.5,40,397/- PERTAINS TO THE TWO COMPANIES WHICH HAVE AMALGAMATE D WITH THE ASSESSEE, NAMELY, M/S. KIRAN SECURITIES PVT. LTD. AND M/S. SO ARMA VINIMAY PVT. LTD. AND FROM WHOM NO DIVIDEND INCOME HAS BEEN EARNED AND DE CLARED BY THE ASSESSEE. THUS TO THE SAID EXTENT, ACCORDING TO ASSESSEE, NO DISALLOWANCE OF EXPENDITURE OF RS.5,40,397/- IS WARRANTED. AS REGARDS THE EXPENDI TURE OF RS.15,74,196/- (PAGE 57 OF PB), IT IS APPARENT THAT IT INCLUDES A SUM OF RS.2,22,729/- (KIRAN SECURITIES PVT. LTD. ) AND A SUM OF RS.3,17,679/- (SOARMA VINI MAY PVT. LTD.) AS CLAIMED BY THE LD. AR WHICH ARE PERTAINING TO AMALGAMATING COMPANIES AND FURTHER AMALGAMATION EXPENSES OF RS.8,58,617 (OF MAYUKA INV ESTMENT LTD.), CAPITAL 10 ITA NO.6088/DEL/2012 INCREASE EXPENSES OF RS.70,000/- (OF MAYUKA INVESTM ENT LTD.) ARE CLAIMED BY THE LD. AR; AND LOSS ON SALE OF INVESTMENT RS.11,69 5/- (PB PAGE 57) WHICH HAVE NO NEXUS WITH THE EXEMPT INCOME. THUS, ACCORDING TO LD. AR, THE SAID AMOUNTS CANNOT BE DISALLOWED. THE REMAINING EXPENDITURE AC CORDING TO AR IS RS.93,477/- (RS.15,74,156/- - RS.2,22,729/- + RS.3 ,17,679/- + RS.8,58,617/- + RS.70,000/- + RS.11,695 (PAGE 57 OF PB) = RS.93,477 /-). THIS SUM OF RS.93,477/-, ACCORDING TO LD. AR, INCLUDES AUDIT FE ES OF RS.16,545/- AND FILING FEES RS.2,088/-, WHICH ARE IN THE NATURE OF ROUTINE BUSINESS/STATUTORY EXPENDITURE. IN VIEW OF THE AFORESAID SUBMISSION OF THE AR, WE FEEL THAT IF THESE EXPENDITURES ARE CONSIDERED IN THE LIGHT OF THE SUO MOTU EXPENDITURE OF RS.50,000/- AS CLAIMED BY THE ASSESSEE FOR EARNING EXEMPT INCOME NEED TO BE RECONSIDERED BY THE AO. THEREFORE, WE SET ASIDE TH E IMPUGNED ORDER AND RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR D ECIDING THE ISSUE IN VIEW OF THE AFORESAID SUBMISSIONS OF LD. AR AND THEREAFTER, DET ERMINING THE QUESTION OF DISALLOWANCE U/S 14A OF THE ACT. NEEDLESS TO SAY, THE ASSESSEE WOULD BE ALLOWED A REASONABLE OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 6 TH DAY OF AUGUST, 2015. SD/- SD/- (S. V. MEHROTRA) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 26 TH DAY OF AUGUST, 2015/TS 11 ITA NO.6088/DEL/2012 COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A)-IX, NEW DELHI. 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI