DEPUTY COMMISSIONER OF INCOME TAX 1(1)(1), MUMBAI V. M/S.ADVENTURE MARKETING PRIVATE LIMITED, MUMBAI

ITA 6091/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9594 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 03-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANADI VARMA LD
• Assessee Lawyers: MAHESH RAJORA LD ARS
• Keywords: Business income; Earning of tax free income; Rule 8D
• Section: 143(3); 14A; 69B; 69; 28

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , , # BEFORE HONBLE SHRI C.N. PRASAD, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.6091/MUM/2017 ( $ $ $ $ %$ %$ %$ %$ / ASSESSMENT YEAR: 2013-14) DCIT - 1(1)(1), ROOM NO.533/579, 5 TH FLOOR, AAYKAR BHAVAN, M. K. ROAD, MUMBAI-400020 / VS. M/S ADVENTURE MARKETING P VT. LTD. 9 TH FLOOR, MAKER CHAMBERS IV 222 NARIMAN POINT, MUMBAI-400021 & ./ ./PAN/GIR NO. AAJCA-4475-B ( &( /APPELLANT ) : ( )&( / RESPONDENT ) & ./ I.T.A. NO.6117/MUM/2017 ( $ $ $ $ %$ %$ %$ %$ / ASSESSMENT YEAR: 2013-14) M/S ADVENTURE MARKETING P VT. LTD. 9 TH FLOOR, MAKER CHAMBERS IV 222 NARIMAN POINT, MUMBAI-400021 / VS. DCIT - CIRCLE 1(2), ROOM NO.368, C.R. BUILDING, NEW DELHI & ./ ./PAN/GIR NO. AAJCA-4475-B ( &( /APPELLANT ) : ( )&( / RESPONDENT ) REVENUE BY : SHRI ANADI VARMA - LD. CIT-DR ASSESSEE BY : SHRI VIJAY MEHTA & SHRI MAHESH RAJORA- LD. ARS * +, / DATE OF HEARING : 01/05/2019 % * +, / DATE OF PRONOUNCEMENT : 03/07/2019 . .. . . .. . 2 . .. . / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID CROSS-APPEALS FOR ASSESSMENT YEAR [AY] 2013-14 CONTEST THE ORDER LD. COMMISSIONER OF INCOME-TAX (APPEALS)- 2, MUMBAI [CIT(A)], APPEAL NO. CIT(A)-2/IT/247/2016-17 D ATED 14/07/2017. THE GROUNDS RAISED BY THE ASSESSEE READS AS UNDER: - THE COMMISSIONER OF INCOME TAX (APPEALS) -3, MUMBAI [HEREINAFTER REFERRED TO AS CIT(A)] ERRED IN DIRECTING THE AO TO NOT ALLOW SET OFF OF LOSSES UNDER THE HEAD INCOME FROM OTHER SOURCE AGAINST THE INCOME UNDER THE HEAD INCOME FROM BUSINESS & PROFESSION. THE APPELLANT SUBMITS THAT THE LD. CIT(A) ONCE HAVI NG ACCEPTED THE CLAIM OF THE APPELLANT FOR DEDUCTION U/S 57(III), THE RESULTANT LOSSES UNDER THE HEAD INCOME FROM OTHER SOURCES ARE ELIGIBLE FOR SET OFF AGAINST THE INCOME FROM BUSINESS & PROFESSION; HENCE THE AO SHALL BE DIRECTED TO ALLO W THE SET OFF OF LOSSES UNDER INCOME FROM OTHER SOURCES AGAINST INCOME UNDER TH E HEAD INCOME FROM BUSINESS & PROFESSION. THE GROUNDS RAISED BY THE REVENUE READS AS UNDER: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F RS. 23.17 CRORE MADE BY THE AO ON ACCOUNT OF ACQUISITION OF QUOTED SHARES T HROUGH OFF-MARKET, BELOW THE MARKET PRICE? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F RS. 23.17 CRORE MADE BY THE AO ON ACCOUNT OF ACQUISITION OF QUOTED SHARES T HROUGH OFF-MARKET, BELOW THE MARKET PRICE THOUGH THE SAME WAS RESULTED IN AC CRUAL OF BENEFIT TO THE ASSESSEE TAXABLE U/S. 28(IV) OF THE I. T. ACT, 1961 ? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING DISALLOWANCE M ADE BY THE AO U/S. 14A OF THE ACT READ WITH RULE 8D OF THE INCOME-TAX RULES I N RELATION TO INVESTMENT MADE BY THE ASSESSEE IN LISTED EQUITY SHARES OF NET WORK 18 MEDIA & INVESTMENTS LTD., BY IGNORING THE BOARD'S CIRCULAR NO. 5 OF 2014 DATED 11.02.2014? REVENUES APPEAL, ITA NO. 6091/MUM/2017 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN MANUFACTURING OF READY-MIX 3 CONCRETE WAS ASSESSED FOR IMPUGNED AY U/S 143(3) ON 18/03/20 16 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED A T RS.2611.94 LACS AFTER CERTAIN DISALLOWANCES AS AGAINST NIL RETURN FILED BY THE ASSESSEE ON 16/09/2013. THE FOLLOWING QUANTUM ADDITIONS ARE THE SUBJECT MATTER OF REVENUES APPEAL BEFORE US: - NO. NATURE OF ADDITION AMOUNT (RS.) 1. DISALLOWANCE U/S 69B 2317.89 LACS 2. DISALLOWANCE U/S 14A 96.18 LACS 2.2 FACTS QUA THE SAME ARE THAT DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED THAT THE ASSESSEE ACQUIRED 12,75,27,787 SHARES OF AN ENTITY NAMELY M/S NETWORK 18 MEDIA & INVESTMENT LTD. FOR A SUM OF RS.361.88 CRORES. OUT OF THIS, THE SHARES NUMBERING 82,78,180 WERE PURCHASED IN OFF-MARKET TRANSACTION FROM DIFFERENT SHAREHOLDERS @RS.5/- PER SHARE WHEREAS 11,92,49,607 SHARES WERE ACQUIRED BY THE AS SESSEE IN THE RIGHT ISSUE @RS.30/- PER SHARE. IT WAS OBSERVED THAT THE PAYMENT OF SHARES ACQUIRED IN OFF-MARKET TRANSACTION WAS MADE AFTER M ORE THAN ONE YEAR. WHEREAS THE PERIOD OF OFF-MARKET TRANSACTION AND RI GHT-ISSUE WAS LESS THAN 3 MONTHS. 2.3 IN THE ABOVE BACKGROUND, LD. AO SHOW-CAUSED THE ASSESSEE AS TO WHY THE INVESTMENT MADE IN 82,78,180 SHARES STATED TO BE MADE @RS.5/- PER SHARES, WAS NOT TO BE CONSIDERED @RS.30 /- PER SHARE AND THE DIFFERENTIAL AMOUNT OF RS.25/- BE BROUGHT TO TA X IN ASSESSEES HAND AS UNDISCLOSED INVESTMENTS. IN DEFENSE, THE ASSESSE E SUBMITTED THAT ALL THE INVESTMENTS WERE RECORDED IN BOOKS OF ACCOUNT A ND THE PROVISIONS OF SECTION 69 WERE NOT APPLICABLE. THE ASSESSEE ALSO F ILED DECLARATION FROM THE SELLERS THAT THE SHARES WERE SOLD AT RS.5/- PER SHARE. HOWEVER, REJECTING THE SAME, LD. AO OPINED THAT INVESTMENTS WERE UNDER-VALUED 4 SINCE THE MARKET PRICE OF THE SHARE ON THE DATE OF TRANSFER WAS MUCH HIGHER AND THEREFORE, AN AMOUNT OF RS.28/- PER SHAR E [BEING THE DIFFERENCE BETWEEN MARKET PRICE PER SHARE I.E. RS.3 3/- & PRICE AT WHICH THE SHARES WERE ACQUIRED I.E. RS.5/- PER SHARE] WAS TO BE ADDED AS UNDISCLOSED INCOME U/S 69B. THE SAME WORKED OUT TO BE RS.23.17 CRORES. 2.4 THE SECOND ADDITION I.E. DISALLOWANCE U/S 14A S TEM FROM THE FACT THAT IT WAS NOTED THAT THE ASSESSEE DEBITED ROC FEE S OF RS.25,000/- EACH ON 14/09/2012 & 06/11/2012. THE SAID SUMS WERE STATED TO BE PAID TO SEBI FOR SUBMISSION OF POST ISSUE REPORT U/R 10 OF TAKEOVER CODE FOR INVESTMENT IN RIGHT ISSUE OF TV18 BROADCAST LTD. AN D NETWORK18 MEDIA & INVESTMENT LTD. SINCE THE ASSESSEE HAD INVESTMENT S IN ITS BALANCE SHEET, THE SAME CALLED FOR DISALLOWANCE U/S 14A. TH E ASSESSEE DEFENDED THE SAME BY SUBMITTING THAT NO EXEMPT INCO ME WAS RECEIVED DURING THE YEAR AND NO EXPENDITURE WAS INCURRED TOW ARDS THE INVESTMENT. HOWEVER, NOT CONVINCED, LD. AO, APPLYING RULE 8D, C OMPUTED AGGREGATE DISALLOWANCE OF RS.96.18 LACS, WHICH COMPRISED-OFF OF AFORESAID DIRECT EXPENDITURE OF RS.50,000/- U/R 8D(2)(I) AND INDIREC T EXPENDITURE DISALLOWANCE U/R 8D(2)(III) FOR RS.95.68 LACS, BEIN G 0.5% OF AVERAGE INVESTMENT. 3.1 AGGRIEVED, THE ASSESSEE AGITATED THE SAME BEFO RE LD. CIT(A) VIDE IMPUGNED ORDER DATED 14/07/2017. REGARDING ADDITION U/S 69B, IT WAS SUBMITTED THAT THE ADDITIONS WERE MADE ON MERE PRES UMPTION, SURMISES AND CONJECTURES. THE ATTENTION WAS DRAWN TO THE FAC T THAT 82,78,180 SHARES WERE PURCHASED FROM 4 PARTIES WHICH WERE THE ASSESSEES PROMOTERS OR PROMOTERS GROUP ENTITIES. IT WAS SUBMI TTED THAT THESE 5 SHARES WERE HELD BY THE TWO DIRECTORS NAMELY MR. RAGHAV BAHL & MRS. RITU KAPOOR IN INDIVIDUAL CAPACITY AS WELL AS THROUGH THEIR CL OSELY HELD ENTITIES IN THE RATIO OF 95:5. THESE DIRECTORS WERE SHAREHOLDERS IN THE ASSESSEE COMPANY IN THE SAME RATIO. WITH A VIEW TO CONSOLIDATE SHAREHOLDING IN ONE SINGLE ENTITY, THE SHARES OF TH ESE DIRECTORS AS WELL AS OTHER CLOSELY HELD COMPANIES WERE TRANSFERRED DURIN G THE YEAR AT FACE VALUE I.E. RS.5/- PER SHARE AND THEREFORE, EVEN AFT ER TRANSFER OR RE- ORGANIZATION, THE STATED DIRECTORS WOULD REMAIN THE BENEFICIAL SHAREHOLDER IN THE SAME RATIO AND THE TRANSACTION H AS NOT RESULTED INTO ANY DILUTION IN THE SHAREHOLDING OF EXISTING SHAREH OLDERS. IN THE AFORESAID BACKGROUND, THE ADDITION U/S 69B WERE AGITATED. IT WAS SUBMITTED THAT THE PROVISIONS OF SECTION 69B WERE NOT, AT ALL, APPLICA BLE TO THE FACTS OF THE CASE. RELIANCE WAS PLACED, INTER-ALIA, ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT V/S RUPEE FINANCE & MANAGE MENT LTD. [ITA NO.1208 OF 2009 20/10/2008], CIT V/S DEVESH AG ARWAL [81 TAXMANN.COM 257] & HONBLE SUPREME COURT IN DHAKESH WARI COTTON MILLS LTD. V/S CIT [26 ITR 775]. 3.2 AFTER DUE CONSIDERATION OF ASSESSEES SUBMISSIO NS AND FACTUAL MATRIX, LD. CIT(A) CONCURRED WITH THE SAME AND DELE TED THE ADDITIONS U/S 69B BY MAKING FOLLOWING OBSERVATIONS: - FROM THE ABOVE DISCUSSION, THE FOLLOWING INFERENCES ARE DRAWN: A) THE LD. AO HAS ESTIMATED THE INVESTMENT MADE IN PURCHASE OF SHARES I.E. 82,78,180 SHARES BY RELYING ON THE MARKET RATE AT R S. 33/- OF THE M/S. NETWORK 18 MEDIA 85 INVESTMENT LTD. B) THE TRANSFEROR AND TRANSFEREE EFFECTIVELY IS MR. RAGHAV BAHL AND MS. RITU KAPOOR AND NOT A THIRD PARTY IS INVOLVED. C) HONBLE BOMBAY HIGH COURT DECISION IN THE CASE OF CIT-7 VS M/S. RUPEE FINANCE 85 MANAGEMENT (P) LTD. IT APPEAL NO. 1208 OF 2008 D ATED 20.10.2008 WHEREIN IT IS HELD THAT MERE PURCHASE OF SHARES, AS AN INVESTMENT , WITH THE LOCK IN PERIOD OF HOLDING, FOR A CONSIDERATION WHICH IS LESS THAN THE MARKET VALUE, CANNOT BE BROUGHT TO TAX, AS A BENEFIT OR PERQUISITE UNDER SECTION 28 (IV) OF THE ACT. 6 D) HONBLE SUPREME COURT DECISION IN THE CASE OF DH AKESWARI COTTON MILLS LTD VS. COMMISSIONER OF INCOME TAX [26 1TR 775 SC] WHEREIN IT IS HELD THE ITO IS NOT ENTITLED TO MAKE A PURE GUESS AND MAKE AN ASSESSMEN T WITHOUT REFERENCE TO ANY EVIDENCE OR ANY MATERIAL AT ALL-THERE MUST BE SOMET HING MORE THAN BARE SUSPICION TO SUPPORT THE ASSESSMENT UNDER S. 23(3)-ITO AND TH E TRIBUNAL IN ESTIMATING THE GROSS PROFIT RATE ON SALES DID NOT ACT ON ANY MATER IAL BUT ACTED ON PURE GUESS AND SUSPICION THE RATIO FOLLOWED IN JURISDICTIONAL HIGH COURT DEC ISION IN THE CASE OF CIT-7 VS M/S. RUPEE FINANCE & MANAGEMENT (P) LTD. IT APPEAL NO. 1 208 OF 2008 AND CIT-20 VS DEVESH AGARWAL, IT APPEAL NO. 1637 OF 2014 WITH APP EAL NO. 1727 OF 2014 IS SQUARELY APPLICABLE TO THE FACT OF THE CASE OF THE APPELLANT THAT MERE PURCHASE OF SHARES, AS AN INVESTMENT, WITH A LOCK IN PERIOD OF HOLDING, FOR A CONSIDERATION WHICH IS LESS THAN THE MARKET VALUE, CANNOT BE BROUGHT TO TAX AND ALSO FOLLOWING THE HON'BLE SUPREME COURT DECISION IN THE CASE OF DHAKE SWARI COTTON MILLS LTD VS. COMMISSIONER OF INCOME TAX [26 ITR 775 SC] WHEREIN ITO CANNOT ACT ON PURE GUESS AND SUSPICION, SO I AM OF THE CONSIDERED OPINION TH AT THE ADDITION MADE BY THE AO ON ACCOUNT OF THE DIFFERENCE IN MARKET VALUE AND TH E FACE VALUE OF THE SHARE IS NOT A JUSTIFIABLE ONE AND ACCORDINGLY I DIRECT THE AO TO DELETE THE ABOVE ADDITION. 3.3 THE DISALLOWANCE U/S 14A WAS DELETED IN VIEW OF THE FACT THAT THE ASSESSEE DID NOT EARN ANY EXEMPT INCOME DURING THE YEAR AND THEREFORE, NO DISALLOWANCE WAS WARRANTED IN TERMS OF DECISION OF HONBLE BOMBAY HIGH COURT RENDERED IN DELITE ENTERPRISES [ITA NO.110 OF 2009 DATED 26/02/2009]. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. CIT-DR, WHILE RELYING UPON THE STAND OF LD.AO, SUBMITTED THAT THE ADDITIONS WOULD BE JUSTIFIED U/S 56(2)(VII A). THE LD. AR, RELYING UPON THE STAND OF LD. FIRST APPELLATE AUTHORITY, SU BMITTED THAT THE AFORESAID PROVISIONS WOULD NOT APPLY TO THE FACTUAL MATRIX. 