ACIT 2(3), MUMBAI V. TATA INDUSTRIES LTD, MUMBAI

ITA 612/MUM/2014

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 7243 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 24-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK NARANG
• Keywords: Earning of tax free income
• Section: 142(1); 14A; 115JB

Judgement Text

1 TATA INDUSTRIES LTD IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI MAHAVIR SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.7595/MUM/2013 - AY 2010-11 I.T.A NO.1855/MUM/2015 - AY 2011-12 TATA INDUSTRIES LIMITED 24, BOMBAY HOUSE HOMI MODI STREET, FORT MUMBAI 400 001 PAN : AAACT4058L VS THE ACIT, RANGE 2(3) MUMBAI-20 APPELLANT RESPONDENT I.T.A NO.612/MUM/2014 - AY 2010-11 I.T.A NO.1763/MUM/2015 - AY 2011-12 THE ACIT- 2(3) / DY.CIT- 2(3)(1) MUMBAI-20 VS TATA INDUSTRIES LIMITED 24, BOMBAY HOUSE HOMI MODI STREET, FORT MUMBAI 400 001 APPELLANT RESPONDENT ASSESSEE BY SMT. AARTI VISSANJI REVENUE BY SHRI ABHISHEK NARANG DATE OF HEARING 08-08-2018 DATE OF PRONOUNCEMENT -09-2018 O R D E R PER G MANJUNATHA, AM : THESE CROSS APPEALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE ARE DIRECTED AGAINST SEPARATE, BUT IDENTICAL ORDERS OF THE CIT(A)-6, 2 TATA INDUSTRIES LTD MUMBAI DATED 17-10-2013 AND 30-01-2015 FOR THE ASSE SSMENT YEARS 2010-11 & 2011-12. SINCE FACTS ARE IDENTICAL AND I SSUES ARE COMMON IN ALL THE APPEALS, FOR THE SAKE OF CONVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER. 2. THE ASSESSEE HAS RAISED MORE OR LESS COMMON GROU NDS OF APPEAL FOR BOTH THE ASSESSMENT YEARS. THEREFORE, FOR THE SAKE OF CONVENIENCE, GROUNDS OF APPEAL TAKEN FOR AY 2010-11 ARE REPRODUC ED BELOW:- THE FOLLOWING GROUNDS OF APPEAL ARE DISTINCT AND S EPARATE AND WITHOUT PREJUDICE TO EACH OTHER: 1. GROUND NO. 1 A) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL ) ['ID. CIT(A)'] HAS ERRED IN LAW AND FACTS IN CONFIRMING THE DISALLOWANCE OF EXP ENDITURE OF RS. 2,25,21,880 (RS. 8,11,72,533 - RS. 5,97,63,078) INCURRED BY THE PROJECTS AND INVESTMENT DEPARTMENT OF THE HEAD OFFICE UNDER THE PROVISIONS OF SECTION 14A, AS PER RULE 8D(2)(I) AS 'THE AMOUNT OF EXPENDITURE DIRECTLY REL ATING TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME' FOR THE PURPOSES OF COMP UTING INCOME FROM BUSINESS OR PROFESSION AND ALSO IN THE COMPUTATION OF TAXABLE I NCOME U/S 115JB. B) THE ID. CIT(A) HAS ERRED IN LAW AND FACTS IN NO T ESTABLISHING A DIRECT NEXUS BETWEEN THE TAX FREE INCOME AND THE EXPENDITURE INC URRED FOR EARNING TAX FREE INCOME FOR THE PURPOSE OF DISALLOWING RS. 2,25,21,8 80 UNDER RULE 8D(2)(I). C) THE ID. CIT(A) HAS NOT CONSIDERED THE EXCLUSIO N OF THE AMOUNT OF INVESTMENTS ON WHICH THE APPELLANT HAS NOT EARNED ANY EXEMPT IN COME DURING THE YEAR UNDER CONSIDERATION FOR THE PURPOSE OF COMPUTING THE 'AVE RAGE VALUE OF INVESTMENT' AS PER RULE 8D(2)(III) R.W.S. 14A OF THE ACT. 2. GROUND NO. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND WITHOUT PREJUDICE TO THE OTHER GROUNDS, THE APPELLANT, WHILE CALCULATING 'AVERAGE VALUE OF INVESTMENT' AS PER RULE 8D(2)(III) R.W.S. 14A OF TH E ACT HAS TAKEN GROSS VALUE OF INVESTMENTS WITHOUT REDUCING THE PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS. IN ACCORDANCE RULE 8D(2)(III) , THE LEARNED ASSISTANT COMMISSIONER OF INCOME-TAX ['ID. ACIT] IN THE ASSES SMENT ORDER, OUGHT TO CONSIDER THE NET VALUE OF THE INVESTMENTS AS APPEAR ING ON THE BALANCE SHEET OF THE APPELLANT (I.E. AFTER REDUCING THE PRO VISION FOR DIMINUTION IN THE VALUE OF INVESTMENTS). 