5.1 WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS A ND PERUSED RELEVANT MATERIAL ON RECORD AND DELIBERATED ON JUDICIAL PRON OUNCEMENTS AS CITED BEFORE. IT EMERGES THAT THE ASSESSEE HAS PURCHASED CERTAIN SHARES @RS.5/- PER SHARE FROM ITS DIRECTORS AND THEIR CLOS ELY HELD COMPANIES. IT IS UNDISPUTED FACT EVEN AFTER THE TRANSFER OF SHARE S, ULTIMATE BENEFICIAL SHAREHOLDING OF THE TWO DIRECTORS WOULD REMAIN UNCH ANGED SINCE THESE 7 SHARES WERE HELD BY THE DIRECTORS IN THE RATIO OF 9 5:5. SIMILAR IS SHAREHOLDING RATIO OF THE TWO DIRECTORS IN THE ASSE SSEE COMPANY. 5.2 PROCEEDING FURTHER, IT IS OBSERVED THAT EXCEPT FOR MERE ALLEGATIONS, NOTHING HAS BEEN BROUGHT ON RECORD BY LD. AO TO EST ABLISH THAT THE ASSESSEE MADE ANY PAYMENT FOR THE STATED INVESTMENT ANYTHING OVER AND ABOVE WHAT WAS RECORDED IN THE BOOKS OF ACCOUNT S. THESE TRANSACTIONS WERE WITHIN THE GROUP ENTITIES AND THE CONFIRMATIONS OF SELLERS HAVE BEEN PLACED ON RECORD. THE ASSESSEE HA S PLACED ON RECORD ASSESSMENT ORDER U/S 143(3) IN CASE OF ONE OF THE S ELLERS NAMELY M/S RB HOLDINGS PVT. LTD., THE PERUSAL OF WHICH REVEAL THA T THE RETURNED INCOME OF THE SAID ENTITY HAS BEEN ACCEPTED BY THE REVENUE . NOTHING ON RECORD WOULD DEMONSTRATE ANY EXCHANGE / FLOW OF FUNDS, OUT OF BOOKS, BETWEEN THE ASSESSEE AND THE SELLERS. IT IS TRITE LAW THAT NO ADDITIONS COULD BE MADE MERELY ON THE BASIS OF ASSUMPTIONS, CONJECTURE S OR SURMISES. WE FIND THAT THE PRIMARY ONUS TO SUBSTANTIATE THE TRAN SACTIONS WAS DULY FULFILLED BY THE ASSESSEE AND THE SAME HAD SHIFTED TO REVENUE TO DISLODGE ASSESSEES CLAIM. IN OUR OPINION, NOTHING HAS BEEN BROUGHT ON RECORD BY LD. AO TO PROVE THAT ANY EXCESS PRICE WAS PAID BY T HE ASSESSEE TO THE SELLERS. THEREFORE, IN THE ABSENCE OF ANY EVIDENCES ESTABLISHING RECEIPTS & PAYMENTS OUTSIDE REGULAR BOOKS OF ACCOUNTS, THE P ROVISIONS OF SECTION 69B COULD NOT BE INVOKED. 5.3 THE SAID PROPOSITION IS SQUARELY COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT RENDERED IN CIT V/S DEVESH AGARWAL [81 TAXMANN.COM 257], WHICH LD. CIT(A) HAS ALREADY CONSIDERED. THE CASE LAW OF HONBLE RAJASTHAN HIGH COURT RENDERED IN CIT V/S MANTRI SHARE BROKERS PVT. LTD. [96 TAXMANN.COM 279] AS CONFIRMED BY 8 HONBLE APEX COURT BY WAY OF DISMISSAL OF REVENUES SLP [96 TAXMANN.COM 280], THE DECISION OF HONBLE DELHI HIGH COURT RENDERED IN CIT V/S PUNEET SABHARWAL [338 ITR 485] ALSO SUPPORTS THE SAME VIEW. 5.4 SO FAR AS THE SUBMISSIONS MADE BY LD. CIT-DR I S CONCERNED, WE FIND THAT, FIRSTLY THE AFORESAID PROVISIONS OF SECT ION 56(2)(VIIA) HAS NOT BEEN INVOKED BY LD.AO AND SECONDLY, THESE PROVISION S DO NOT APPLY IN CASE OF RECEIPTS OF SHARES FOR INADEQUATE CONSIDERA TION BY THE ASSESSEE, OF A COMPANY NOT BEING A COMPANY IN WHICH THE PUBLI C ARE SUBSTANTIALLY INTERESTED [AS DEFINED IN SECTION 2(18)]. HOWEVER, WE FIND THAT SHARES BEING TRANSACTED BY THE ASSESSEE ARE NOT OF A PRIVA TE COMPANY BUT OF A PUBLIC LISTED COMPANY WHICH IS EVIDENT FROM THE FAC T THAT LD. AO PROCEEDED TO TAX THE DIFFERENCE OF LISTED PRICE AND THE ACQUISITION PRICE U/S 69B. THEREFORE, THE SAID PROVISIONS, IN OUR OPI NION, DO NOT APPLY TO THE FACTUAL MATRIX. 5.5 THE REVENUE, IN ITS GROUND OF APPEAL, HAS ALSO ASSERTED THAT THE ACQUISITION OF SHARES HAS RESULTED INTO ACCRUAL OF BENEFIT TO THE ASSESSEE U/S 28(IV). HOWEVER, WE AGAIN FIND THAT THE PROVISI ONS OF SECTION 28(IV) HAVE NOT BEEN INVOKED BY LD. AO TO MAKE THE IMPUGNE D ADDITIONS. SECONDLY, THE ALLEGATIONS OF LD. AO STEM FROM THE S USPICION THAT THE ASSESSEE HAS PAID THE DIFFERENTIAL AMOUNT OF RS.28/ - PER SHARE TO THE SELLER. UNDER THESE CIRCUMSTANCES, NOTHING WOULD SU GGEST THAT THE ASSESSEE HAS RECEIVED CERTAIN BENEFIT DURING THE CO URSE OF ITS BUSINESS SO AS TO ATTRACT THE PROVISIONS OF SECTION 28(IV) S INCE IT IS NOT THE CASE OF LD. AO THAT THE ASSESSEE HAD RECEIVED CERTAIN BENEF IT BY WAY OF PURCHASE OF SHARES OF HIGHER VALUE AT LOWER PRICES. 9 5.6 KEEPING IN VIEW THE ENTIRETY OF FACTS AND CIRCU MSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER ON THIS IS SUE. THIS GROUND OF REVENUES APPEAL STANDS DISMISSED. 6.1 SO FAR AS THE DISALLOWANCE U/S 14A IS CONCERNED , WE FIND THAT IT IS UNDISPUTED FACT THAT THE ASSESSEE HAS NOT EARNED AN Y EXEMPT INCOME DURING THE YEAR. THIS BEING, SO NO DISALLOWANCE U/R 8D(2)(III) WOULD BE WARRANTED IN TERMS OF DECISION OF HONBLE BOMBAY HIGH COURT [NAGPUR BENCH] RENDERED IN PCIT VS. BALLARPUR INDUSTRIES LT D. [ITA NO.51 OF 2016], PR.CIT V/S M/S RIVIAN INTERNATIONAL PVT. LTD . [ITA NO.693 OF 2015] & HONBLE DELHI HIGH COURT RENDERED IN PCIT V S. MCDONALDS INDIA (P) LTD. [101 TAXMANN.COM 86]. 6.2 SO FAR AS THE DISALLOWANCE U/R 8D(2)(I) IS CONC ERNED, WE FIND THAT THE AFORESAID PAYMENT OF RS.0.50 LACS HAS BEEN PAID BY THE ASSESSEE TO SEBI FOR CERTAIN STATUTORY COMPLIANCES. THESE PAYME NTS, BEING MORE IN THE NATURE OF STATUTORY & MANDATORY PAYMENTS, COULD NOT BE SAID TO BE INCURRED IN RELATIONS TO MAKING-OFF OF INVESTMENTS. 6.3 KEEPING IN VIEW THE SAME, NO INFIRMITY COULD BE FOUND IN THE IMPUGNED ORDER QUA THIS ISSUE. THIS GROUND OF REVENUES APPEAL STANDS DISMISSED. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISSED. ASSESSEES APPEAL, ITA NO. 6117/MUM/2017 7.1 THE GRIEVANCE OF THE ASSESSEE STEM FROM THE FAC T THAT THE ASSESSEE SUFFERED INTEREST DISALLOWANCE OF RS.160.1 1 LACS U/S 36(1)(III). BEFORE LD. FIRST APPELLATE AUTHORITY, IT WAS ALTERN ATIVELY SUBMITTED THAT BORROWED FUNDS HAD DIRECT NEXUS WITH INVESTMENT IN DEBENTURE SINCE THE MONEYS WERE BORROWED AND INVESTED ON SAME DATE I.E. 13/07/2011. THE MONEYS WERE BORROWED @15% WHEREAS INTEREST ON DEBEN TURE WAS 10 EARNED @10%. ACCORDINGLY, THE ASSESSEE EARNED INTER EST INCOME OF RS.265.75 LACS AND PAID INTEREST EXPENDITURE OF RS. 425.86 LACS. IT WAS THE DIFFERENTIAL OF THE TWO, WHICH LD. AO HAD DISAL LOWED U/S 36(1)(III). THE ASSESSEE PLEADED THAT SINCE INTEREST INCOME WAS OFF ERED UNDER THE HEAD INCOME FROM OTHER SOURCES AND THE BORROWED FUNDS HAD DIRECT NEXUS WITH INVESTMENT, FULL DEDUCTION OF THE INTEREST EXP ENDITURE WAS ALLOWABLE U/S 57(III). THE ATTENTION WAS DRAWN TO THE COMPUTA TION OF INCOME TO SUBMIT THAT THE ASSESSEE HAS IGNORED THE LOSS UNDER THE HEAD INCOME FROM OTHER SOURCES EXCEPT TO THE EXTENT OF SETTING-OFF OF BUSINESS IN COME OF RS.6,48,911/-. THE LD. CIT(A), CONVINCED WITH TH E CLAIM OF THE ASSESSEE U/S 57(III) CONCLUDED THE MATTER IN THE FO LLOWING MANNER: - SO AS PER THE PROVISIONS OF SECTION 57(III), THE AP PELLANT COMPANY HAS RIGHTLY CLAIMED THE DEDUCTION U/S 57(III) AND FURTHER THE NET EFFEC T IS ONLY RS.6,48,911/- THE APPELLANT COMPANY GETS BENEFIT SO EVEN IF THE AO HAS ANY RESE RVATION, RS.6,48,911/- CAN BE TREATED AS AN INCOME AND NOT TO SET OFF THE INTERES T LOSS AS THE APPELLANT COMPANY ALREADY IGNORED THE CARRY FORWARD. ACCORDINGLY, IT IS PARTLY ALLOWED. AGGRIEVED BY THE AFORESAID DIRECTIONS, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. THE LD. AR PLEADED THAT THE ASSESSEES C LAIM U/S 57(III) WAS ACCEPTED IN THE IMPUGNED AY AND THEREFORE, THE ASSE SSEE WAS ELIGIBLE TO SET-OFF LOSSES UNDER THE HEAD INCOME FROM OTHER SOURCES TO THE EXTENT OF BUSINESS INCOME I.E. RS.6,48,911/-. 7.2 UPON PERUSAL, IT EMERGES THAT THE ASSESSEES AL TERNATIVE CLAIM OF DEDUCTION U/S 57(III) HAS BEEN ACCEPTED BY LD. FIRS T APPELLATE AUTHORITY AND THE SAME HAS ATTAINED FINALITY IN VIEW OF THE F ACT THAT THE REVENUE IS NOT IN FURTHER APPEAL BEFORE US. THEREFORE, IN THE GIVEN SITUATION, ONCE THE CLAIM WAS ACCEPTED U/S 57(III), THE LD. CIT(A), IN OUR OPINION, WAS NOT JUSTIFIED IN NOT ALLOWING THE INTER-HEAD SET-OFF OF LOSSES UNDER THE HEAD INCOME FROM OTHER SOURCES AGAINST BUSINESS INCOME TO THE EXTENT OF 11 RS.6,48,911/-, WHICH OTHERWISE WAS ALLOWABLE TO THE ASSESSEE IN TERMS OF SECTION 71(1). THEREFORE, LD. AO IS DIRECTED TO ALLOW SET-OFF OF LOSSES UNDER THE HEAD INCOME FROM OTHER SOURCES AGAINST BUSINESS INCOME TO THE EXTENT OF RS.6,48,911/-. THE ASSESSEES APPEAL STANDS ALLOWED. CONCLUSION 8. THE REVENUES APPEAL STANDS DISMISSED WHEREAS TH E ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD JULY, 2019. SD/- SD/- (C.N.PRASAD) (MANOJ KUMAR AGGARWAL) . .. . / JUDICIAL MEMBER . .. . / ACCOUNTANT MEMBER MUMBAI; DATED : 03/07/2019 SR.PS:-JAISY VARGHESE / 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.