3. THE ASSESSEE HAS ALSO FILED A PETITION FOR ADMIS SION OF ADDITIONAL GROUND OF APPEAL ON 25-09-2017 AND 20-03-2018 BY TA KING CERTAIN ADDITIONAL GROUNDS. THE ADDITIONAL GROUNDS TAKEN B Y THE ASSESSEE ARE 3 TATA INDUSTRIES LTD REPRODUCED HEREUNDER:- THE HON' TRIBUNAL BE PLEASED TO HOLD THAT NO DISALL OWANCE IS TO BE MADE U/S. 14A OF THE ACT, ON THE STRATEGIC INVESTMENTS H ELD IN SHARES OF COMPANIES. WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTERNATE THE HON' TRIBUNAL BE PLEASED TO HOLD THAT THE LD. C IT(A) HAVING SUSTAINED DISALLOWANCE OF EXPENDITURE OF RS. 1,37,38,3477- (O UT OF PROJECT AND INVESTMENT DEPARTMENT) UNDER RULE 8D(2)(I), FURTHER DISALLOWANCE OF RS.6,34,04,103/- (RS. 6,72,11,1037- LESS RS.38,07,0 007-) CANNOT BE SUSTAINED UNDER RULE 8D(2)(III). WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTERNATE THE HON' TRIBUNAL BE PLEASED TO HOLD THAT THE AGGRE GATE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D(2)(I) AND (III) CANNOT EXCEED THE EXPENDITURE INCURRED BY THE PROJECT AND INVESTMENT DEPARTMENT OF RS.2,14,09,4757- (RS. 8,11,72,5537- LESS RS.5,97,63 ,0787-) BEING NET OF DISALLOWANCES MADE UNDER THE APPLICABLE PROVISIONS OF THE ACT OTHER THAN SECTION 14A. IN VIEW OF THE DECISION OF THE HON. ITAT, MUMBAI, I N THE APPELLANT'S OWN CASE VIDE ORDER DATED 20 TH JULY 2016 FOR A.Y. 2004-05, HOLDING THAT THE APPELLANT IS ENTITLED TO DEDUCTION OF EXPENSE INCUR RED ON INVESTMENTS MADE WITH A VIEW TO EXERCISE CONTROL, IT IS HUMBLY SUBMITTED THAT THE APPELLANT IS ENTITLED TO DEDUCTION OF RS.5,97,63,07 87- BEING LEGAL AND PROFESSIONAL FEES INCURRED BY THE PROJECT AND INVES TMENT DEPARTMENT AND OTHER DIVISION OR DEPARTMENT. 1. COMPUTATION OF BOOK PROFIT U/S. 115JB OF THE ACT THE HON'BLE TRIBUNAL BE PLEASED TO HOLD THAT THE CO MPUTATION U/S. CLAUSE (F) OF EXPLANATION-1 TO SECTION 115JB(2) IS TO BE M ADE WITHOUT TAKING INTO ACCOUNT DISALLOWANCE MADE U/S. 14A READ WITH RULE 8 D(2)(III). 4. THE REVENUE ALSO HAS TAKEN MORE OR LESS COMMON G ROUNDS OF APPEAL FOR BOTH THE ASSESSMENT YEARS. THE GROUND S OF APPEAL TAKEN BY THE REVENUE FOR AY 2010-11 ARE EXTRACTED BELOW:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF EXPENDITURE O F RS.8,11,72,533/- MADE U/S 14A OF THE IT ACT, WITHOUT APPRECIATING THAT DISALL OWANCE OF EXPENDITURE OF RS.8,11,72,533/- BEING RELATED TO THE INVESTMENT DI VISION WAS DISALLOWABLE UNDER RULE 8D(2)(II), WHICH IS CLEARLY APART FROM T HE DISALLOWANCE OF RS.L 1,41,68,7307- MADE BY THE ASSESSEE VOLUNTARILY AND THUS THERE IS NO DOUBLE DISALLOWANCE. 4 TATA INDUSTRIES LTD 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN APPLYING RULE 8D(2)(II) R.W.S 14 A BY HOLDING THAT SINCE THE AMOUNT OF INVESTMENT OUT OF SHARE APPLICATION MONEY , HAD NOT EARNED ANY EXEMPT INCOME, THE SAME SHOULD BE EXCLUDED FROM THE CALCULATION WITHOUT APPRECIATING THAT RULE 8D(2)(II) R.W.S 14A DOES NOT EXCLUDE ANY FORM OF INVESTMENT IN CASE OF MIXED FUNDS. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INVESTMENT AND FINANCE COMPANY AND A PROMOTER OF VARIOUS COMPA NIES IN TATA GROUP. IT HAS INITIATED AND PROMOTED TATA GROUP CO MPANIES INTO KEY BUSINESS AREAS SUCH AS TELECOM EQUIPMENT, FINANCIAL SERVICES, OIL EXPLORATIONS AND DRILLING SERVICES, INFORMATION TEC HNOLOGY, PROCESS MANAGEMENT SYSTEMS, TELECOM SERVICES, AUTO COMPONEN TS AND INFRASTRUCTURE DEVELOPMENT. THE ASSESSEE HOLDS INV ESTMENT IN SHARE CAPITAL OF VARIOUS COMPANIES PROMOTED BY IT AND HAS CONTROLLING INTEREST AND THEREFORE, TAKES ACTIVE INTEREST IN THE BUSINES S OF THOSE COMPANIES. THE ASSESSEE HAS DIVIDED ITS BUSINESS ACTIVITIES IN TO 3 OPERATING DIVISIONS, I.E. TATA STRATEGIC MANAGEMENT GROUP (TS MG), TATA INTERACTIVE SERVICES (TIS) AND HEAD OFFICE. THE HE AD OFFICE LOOKS AFTER INVESTMENT AND PROJECT DIVISION INCLUDING FINANCE A ND ACCOUNTS. THE ASSESSEE HAS FILED ITS RETURN OF INCOME FOR AY 2010 -11 DECLARING TOTAL INCOME OF RS.3,20,77,310. THE CASE WAS SELECTED FO R SCRUTINY AND NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUE D. IN RESPONSE TO NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSES SEE APPEARED FROM TIME TO TIME AND FILED VARIOUS DETAILS INCLUDING AU DITED BALANCE-SHEET AND 5 TATA INDUSTRIES LTD P&L ACCOUNT, ETC. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS EARNED DIVIDEND INCOME OF RS.15,43 ,42,348 AND CLAIMED THE SAME AS EXEMPT U/S 10(34) OF THE INCOME -TAX ACT, 1961. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS MADE SUO MOTO DISALLOWANCE OF RS.6,72,11,103 U/S 14A R.W.R. 8D(2) (III) OF INCOME-TAX RULES, 1962 IN RESPECT OF EXPENDITURE INCURRED IN R ELATION TO EXEMPT INCOME. IN ORDER TO ASCERTAIN THE CORRECTNESS OF D ISALLOWANCE MADE BY THE ASSESSEE U/S 14A OF THE ACT, THE AO CALLED UPON THE ASSESSEE TO FILE NECESSARY DETAILS TO JUSTIFY DISALLOWANCE QUANTIFIE D U/S 14A OF THE ACT. IN RESPONSE TO NOTICE, THE ASSESSEE HAS FILED COMPLETE DETAILS OF ACTIVITIES UNDERTAKEN BY THE COMPANY, INVESTMENTS HELD IN VARI OUS COMPANIES AND EXPENDITURE INCURRED BY 3 DIVISIONS. THE ASSESSEE FURTHER CONTENDED THAT IT HAS SUO MOTO DISALLOWED A SUM OF RS.6,72,11 ,103 TOWARDS GENERAL AND ADMINISTRATIVE EXPENSES U/S 14A BY INVO KING RULE 8D(2)(III) @0.5% OF AVERAGE VALUE OF INVESTMENTS. THEREFORE, IT HAS MADE SUO MOTO DISALLOWANCE IN ACCORDANCE WITH LAW AND HENCE, NO FURTHER DISALLOWANCE IS CALLED FOR IN RESPECT OF EXPENDITUR E INCURRED BY THE HEAD OFFICE. THE AO, AFTER CONSIDERING RELEVANT SUBMISS IONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE HAS INCURRED HUGE EXPEND ITURE IN 3 DIVISIONS OUT OF WHICH A SUM OF RS.8,11,72,553 HAS BEEN INCUR RED BY INVESTMENT / 6 TATA INDUSTRIES LTD PROJECT DEPARTMENT WHICH IS DIRECTLY RELATABLE TO E XEMPT INCOME AND WHICH IS EVIDENT FROM THE FACT THAT THE ASSESSEE HA S MADE HUGE INVESTMENT OF RS.1,344 CRORES IN VARIOUS GROUP COMP ANIES WHICH REQUIRES AN EXCLUSIVE MANAGEMENT TO LOOKAFTER SUBST ANTIAL MARKET RESEARCH, DAY TODAY ANALYSIS OF MARKET TREND AND RE AL TIME DECISIONS WITH REGARD TO ACQUISITION, RETENTION AND SALE OF S HARES AT THE MOST APPROPRIATE TIME. THIS FUNCTION IS BEING PERFORMED BY THE INVESTMENT / PROJECT DEPARTMENT OF THE HEAD OFFICE, THEREFORE, W HATEVER EXPENDITURE INCURRED AT INVESTMENT / PROJECT DEPARTMENT IS DIRE CTLY ATTRIBUTABLE TO EXEMPT INCOME AND ACCORDINGLY DISALLOWED A SUM OF R S.8,11,72,533 U/S 14A R.W.R. 8D(2)(I) OF I.T. RULES, 1962. 7. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS REITERATED ITS SUBMISSIONS MADE BEFORE THE AO. THE ASSESSEE ALSO FURNISHED A DETAILED SUBMISSION ON THE ISSUE WHICH HAS BEEN REP RODUCED BY THE LD.CIT(A) AT PARA 5.1 ON PAGES 5 TO 19 OF THE ORDER . THE SUM AND SUBSTANCE OF THE ARGUMENTS OF THE ASSESSEE BEFORE T HE LD.CIT(A) ARE THAT THE AO WAS ERRED IN MAKING FURTHER DISALLOWANC E OF RS.8,11,72,533 U/S 14 R.W.R. 8D(2)(I) IN RESPECT OF EXPENSES INCUR RED BY INVESTMENT / PROJECT DEPARTMENT WITHOUT APPRECIATING THE FACT TH AT OUT OF TOTAL EXPENSES OF RS.8,11,72,533, THE ASSESSEE HAS ALREAD Y MADE 7 TATA INDUSTRIES LTD DISALLOWANCE OF RS.5,97,63,078 BEING LEGAL FEES PAI D FOR THE ARBITRATION MATTER IN RESPECT OF IDEA CELLULAR LTD, THEREFORE, MAKING DISALLOWANCE OF TOTAL EXPENDITURE INCURRED BY INVESTMENT / PROJECT DEPARTMENT AMOUNTS TO DOUBLE ADDITION. THE ASSESSEE FURTHER CONTENDED TH AT BEFORE MAKING ANY DISALLOWANCE U/S 14A R.W.R. 8D(2)(I), THE AO HA S TO ASCERTAIN THE LIVE NEXUS BETWEEN EXEMPT INCOME AND EXPENDITURE INCURRE D BY THE ASSESSEE. IN THIS CASE, THE AO HAS MADE ARBITRARY DISALLOWANCE OF TOTAL EXPENDITURE INCURRED BY THE DIVISION WITHOUT ESTABL ISHING ANY LINK BETWEEN EXEMPT INCOME AND EXPENDITURE INCURRED BY T HE DIVISION. 8. THE LD.CIT(A), AFTER CONSIDERING RELEVANT SUBMIS SIONS OF THE ASSESSEE AND ALSO ON ANALYSIS OF PROVISIONS OF RULE 8D(2)(I) HELD THAT THE AO HAS CONSIDERED WHOLE OF THE EXPENDITURE ON INVES TMENT / PROJECT DEPARTMENT OF THE HEAD OFFICE OF RS.8,11,72,533 FOR THE PURPOSE OF DISALLOWANCE U/S 14A R.W.R. 8D(2)(I) WITHOUT ASCERT AINING THE CORRECT FACT THAT THE ASSESSEE HAS ALREADY MADE SUO MOTO DISALLO WANCE OF RS.18,73,83,588 OUT OF TOTAL EXPENDITURE INCURRED A T HEAD OFFICE OF RS.23,80,21,561 WHICH MEANS THAT THE REMAINING EXPE NDITURE CLAIMED BY THE ASSESSEE AT HEAD OFFICE IS ONLY RS.5,06,37,9 73. THEREFORE, BY DISALLOWING A FURTHER AMOUNT OF RS.8,11,72,533, THE AO HAS OBVIOUSLY MADE DOUBLE DISALLOWANCE OF THE SAME EXPENDITURE. THE LD.CIT(A) FURTHER OBSERVED THAT OUT OF TOTAL EXPENDITURE OF I NVESTMENT / PROJECT 8 TATA INDUSTRIES LTD DEPARTMENT, THE ASSESSEE HAS DISALLOWED AN AMOUNT O F RS.5,97,63,078 BEING LEGAL FEES PAID FOR THE ARBITRATION MATTER IN RESPECT OF IDEA CELLULAR LTD. THUS, OUT OF THE TOTAL EXPENSES DEBITED IN IN VESTMENT / PROJECT DEPARTMENT, THE AO COULD NOT HAVE DISALLOWED MORE T HAN RS.2,25,21,880 AS THE BALANCE EXPENDITURE HAD ALREA DY BEEN DISALLOWED BY THE ASSESSEE. THE LD.CIT(A) FURTHER OBSERVED TH AT OUT OF THE NET EXPENDITURE OF RS.2,25,21,880, THE RATIO OF INVESTM ENT FROM WHICH THE ASSESSEE RECEIVED EXEMPT INCOME AND THE INVESTMENT FROM WHICH THE ASSESSEE RECEIVED INCOME CHARGEABLE TO INCOME-TAX I S 61% AND 39%, RESPECTIVELY. THEREFORE, OUT OF NET CLAIM OF EXPEN DITURE OF RS.2,25,21,880 INCURRED IN RESPECT OF INVESTMENT / PROJECT DEPARTMENT, THE DIRECT EXPENDITURE ATTRIBUTABLE TO EXEMPT INCOM E CAN BE ONLY RS.1,37,38,347, HENCE, OUT OF THE TOTAL DISALLOWANC E OF RS.8,11,72,533 THE DISALLOWANCE TO THE EXTENT OF RS.1,37,38,347 IS SUSTAINED AND THE BALANCE DISALLOWANCE OF RS. 6,74,34,186 IS DELETED. INSOFAR AS ADDITIONAL GROUND TAKEN BY THE ASSESSEE IN RESPECT OF COMPUTATION OF AVERAGE VALUE OF INVESTMENTS BY EXCLUDING INVESTMEN TS, WHICH DID NOT YIELD EXEMPT INCOME AND SHARE APPLICATION MONEY, TH E LD.CIT(A) DIRECTED THE AO TO VERIFY THE FACTS AND RE-COMPUTE THE DISALLOWANCE EXCLUDING SHARE APPLICATION MONEY FROM THE AVERAGE VALUE OF INVESTMENTS. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE REVENUE AS WELL 9 TATA INDUSTRIES LTD AS THE ASSESSEE ARE IN APPEALS BEFORE US. 9. THE ONLY ISSUE THAT CAME UP FOR OUR CONSIDERATIO N FROM ASSESSEES APPEAL AS WELL AS THE REVENUE APPEAL IS COMPUTATION OF DISALLOWANCE CONTEMPLATED U/S 14A R.W.R. 8D(2) OF I.T. RULES, 19 62. THE ASSESSEE HAS TAKEN VARIOUS GROUNDS CHALLENGING THE ACTION OF THE CIT(A) IN PARTIALLY SUSTAINING DISALLOWANCE COMPUTED BY THE A O U/R 8D(2)(I) OF I.T. RULES, 1962 AND RECOMPUTATION OF AVERAGE VALUE OF I NVESTMENTS FOR THE PURPOSE OF DETERMINATION OF DISALLOWANCES CONTEMPLA TED U/R 8D(2)(III) OF I.T. RULES, 1962. THE REVENUE HAS TAKEN VARIOUS GR OUNDS IN RESPECT OF DISALLOWANCES MADE BY THE AO U/S 14A R.W.R.8D(2)(I) OF THE I.T. RULES, 1962. THEREFORE, THE WHOLE GROUNDS TAKEN BY THE AS SESSEE AS WELL AS THE REVENUE FOR THE AY 2010-11 ARE BEING COLLECTIVE LY DISPOSED OF. 10. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE L D.CIT(A) WAS ERRED IN SUSTAINING DISALLOWANCE QUANTIFIED BY THE AO U/S 14A AS PER RULE 8D(2)(I) OF RS.137,38,347 WITHOUT APPRECIATING THE FACT THAT ALL EXPENDITURE INCURRED BY THE INVESTMENT / PROJECT DE PARTMENT IS HAVING NO RELEVANCE TO DIVIDEND INCOME EARNED BY THE ASSESSEE . THE AO, BEFORE MAKING ANY DISALLOWANCE U/R 8D(2)(I) SHOULD ASCERTA IN PROXIMATE RELATIONSHIP BETWEEN THE EXPENDITURE AND INCOME WHI CH DOES NOT FORM PART OF TOTAL INCOME. IN THIS CASE, THE AO HAS DIS ALLOWED TOTAL EXPENDITURE INCURRED BY BY INVESTMENT / PROJECT DEP ARTMENT OF HEAD 10 TATA INDUSTRIES LTD OFFICE IGNORING THE FACT THAT OUT OF THE TOTAL EXPE NSES OF RS.8,11,72,533, THE ASSESSEE HAS ALREADY SUO MOTO DISALLOWED AN AMO UNT OF RS.5,86,50,633, THEREFORE, DISALLOWING TOTAL EXPEND ITURE AMOUNTS TO DOUBLE DISALLOWANCE OF THE SAME EXPENDITURE. THE L D.AR FURTHER SUBMITTED THAT THE ASSESSEE HAS ALSO EXAMINED EXPEN DITURE INCURRED AT HEAD OFFICE BY THE INVESTMENT / PROJECT DEPARTMENT AND CAME TO THE CONCLUSION THAT THE EXPENDITURE INCURRED AT HEAD OF FICE DIVISION HAS NO RELEVANCE TO EXEMPT INCOME EARNED BY THE ASSESSEE A ND ACCORDINGLY BY APPLYING THE PRESCRIBED METHOD PROVIDED U/R 8D(2)(I II) HAS MADE SUO MOTO DISALLOWANCE OF RS.6,72,11,103. THEREFORE, TH E AO WAS ERRED IN MAKING FURTHER DISALLOWANCE OF RS.8,11,72,533. THE LD.AR FURTHER SUBMITTED THAT THE ASSESSEE HAS ALTHOUGH MADE SUO M OTO DISALLOWANCE OF RS.6,72,11,103 @0.50% OF AVERAGE VALUE OF INVEST MENT, BUT WHILE COMPUTING AVERAGE VALUE OF INVESTMENT, IT HAS INCLU DED INVESTMENTS IN SHARE APPLICATION MONEY OF VARIOUS COMPANIES AND AL SO INVESTMENTS ON WHICH NO EXEMPT INCOME HAS BEEN RECEIVED DURING THE YEAR. BUT, FACT REMAINS THAT WHILE COMPUTING AVERAGE VALUE OF INVES TMENTS, INVESTMENTS MADE IN SHARE APPLICATION MONEY AND INVESTMENTS WHI CH DID NOT YIELD ANY INCOME DURING THE YEAR NEEDS TO BE EXCLUDED. T HE LD.CIT(A) ALTHOUGH ADJUDICATED UPON THE ISSUE OF SHARE APPLIC ATION MONEY, REJECTED THE GROUND TAKEN BY THE ASSESSEE FOR THE E XCLUSION OF 11 TATA INDUSTRIES LTD INVESTMENTS, WHICH DID NOT YIELD ANY EXEMPT INCOME WHILE COMPUTING AVERAGE VALUE OF INVESTMENT. THE LD.AR FURTHER SUB MITTED THAT, LAW IS WELL SETTLED NOW AS PER WHICH, FOR THE PURPOSE OF D ETERMINATION OF AVERAGE VALUE OF INVESTMENTS ONLY THOSE INVESTMENTS , WHICH YIELD EXEMPT INCOME NEEDS TO BE CONSIDERED BUT NOT ALL IN VESTMENTS. IN THIS REGARD, RELIED UPON THE DECISION OF ITAT, DELHI SPE CIAL BENCH IN THE CASE OF ACIT VS VIREET INVESTMENTS PVT LTD (2017) 165 IT D 27 (DEL). 11. THE LD.DR, ON THE OTHER HAND, SUBMITTED THAT TH E LD.CIT(A) WAS ERRED IN ALLOWING PARTIAL RELIEF TOWARDS DISALLOWAN CE COMPUTED BY THE AO U/S 14A R.W.R. 8D(2)(I) WITHOUT APPRECIATING THE FA CT THAT THE AO HAS BROUGHT OUT CATEGORICAL FACTS THAT INVESTMENT / PRO JECT DEPARTMENT OF HEAD OFFICE IS LOOKING AFTER INVESTMENT PORTFOLIO O F THE ASSESSEE AND HENCE, WHATEVER EXPENDITURE INCURRED BY THAT DIVISI ON NEEDS TO BE TAGGED WITH EXEMPT INCOME EARNED BY THE ASSESSEE. THE LD.DR FURTHER SUBMITTED THAT IN RESPECT OF EXCLUSION OF SHARE APP LICATION MONEY FROM THE AVERAGE VALUE OF INVESTMENTS FOR THE PURPOSE OF DETERMINATION OF DISALLOWANCES CONTEMPLATED U/R 8D(2)(III), THE PROV ISIONS ENVISAGED U/S 14A R.W.R. 8D(2)(III) DOES NOT SPECIFY EXCLUSION OF ANY INVESTMENT FOR THE PURPOSE OF COMPUTATION OF DISALLOWANCE. THEREFORE, THE LD.CIT(A) WAS ERRED IN GIVING DIRECTION TO THE AO TO EXCLUDE SHAR E APPLICATION MONEY FROM THE AVERAGE VALUE OF INVESTMENTS FOR THE PURPO SE OF DETERMINATION 12 TATA INDUSTRIES LTD OF DISALLOWANCE U/R 8D(2)(III) OF IT RULES, 1962. 12. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THERE IS NO DISPUTE WITH REGARD TO THE APPLICABILITY OF PROVISI ONS OF SECTION 14A AND RULE 8D(2) OF I.T. RULES, 1962. THE ASSESSEE HAS E ARNED DIVIDEND INCOME OF RS.15,43,42,248 AND ALSO MADE SUO MOTO DI SALLOWANCE OF RS.6,72,11,103 BY INVOKING RULE 8D(2)(III) OF INCOM E-TAX RULES, 1962. THERE IS NO DISPUTE WITH REGARD TO THESE FACTS. AL THOUGH, THE ASSESSEE HAS TAKEN ADDITIONAL GROUNDS OF APPEAL FOR EXCLUSIO N OF SHARE APPLICATION MONEY AND INVESTMENTS WHICH DID NOT YIELD EXEMPT IN COME FOR THE PURPOSE OF COMPUTATION OF AVERAGE VALUE OF INVESTME NTS FOR THE FIRST TIME BEFORE THE LD.CIT(A), THE FACT REMAINS THAT THE ASS ESSEE, ON ITS OWN, DETERMINED AVERAGE VALUE OF INVESTMENTS AND COMPUTE D DISALLOWANCE OF RS.6,72,11,103. THE ONLY CONTROVERSY IS WITH REGAR D TO FURTHER DISALLOWANCE QUANTIFIED BY THE AO U/S 14A R.W.R. 8D (2)(I) OF THE I.T RULES, 1962 IN RESPECT OF TOTAL EXPENDITURE INCURR ED BY THE INVESTMENT / PROJECT DEPARTMENT OF HEAD OFFICE. IT IS AN ADMITT ED FACT THAT THE ASSESSEE IS A PROMOTER COMPANY OF VARIOUS TATA GROU P COMPANIES AND HELD INVESTMENTS IN VARIOUS GROUP COMPANIES. FOR T HIS PURPOSE, THE ASSESSEE HAS ESTABLISHED A SEPARATE DIVISION IN ITS HEAD OFFICE TO LOOK AFTER VARIOUS INVESTMENTS. THE INVESTMENT PORTFOLI O OF THE ASSESSEE IS 13 TATA INDUSTRIES LTD COMPLEX IN NATURE WHICH NEEDS DAY TO DAY MONITORING OF INVESTMENTS DEPENDING UPON MARKET CONDITIONS AND OTHER VARIOUS FACTORS WHICH INVOLVES VARIOUS LEVEL OF SUPERVISION. THEREFORE, THE CLAIM OF THE ASSESSEE THAT IT HAS NOT INCURRED ANY DIRECT EXPEND ITURE WHICH RELATES TO EXEMPT INCOME IS NOT CORRECT. 13. HAVING SAID SO, LET US EXAMINE EXPENDITURE INCU RRED BY THE ASSESSEE. IF, WE GO THROUGH THE DETAILS OF EXPENDI TURE INCURRED BY THE ASSESSEE AT INVESTMENT / PROJECT DEPARTMENT, THE AS SESSEE HAS BIFURCATED ITS EXPENSES INTO THREE MAJOR CATEGORIES , I.E. PAYMENT TO AND PROVISION FOR EMPLOYEES, ESTABLISHMENT EXPENSES AND OTHER EXPENSES. OUT OF ESTABLISHMENT EXPENSES OF RS.6,84,30,329, TH E ASSESSEE HAS MADE DISALLOWANCE OF RS.5,97,63,078 BEING LEGAL FEE S PAID FOR THE ARBITRATION MATTER IN RESPECT OF IDEA CELLULAR ON I TS OWN IN THE STATEMENT OF TOTAL INCOME. THUS, OUT OF TOTAL EXPENDITURE IN CURRED AT INVESTMENT / PROJECT DEPARTMENT OF RS.8,11,72,553, THE ASSESSEE HAS MADE SUO MOO DISALLOWANCE OF RS.5,97,63,078. THEREFORE, THE BAL ANCE AMOUNT REMAINS FOR CONSIDERATION IS ONLY AT RS.2,25,21,880 . THEREFORE, IF AT ALL ANY EXPENDITURE NEEDS TO BE DISALLOWED U/R 8D(2)(I) , THE AO NEEDS TO CONSIDER ONLY AN AMOUNT OF RS.2,25,21,880, BUT NOT TOTAL EXPENDITURE INCURRED AT RS.811,72,533. THEREFORE, WE ARE OF TH E CONSIDERED VIEW THAT THE AO WAS ERRED IN MAKING TOTAL DISALLOWANCE OF EXPENDITURE 14 TATA INDUSTRIES LTD INCURRED IN RESPECT OF INVESTMENT / PROJECT DEPARTM ENT OF RS.8,11,72,533. 14. HAVING SAID SO, LET US EXAMINE WHETHER THE LD.C IT(A) WAS RIGHT IN SUSTAINING DISALLOWANCE OF RS.1,37,38,347 U/S 14A R .W.R. 8D(2)(I) OF THE I.T. RULES, 1962. THE LD.CIT(A) HAS WORKED OUT A R ATIO OF INVESTMENTS WHICH YIELDED EXEMPT INCOME AND INVESTMENT WHICH YI ELDED TAXABLE INCOME AND ACCORDINGLY ARRIVED AT A RATIO OF 61% AN D 39%, RESPECTIVELY. ACCORDINGLY, HE DISALLOWED 61% OF NET EXPENDITURE I NCURRED BY INVESTMENT / PROJECT DEPARTMENT OF THE HEAD OFFICE OF RS.2,25,21,880 AND SUSTAINED DISALLOWANCE OF RS.1,37,38,347. IT IS TH E CLAIM OF THE ASSESSEE THAT EXPENDITURE INCURRED BY THE INVESTMEN T / PROJECT DEPARTMENT HAS NO RELATION TO EXEMPT INCOME EARNED BY THE ASSESSEE AND HENCE, FURTHER DISALLOWANCE OF TOTAL EXPENDITUR E U/R 8D(2)(I) IS INCORRECT. WE DO NOT FIND ANY MERIT IN THE ARGUMEN T OF THE ASSESSEE FOR THE REASON THAT ON PERUSAL OF DETAILS FILED BY THE ASSESSEE, THE ASSESSEE, ON ITS OWN, FILED DETAILS OF EXPENDITURE INCURRED BY INVESTMENT / PROJECT DEPARTMENT AS PER WHICH IT HAS INCURRED E XPENDITURE TOWARDS PAYMENT AND PROVISION TO EMPLOYEES AND OTHER EXPENS ES. IT IS ALSO AN ADMITTED FACT THAT INVESTMENT / PROJECT DEPARTMENT HAS LOOKED AFTER INVESTMENT PORTFOLIO OF THE ASSESSEE. IT IS ALSO A N ADMITTED FACT THAT INVESTMENT DECISIONS ARE VERY COMPLEX IN NATURE AND THEY REQUIRE SUBSTANTIAL MARKET RESEARCH, DAY TO DAY ANALYSIS OF MARKET TREND AND 15 TATA INDUSTRIES LTD REAL TIME DECISIONS WITH REGARD TO ACQUISITION, RET ENTION AND SALE OF SHARES AT THE MOST APPROPRIATE TIME. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO MERIT IN THE ARGUM ENT OF THE ASSESSEE THAT THERE IS NO LIVE NEXUS BETWEEN EXPENDITURE INC URRED BY INVESTMENT / PROJECT DEPARTMENT OF HEAD OFFICE AND EXEMPT INCOME EARNED BY THE ASSESSEE. THE LD.CIT(A), AFTER CONSIDERING RELEVAN T FACTS HAS RIGHTLY ARRIVED AT A CONCLUSION TO ALLOCATE NET EXPENSES CL AIMED BY THE ASSESSEE TOWARDS INVESTMENT / PROJECT DEPARTMENT OF HEAD OFFICE @61% TOWARDS EXEMPT INCOME AND 31% FOR TAXABLE INCOME. THERE IS NO INFIRMITY OR ERROR IN THE FINDINGS GIVEN BY THE LD. CIT(A). HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF LD.CIT(A) AND RE JECT GROUND TAKEN BY THE ASSESSEE AS WELL AS THE REVENUE. 15. COMING TO THE ISSUE OF COMPUTATION OF AVERAGE V ALUE OF INVESTMENT. THE ASSESSEE CLAIMS THAT FOR THE PURPOSE OF DETERMI NATION OF AVERAGE VALUE OF INVESTMENTS, INVESTMENT WHICH DID NOT YIEL D EXEMPT INCOME AND INVESTMENT IN SHARE APPLICATION MONEY NEEDS TO BE E XCLUDED. ACCORDING TO THE ASSESSEE, ALTHOUGH IT HAS COMPUTED AVERAGE V ALUE OF INVESTMENTS BY TAKING INTO ACCOUNT SHARE APPLICATION MONEY AND INVESTMENTS WHICH DID NOT YIELD EXEMPT INCOME FOR THE YEAR, BUT THE F ACT REMAINS THAT VARIOUS COURTS AND TRIBUNALS HAVE CONSISTENTLY HELD THAT FOR THE PURPOSE OF DETERMINATION OF AVERAGE VALUE OF INVESTMENTS, I NVESTMENTS WHICH DID 16 TATA INDUSTRIES LTD NOT YIELD EXEMPT INCOME AND SHARE APPLICATION MONEY NEEDS TO BE EXCLUDED, THEREFORE, EVEN THOUGH THE ASSESSEE BY IT S OWN INCLUDED THOSE INVESTMENTS WHILE COMPUTING DISALLOWANCE U/S 14A, THOSE INVESTMENTS NEEDS TO BE EXCLUDED FOR THE PURPOSE OF DETERMINATION OF DISALLOWANCE U/S 14A R.W.R. 8D(2)(III) OF I.T. RULE S, 1962. 16. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATE RIAL ON RECORD, WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE ASSE SSEE FOR THE REASON THAT THE ASSESSEE, ON ITS OWN, HAS COMPUTED DISALLO WANCE CONTEMPLATED U/S 14A BY INVOKING RULE 8D(2)(III) AND DETERMINED DISALLOWANCE OF RS.6,72,11,103 BEING 0.5% OF AVERAGE VALUE OF INVES TMENTS. WE FURTHER NOTICE THAT THE ASSESSEE, ON ITS OWN, COMPUTED AVER AGE VALUE OF INVESTMENTS BY INCLUDING SHARE APPLICATION MONEY AN D ALL INVESTMENTS INCLUDING INVESTMENTS WHICH DID NOT YIELD EXEMPT IN COME. THEREFORE, MERELY ON THE BASIS OF CERTAIN SUBSEQUENT DECISIONS OF TRIBUNALS AND COURTS MAKING A FRESH CLAIM FOR EXCLUSION OF INVEST MENTS WHICH DID NOT YIELD ANY EXEMPT INCOME FOR THE PURPOSE OF COMPUTAT ION OF AVERAGE VALUE OF INVESTMENT, CANNOT BE ENTERTAINED, THAT TO O, IN A CASE OF THE ASSESSEE. NO DOUBT, THE COURTS HAVE HELD THAT FOR THE PURPOSE OF DETERMINATION OF AVERAGE VALUE OF INVESTMENTS, ONLY THOSE INVESTMENTS WHICH YIELD EXEMPT INCOME NEEDS TO BE CONSIDERED FO R THE PURPOSE OF DETERMINATION OF AVERAGE VALUE OF INVESTMENTS. IN THIS CASE, THE 17 TATA INDUSTRIES LTD ASSESSEE, ON ITS OWN, DETERMINED AVERAGE VALUE OF I NVESTMENTS WHICH MAY INCLUDE SHARE APPLICATION MONEY AND INVESTMENTS WHICH DID NOT YIELD ANY EXEMPT INCOME. HAD IT BEEN A CASE OF THE ASSESSEE THAT IT HAS MADE A CLAIM BY FILING THE REVISED STATEMENT OF TOT AL INCOME BEFORE THE AO FOR MAKING FRESH CLAIM OF EXCLUSION OF INVESTMEN TS WHICH DID NOT YIELD ANY EXEMPT INCOME. THE ASSESSEE, ALL ALONG D ID NOT DISTURB SUO MOTO DISALLOWANCE QUANTIFIED U/S 14A R.W.S. 8D(2)(I II), BUT AT A LATER STAGE, ON THE BASIS OF CERTAIN DECISIONS MADE A FRE SH CLAIM BY RAISING ADDITIONAL GROUNDS FOR EXCLUSIONS OF THOSE INVESTME NTS WITHOUT ANY PROPER FACTS AS TO HOW THE COMPUTATION MADE BY THE ASSESSEE WHILE FILING RETURN OF INCOME IS INCORRECT WHICH NEEDS CO RRECTION ON THE BASIS OF SUBSEQUENT DECISIONS OF COURTS AND TRIBUNALS. THE ASSESSEE BEING A CORPORATE GIANT ADVISED BY TAX CONSULTANT IS WELL A WARE OF THE PROVISIONS. THE ASSESSEE, ON ITS OWN, DETERMINED DISALLOWANCE A S PER THE PROVISIONS OF SECTION 14A R.W.R. 8D(2)(III). THERE FORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO REASON FOR THE ASS ESSEE TO SEEK REVISION OF ITS OWN COMPUTATION. ACCORDINGLY, WE R EJECT ADDITIONAL GROUND TAKEN BY THE ASSESSEE FOR EXCLUSION OF INVESTMENTS, WHICH DID NOT YIELD ANY EXEMPT INCOME FOR THE PURPOSE OF COMPUTATION OF AVERAGE VALUE OF INVESTMENTS. WE ALSO REVERSE THE FINDINGS OF THE L D.CIT(A) IN DIRECTING THE AO TO EXCLUDE SHARE APPLICATION MONEY FOR THE P URPOSE OF 18 TATA INDUSTRIES LTD COMPUTATION OF AVERAGE VALUE OF INVESTMENT. FINALL Y, WE DO NOT WANT TO DISTURB SUO MOTO DISALLOWANCE QUANTIFIED BY THE ASS ESSEE U/S 14A R.W.R. 8D(2)(III) OF RS.6,72,11,103 AND ACCORDINGLY, WE RE JECT ALL GROUNDS TAKEN BY THE ASSESSEE CHALLENGING EXCLUSION OF INVESTMENT S WHICH DID NOT YIELD EXEMPT INCOME INCLUDING SHARE APPLICATION MONEY. T HE CASE LAWS RELIED UPON BY THE ASSESSEE IN SUPPORT OF ITS ARGUMENTS HA VE BEEN CONSIDERED AND FOUND THAT NOT APPLICABLE TO FACTS OF THE PRESE NT CASE. 17. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM ADDITIONAL GROUND OF APPEAL FILED BY THE ASSESSEE, VIDE LETTER DATED 29-09-2017 IS WITH REGARD TO DISALLOWANCE OF A SUM OF RS.5,97,63, 078 BEING LEGAL AND PROFESSIONAL FEES INCURRED BY THE PROJECT / INVESTM ENT DEPARTMENT AND OTHER DIVISION. THE ASSESSEE HAS TAKEN AN ADDITION AL GROUND IN THE LIGHT OF DECISION RENDERED BY THE CO-ORDINATE BENCH OF IT AT, MUMBAI IN ASSESSEES OWN CASE FOR AY 2004-05 IN ITA NO.4894/M UM/2008 TO ARGUE THAT ANY EXPENDITURE INCLUDING LEGAL AND PROF ESSIONAL FEES INCURRED BY PROJECT / INVESTMENT DEPARTMENT IS ALLOWABLE DED UCTION. THEREFORE, EVEN THOUGH THE ASSESSEE HAS MADE SUO MOTO DISALLOW ANCE OF SUCH EXPENDITURE, THE SAME NEEDS TO BE ALLOWED AS BUSINE SS EXPENDITURE IN THE LIGHT OF SAID DECISION. THE ASSESSEE ALSO RELI ED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SA BUILDERS VS CIT 288 ITR 1 (SC) TO SUPPORT ITS ARGUMENT. 19 TATA INDUSTRIES LTD 18. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS MADE SUO MOTO DISALLOW ANCE IN RESPECT OF LEGAL AND PROFESSIONAL FEES INCURRED FOR THE ARBITR ATION MATTER IN RESPECT OF IDEA CELLULAR LTD IN THE STATEMENT OF TOTAL INCO ME ON THE GROUND THAT THE SAID EXPENDITURE HAS NO NEXUS BETWEEN ITS BUSIN ESS ACTIVITY AND THE EXPENDITURE INCURRED. WE FURTHER NOTICE THAT THE A SSESSEE NEITHER CHALLENGED THE SAID ADDITION MADE BY IT ON ITS OWN BEFORE THE LOWER AUTHORITIES. THEREFORE, WE ARE OF THE CONSIDERED V IEW THAT ONCE A PARTICULAR EXPENDITURE HAVING BEEN DISALLOWED AS NO T ALLOWABLE DEDUCTION WHILE FILING RETURN OF INCOME, THE SAME C ANNOT BE CLAIMED AS ALLOWABLE DEDUCTION WITHOUT THERE BEING ANY CHANGES IN FACTS. NO DOUBT, NO TAX WITHOUT AUTHORITY OF LAW CAN BE COLLECTED FR OM ANY PERSON. ONLY LEGITIMATE TAXES PAYABLE TO THE EXCHEQUER NEEDS TO BE COLLECTED. EVEN THE ASSESSEE, ON ITS OWN, PAID SOME TAX BY MISCONCE PTION OF LAW, THE SAME NEEDS TO BE RECONSIDERED, IF LATER, IT IS FOUN D THAT SUCH TAX IS NOT LIABLE TO BE PAID TO THE EXCHEQUER. THERE IS NO DI SPUTE WITH REGARD TO THIS PROPOSITION LAID DOWN BY THE COURTS. BUT, IT IS FOR THE ASSESSEE TO PROVE BEYOND DOUBT THAT THE SAID ADMISSION IS NOT U NDER MISCONCEPTION OF LAW AND SUCH TAX IS NOT PAYABLE TO THE EXCHEQUER . IN THIS CASE, ON PERUSAL OF FACTS AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE HAS DISALLOWED LEGAL AND PROFESSIONAL FEES PAID IN RESP ECT OF ARBITRATION 20 TATA INDUSTRIES LTD MATTER OF IDEA CELLULAR LTD HAVING CONSIDERED FACTS AND CIRCUMSTANCES IN THE LIGHT OF ITS BUSINESS ACTIVITY. THEREFORE, ALL OF A SUDDEN MAKING A FRESH CLAIM AND ASKING FOR DEDUCTION FOR SUCH EXPEN DITURE WITHOUT THERE BEING ANY MATERIAL CHANGES IN FACTS CANNOT BE ENTER TAINED. THEREFORE, WE REJECT THE ADDITIONAL GROUND TAKEN BY THE ASSESS EE. 19. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM ADDITIONAL GROUND OF APPEAL FILED VIDE LETTER DATED 28-03-2018 IS WITH REGARD TO ADJUSTMENT MADE TO BOOK PROFIT COMPUTED U/S 115JB O F THE I.T. ACT, 1961 IN RESPECT OF DISALLOWANCE MADE U/S 14A R.W.R. 8D(2 )(III). THE ASSESSEE HAS TAKEN ADDITIONAL GROUND IN THE LIGHT OF DECISIO N OF ITAT, DELHI SPECIAL BENCH IN THE CASE OF ACIT VS VIREET INVESTMENT PVT LTD (2017) 165 ITD 37 (DEL)(SB) TO ARGUE THAT NO ADJUSTMENT COULD BE M ADE TO BOOK PROFIT COMPUTED U/S 115JB OF THE INCOME-TAX ACT, 1961 IN R ESPECT OF ADDITION MADE ON ACCOUNT OF DISALLOWANCE MADE U/S 14A R.W.R. 8D(2)(III) OF THE IT RULES, 1962. 20. HAVING HEARD BOTH SIDES, WE FIND THAT ADDITIONA L GROUND TAKEN BY THE ASSESSEE IN THE LIGHT OF IN THE LIGHT OF ITAT, DELH I SPECIAL BENCH IN ACIT VS VIREET INVESTMENT PVT LTD (SUPRA) DID NOT EMANAT E FROM THE ORDER OF THE AO, AS AO HAS NEVER MADE ANY ADJUSTMENT TO BOOK PROFIT COMPUTED U/S 115JB OF THE INCOME-TAX ACT, 1961 IN HIS ASSESS MENT ORDER. IN RESPECT OF DISALLOWANCE MADE U/S 14A OF THE I.T. AC T, 1961. THEREFORE, 21 TATA INDUSTRIES LTD WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO MERI T IN THE ADDITIONAL GROUND TAKEN BY THE ASSESSEE IN THE LIGHT OF THE SA ID DECISION AND ACCORDINGLY, THE GROUND TAKEN BY THE ASSESSEE IS DI MISSED, AS NOT MAINTAINABLE. 21. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN ITA NO.7595/MUM/2013 FOR AY 2010-11 IS DISMISSED AND AP PEAL FILED BY THE REVENUE IN ITA NO.612/MUM/2014 FOR AY 2010-11 IS PA RTLY ALLOWED. ITA NO.1763/MUM/2015 & ITA 1855/MUM/2015 (AY 2011-1 2) 22. THE FACTS AND ISSUES INVOLVED IN THESE APPEALS FILED BY THE ASSESSEE AS WELL AS THE REVENUE ARE SIMILAR TO THE FACTS AND ISSUES ALREADY CONSIDERED BY US IN ITA NO.7595/MUM/2013 AN D ITA NO.612/MUM/2014 FOR AY 2010-11. WE HAVE CONSIDERED TWO ISSUES IN THE PRECEDING PARAGRAPHS, I.E. (1) COMPUTATION OF D ISALLOWANCE U/S 14A R.W.R. 8D(2)(I) AND 8D(2)(III); AND (2) DISALLOWANC E OF LEGAL AND PROFESSIONAL CHARGES. IN THE PRESENT APPEALS, THE ASSESSEE AS WELL AS THE REVENUE HAS TAKEN A GROUND ON THE ISSUES WHICH WE HAVE ALREADY CONSIDERED IN PRECEDING PARAGRAPHS. THE REASONS GI VEN BY US IN THE PRECEDING PARAGRAPHS IN ITA NO.7595/MUM/2013 AND IT A NO.612/MUM/2014 FOR AY 2010-11 SHALL MUTATIS MUTAND IS APPLY TO THESE APPEALS ALSO. THEREFORE, FOR SIMILAR REASONS, WE D ISMISS APPEAL FILED BY THE ASSESSEE IN ITA NO.1763/MUM/2015 AND PARTLY ALL OWED THE APPEAL 22 TATA INDUSTRIES LTD FILED BY THE REVENUE IN ITA 1855/MUM/2015. 12. IN THE RESULT, APPEALS FILED BY THE ASSESSEE AR E DISMISSED AND APPEALS FILED BY THE REVENUE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER, 2018. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 28 TH SEPTEMBER, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI