THE SHAMRAO VITHAL CO-OP BANK LTD, MUMBAI V. DCIT 1(3), MUMBAI

ITA 6462/MUM/2011

• Counselvise Citation: 646219914 RSA 2011
• Duration Of Justice: 4 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 10-02-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 22-09-2011
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Capital asset; Depreciation; Earning of tax free income; Cost of acquisition; Revenue expenditure
• Section: 143(3); 14A; 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA N O S . 4092&6462 / MUM/20 1 1 ITA NO.3859/MUM/2013 & ITA NO.4286/MUM/2014 ( / ASSESSMENT YEAR S : 2007 - 2008 TO 2010 - 2011 ) THE SHAMRAO VITHAL CO - OP BANK LTD., C/O MUKUND M.CHITALE & CO., CHARTERED ACCOUNTANTS, 205 AGARWAL SHYAMKAMAL, A, VILE PARLE ( E), MUMBAI - 400057 VS. DCIT - 1(1), MUMBAI ./ ./ PAN/GIR NO. : A A AAT 0177 C ( / APPELLANT ) .. ( / RESPONDENT ) AND ./ ITA NO . 4927 / MUM/20 14 ( / ASSESSMENT YEAR :20 10 - 201 1 ) DCIT - 1(1), MUMBAI VS. THE SHAMRAO VITHAL CO - OP BANK LTD., C/O MUKUND M.CHITALE & CO., CHARTERED ACCOUNTANTS, 205 AGARWAL SHYAMKAMAL, A, VILE PARLE (E), MUMBAI - 400057 ./ ./ PAN/GIR NO. : A AAAT 0177 C ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI SUNIL GANOO /REVENUE BY : SHRI NEIL PHILIP / DATE OF HEARING : 06 /0 7 / 2015 / DATE OF PRONOUNCEMENT 23/09 /2015 / O R D E R PER R.C.SHARMA (A.M) : T HESE ARE THE APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) , MUMBAI , FOR THE ASSESSMENT YEAR S 2007 - 08 TO 2010 - 2011 , IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE ACT. ITA NOS. 4092 & 6462 / 11 &3859 / 13 , 4286&4927 / 14 2 2. COMMON GROUNDS ARE INVOLVED IN ALL THE APPEALS, THEREFORE, AL L THE APPEALS ARE BEING HEARD ALTOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE, FIRST WE SHALL TAKE UP THE APPEALS OF THE ASSESSEE (I.E. ITA NOS.4092 & 6462/2011, ITA NOS.3859/2013 AND ITA NO.4286/2014 FOR THE A SSESSMENT YEARS 2007 - 08 TO 2010 - 11). 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A COOPERATIVE BANK. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS ACQUIRED THREE OTHER CO - OPERATIVE BANKS VIZ. THE BANGALORE CENTRAL CO.OP. BANK LTD., SHREE SAPTSHRUNGI URBAN CO.OP. BANK LTD. AND SHREE MAHAVIR CO.OP. BANK LTD. T HE ASSESSEE CLAIMED RS.4.56 CRORES REPRESENTING THE AMORTIZED AMOUNT OF COST OF ACQUISITION. THE ASSESSEE S CLAIM OF ALLOWING THE EXCESS PAYMEN T AS REVENUE EXPENDITURE WAS ALSO DECLINED BY AO. THE AO DID NOT ACCEPT THE CONTENTION OF ASSESSEE AND OBSERVED THAT ACQUISITION OF BANK IS BENEFIT OF ENDURING NATURE AND THE COST ALLOCATED TOWARDS IT IS THE COST OF INVESTMENT AND NOT IN THE NATURE OF REVE NUE EXPENDITURE . THE AO FURTHER OBSERVED THAT SINCE IT IS CAPITAL COST THE SAME IS NOT ALLOWABLE UNDER THE A CT EVEN IF IT IS DEFERRED AND DISALLOWED THE SAME. 4. BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE ACTION OF THE AO, AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEALS BEFORE US FOR THE ABOVE ASSESSMENT YEARS. 5. IT WAS ARGUED BY THE LD. AR THAT THE AMOUNT PAID IN EXCESS OF THE COST OF ASSETS SO ACQUIRED SHOULD BE ALLOWED AS REVENUE EXPENDITURE OR ITA NOS. 4092 & 6462 / 11 &3859 / 13 , 4286&4927 / 14 3 AS AN ALTERNATE DEPRECIA TION SHOULD BE ALLOWED THEREON , IN TERMS OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF SMIFS SECURITIES LTD., 24 TAXMANN.COM 222. 6. ON THE OTHER HAND, LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS ACQUIRED THREE COOPERATIVE BANKS. THE AMOUNT PAID FOR ACQUISITION WAS RS.22.83 CRORES. THE ASSESSEE VALUED THE TANGIBLE ASSETS AND RIGHTS SO ACQUI RED. THE DIFFERENCE BETWEEN THE COST SO PAID VIS - - VIS VALUE OF THE ASSETS AND RIGHTS SO ACQUIRED WAS CLAIMED AS REVENUE EXPENDITURE WHICH WAS DISALLOWED BY THE AO. THE AO ALSO DISALLOWED AMORTIZATION OF SUCH EXPENDITURE. T HE AMOUNT PAID IN EXCESS OF THE V ALUE OF ASSETS WERE ARGUED BY LD. AR, AS IN THE NATURE OF PAYMENT FOR GOODWILL AND ASSESSEE IS ONLY ENTITLE D FOR CLAIM OF DEPRECIATION THEREON AS PER VERDICT OF THE HONBLE SUPREME COURT IN THE CASE OF SMIFS SECURITIES LTD. 34 8 ITR 302 , WHEREIN THE HONBLE SUPREME COURT HELD THAT GOODWILL IS A DEPRECIABLE ASSET ELIGIBLE FOR CLAIM OF DEPRECIATION AS PER PROVISIONS OF EXPLANATION 3(B) TO SECTION 32 (1) OF THE ACT. THE PRECISE OBSERVATION OF THE HONBLE SUPREME COURT WAS AS UNDER : - HELD - EXPLANATION 3 TO SE CTION 32(1) STATES THAT THE EXPRESSION 'ASSET' SHALL MEAN AN INTANGIBLE ASSET, BEING KNOW - HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE. A READING OF THE WORDS 'ANY OTHER BUSINESS OR ITA NOS. 4092 & 6462 / 11 &3859 / 13 , 4286&4927 / 14 4 COMMERCIAL RIGHTS OF SIMILAR NATURE' IN CLAUSE ( B ) OF EXPLANATION 3 INDICATES THAT GOODWILL WOULD FALL UNDER THE EXPRESSION 'ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF A SIMILAR NATURE'. THE PRINCIPLE OF EJUSDEM GENERIS WOULD STRICTLY APPLY WHILE INTERPR ETING THE SAID EXPRESSION WHICH FINDS PLACE IN EXPLANATION 3 ( B ). (PARA 4) IN VIEW OF THE ABOVE, IT IS OPINED THAT 'GOODWILL' IS AN ASSET UNDER EXPLANATION 3 ( B ) TO SECTION 32(1). (PARA 5) ONE MORE ASPECT NEEDS TO BE HIGHLIGHTED. IN THE PRESENT CASE, TH E ASSESSING OFFICER, AS A MATTER OF FACT, CAME TO THE CONCLUSION THAT NO AMOUNT WAS ACTUALLY PAID ON ACCOUNT OF GOODWILL. THIS IS A FACTUAL FINDING. THE COMMISSIONER (APPEALS) HAS COME TO THE CONCLUSION THAT THE ASSESSEE HAD FILED COPIES OF THE ORDERS OF T HE HIGH COURT ORDERING AMALGAMATION OF THE ABOVE TWO COMPANIES; THAT THE ASSETS AND LIABILITIES OF 'Y' LTD. WERE TRANSFERRED TO THE ASSESSEE FOR A CONSIDERATION; THAT THE DIFFERENCE BETWEEN THE COST OF AN ASSET AND THE AMOUNT PAID CONSTITUTED GOODWILL AND THAT THE ASSESSEE - COMPANY IN THE PROCESS OF AMALGAMATION HAD ACQUIRED A CAPITAL RIGHT IN THE FORM OF GOODWILL BECAUSE OF WHICH THE MARKET WORTH OF THE ASSESSEE - COMPANY STOOD INCREASED. THIS FINDING HAS ALSO BEEN UPHELD BY TRIBUNAL. THERE IS NO REASON TO IN TERFERE WITH THE FACTUAL FINDING. (PARA 6) ONE MORE ASPECT WHICH NEEDS TO BE MENTIONED IS THAT, AGAINST THE DECISION OF TRIBUNAL, THE REVENUE HAD PREFERRED AN APPEAL TO THE HIGH COURT IN WHICH IT HAD RAISED ONLY THE QUESTION AS TO WHETHER GOODWILL IS AN ASSET UNDER SECTION 32. IN THE CIRCUMSTANCES, BEFORE THE HIGH COURT, THE REVENUE DID NOT FILE AN APPEAL ON THE FINDING OF FACT REFERRED TO HEREINABOVE. (PARA 7) IN VIEW OF THE ABOVE, IT HAS TO BE HELD THAT GOODWILL IS AN ASSET WITHIN THE MEANING OF SECTI ON 32 AND DEPRECIATION ON 'GOODWILL' IS ALLOWABLE UNDER THE SAID SECTION. (PARA 8) 8. WE HA VE GONE THROUGH THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF SMIFS SECURITIES LTD., 348 ITR 0302 , WHEREIN IT WAS HELD THAT PRINCIPLE OF EJUSDEM GENERIS WOU LD STRICTLY APPLY WHILE INTERPRETING THE EXPRESSION OF GOODWILL, WHICH FINDS PLACE IN EXPLANATION 3(B) TO SECTION 362(1). ACCORDINGLY IT WAS HELD THAT GOODWILL IS AN ASSET UNDER EXPLANATION 3(B) TO SECTION 32(1) OF THE ACT, THEREFORE, ELIGIBLE FOR CLA IM OF DEPRECIATION. FOR THIS PURPOSE RELIANCE CAN ALSO BE PLACED ON THE FOLLOWING DECISION WHEREIN GOODWILL WAS ACCEPTED AS AN ASSET ELIGIBLE FOR CLAIM OF DEPRECIATION : - ITA NOS. 4092 & 6462 / 11 &3859 / 13 , 4286&4927 / 14 5 I) TYSSENKRUPP ELEVATOR (INDIA) (P) LTD., 167 TTJ 131(DEL); II) WORLDWIDE MEDIA PVT . LTD., 30 ITR (TRIB) 181; III) M/S PPG ASIAN PAINTS PVT. LTD., ITA NO.2919/MUM/2013, DATED 15 - 4 - 15 IV) M/S TOYO ENGINEERING INDIA LIMITED, ITA NO.3279/MUM/2008, DATED 13 - 10 - 2014; V) BIRLA GLOBAL ASSET FINANCE CO. LTD., 221 TAXMAN 176(BOMBAY); VI) KEC INTE RNATIONAL LTD., ORDER DATED 7 - 2 - 2013(BOMBAY HIGH COURT) IN VIEW OF THE ABOVE DISCUSSION, WE RESTORE THE MATTER BACK TO THE FILE OF AO FOR CONSIDERING ASSESSEES CLAIM OF DEPRECIATION IN TERMS OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF SMIFS SECUR TIES (SUPRA) . THE IS ALSO DIRECTED TO CONSIDER THE NATURE OF EXCESS PAYMENT SO UNDER IN TERMS OF DECISION OF HONBLE SUPREME COURT DISCUSSED ABOVE. 9 . NOW, WE SHALL TAKE THE APPEAL FILED BY THE REVENUE FOR ASSESSMENT YEAR 2010 - 2011 (I.E ITA NO.4927/MUM/201 4) , WHEREIN THE REVENUE IS AGGRIEVED BY THE ACTION OF CIT(A) FOR TREATING THE SECURITIES HELD BY THE BANK AS INVESTMENTS INSTEAD OF STOCK IN TRADE AND ALLOWING DEPRECIATION ON IT. 10 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE ASSESSEE CLAI MED DEPRECIATION ON THE INVESTMENT IN SHARES. HOWEVER, THE AO DID NOT ALLOW THE SAME AND T REATED THE INVESTMENTS IN SHARES AS STOCK IN TRADE. BY THE IMPUGNED ORDER THE CIT(A) BY OBSERVING AS UNDER : - 4.3 THE FACTS OF THE CASE, THE STAND TAKEN BY THE AO I N THE ASSESSMENT ORDER AND THE CONTENTIONS OF THE APPELLANT COMPANY DURING THE APPELLANT PROCEEDINGS AS WELL AS THE WRITTEN SUBMISSIONS MADE ARE CAREFULLY CONSIDERED. THE CONTENTIONS OF THE APPELLANT ARE CONSIDERED WITH REFERENCE TO THE CBDT INSTRUCTION NO . 17/2008 DATED 26.11.2008. THE RELEVANT PART OF THE INSTRUCTION IS AS UNDER: ' '(VII) AS PER THE RBI GUIDELINES DATED 16 TH OCTOBER 2000, THE INVESTMENT PORTFOLIO OF THE BANKS IS REQUIRED TO BE CLASSIFIED UNDER THREE CATEGORIES VIZ. HELD TO MATURITY (HTM ). HELD FOR ITA NOS. 4092 & 6462 / 11 &3859 / 13 , 4286&4927 / 14 6 TRADING (HFJ) AND AVAILABLE FOR SALE (AFS). INVESTMENTS CLASSIFIED UNDER HTM CATEGORY NEED NOT BE MARKED TO MARKET AND ARE , CARRIED AT ACQUISITION COST UNLESS THESE ARE MORE THAN THE FACE VALUE, IN WHICH CASE THE PREMIUM SHOULD BE AMORTIZED OV ER THE PERIOD REMAINING TO MATURITY. IN THE CASE OF H FJ AND AFS SECURITIES FORMING STOCK IN TRADE OF THE BANK, THE DEPRECIATION / APPRECIATION IS TO BE AGGREGATED SCRIP WISE AND ONLY NET DEPRECIATION, IF ANY, IS REQUIRED TO BE PROVIDED FOR IN THE ACCOUNTS. THE LATEST GUIDELINES OF THE RBI MAY BE REFERRED TO FOR ALLOWING ANY SUCH CLAIMS. ' 4.4 AS CAN BE SEEN FROM THE ABOVE, CBDT HAS REITERATED THE RBI GUIDELINES DATED 16.10.2010 AND ADVISED A.OS TO ALLOW THE CLAIMS OF AMORTIZATION OF PREMIUM OVER THE BAL ANCE MATURITY PERIOD OF SECURITIES CLASSIFIED UNDER HELD TO MATURITY (HTM) CATEGORY. FURTHER, THE APPELLANT HAS ALSO CITED THE DECISION OF THE HON'BLE ITAT, MUMBAI IN THE CASE OF BANK OF RAJASTHAN LTD. (28.12.2010). IT IS SEEN FROM THE DECISION OF THE HON' BLE IT AT (SUPRA), THAT RELYING UPON THE RBI GUIDELINES AND CBDT DIRECTIONS, IT WAS HELD THAT A.O. HAS TO ALLOW THE PREMIUM AMORTIZED OVER THE BALANCE PERIOD OF MATURITY OF THE SECURITIES HELD UNDER HTM CATEGORY. ACCORDINGLY, AO IS HEREBY DIRECTED TO ALLOW THE PREMIUM PERTAINING TO THE SECURITIES HELD UNDER HTM CATEGORY TO THE EXTENT APPLICABLE FOR THE RELEVANT PREVIOUS YEAR. THIS GROUND OF APPEAL IS TREATED AS ALLOWED. 1 1 . WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AU THORITIES BELOW AND FOUND FROM THE RECORD THAT DURING THE ASSESSMENT PROCEEDINGS, THE AO HAS EXAMINED THE ALLOWABILITY OF A SUM OF RS.79,00,000/ - REPRESENTING AMORTIZATION OF PREMIUM ON HTM SECURITIES, DEBITED TO THE P&L ACCOUNT FOR THE F.YR 2009 - 2010, AND DISALLOWED THE CLAIM. THE AO HAS TAKEN A STAND IN THE ASSESSMENT ORDER THAT A SIMILAR DISALLOWANCE WAS MADE IN RESPECT OF A.YR.2008 - 09, WHICH WAS UPHELD BY THE FIRST APPELLATE AUTHORITY. THE OTHER REASONS STATED BY THE AO IN THE ASSESSMENT ORDER INCLUDE T HAT THE STOCK - IN - TRADE OF SECURITIES CANNOT BE EQUATED WITH THE CAPITAL ASSETS UNDER THE INCOME - TAX ACT AND, THEREFORE, NO DEPRECIATION IS ADMISSIBLE IN VIEW OF THE RBI GUIDELINES AS WELL AS BY THE CBDT INSTRUCTIONS NO.17 DATED 26.11 - 2008. ITA NOS. 4092 & 6462 / 11 &3859 / 13 , 4286&4927 / 14 7 THE ISSUE UNDER CONSIDERATION IS COVERED BY THE DECISION OF COORDINATE BENCH IN THE CASE OF BANK OF RAJASTHAN LTD., ORDER DATED 22 - 12 - 2010, WHEREIN AFTER RELYING ON RBI GUIDELINES AND THE CBDT DIRECTION IT WAS HELD THAT THE AO HAS TO ALLOW PREMIUM AMORTIZED OVER THE BALAN CE PERIOD OF MATURITY OF THE SECURITIES HELD TO MATURITY. THE ASSESSEES CASE IS ALSO SUPPORTED BY THE CBDT INSTRUCTIONS NO.17/2008, DATED 26 - 11 - 2008. RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH, W E DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT (A) FOR ALLOWING THE CLAIM OF AMORTIZATION OF PREMIUM BY CIT(A) . 12. ONE MORE GROUND HAS BEEN TAKEN BY THE REVENUE IN THE ASSESSMENT YEAR 2010 - 11 FOR DELETING DISALLOWANCE U/S.14A BY THE CIT(A) . FROM THE RECORD WE FOUND THAT IN RESPECT OF DIVIDEND INCOME O F RS.1,79,30,860/ - , THE AO APPLIED RULE 8D AND COMPUTED DISALLOWANCE AT RS.7,15,79,750/ - . BY THE IMPUGNED ORDER THE CIT(A) RESTORED THE MATTER BACK TO THE AO ON THE PLEA THAT THERE WAS NIL INVESTMENT IN SHARES AND SECURITIES AT THE BEGINNING OF THE YEAR AS WELL AS AT THE END OF THE YEAR, THEREFORE, NO AVERAGE BALANCE CAN BE TAKEN FOR COMPUTING DISALLOWANCE U/S.14A. THE PRECISE OBSERVATION OF THE CIT(A) WAS AS UNDER : - 5.4 THE FACTS OF THE CASE, THE STAND TAKEN BY THE A.O. IN THE ASSESSMENT ORDER AND THE CO NTENTIONS OF THE APPELLANT COMPANY DURING THE APPELLATE PROCEEDINGS AS WELL AS THE WRITTEN SUBMISSIONS MADE ARE CAREFULLY CONSIDERED. DURING THE RELEVANT PREVIOUS YEAR, THE APPELLANT BANK HAS RECEIVED DIVIDEND INCOME OF RS.1,79,30,860/ - WHICH IS IN THE NAT URE OF INCOME NOT TO BE INCLUDED IN THE TOTAL INCOME OF THE APPELLANT BANK. ON A PERUSAL OF THE ASSESSMENT ORDER IT IS EVIDENT THAT A.O. HAS APPLIED RULE 8D OF THE INCOME - TAX RULES IN A MECHANICAL FASHION. 5.5. A.O. WAS REQUIRED TO EXAMINE AND ARRIVE AT THE OPENING BALANCE AND CLOSING BALANCE OF INVESTMENTS, THE INCOME FROM WHICH ITA NOS. 4092 & 6462 / 11 &3859 / 13 , 4286&4927 / 14 8 IS NOT TO BE INCLUDED IN THE TOTAL INCOME OF THE APPELLANT, AND ON THAT BASIS ARRIVE AT THE DISALLOWANCE IN TERMS OF RULE 8D(2)(III) OF THE INCOME - TAX RULES. THE APPELLANT IS CAT EGORICAL IN ITS STATEMENTS AND SUBMISSIONS THAT THE ONLY INVESTMENTS, THE INCOME FROM WHICH IS EXEMPT, WAS MUTUAL FUNDS. IT IS CLARIFIED THAT THE INVESTMENTS IN MUTUAL FUNDS WERE MADE DURING THE F. Y R. 2009 - 10 AND WERE REDEEMED DURING THE SAME FINANCIAL Y EAR. IT IS FURTHER REITERATED THAT SINCE THERE WAS NO OPENING AND CLOSING BALANCE OF INVESTMENTS, THE INCOME. FROM WHICH IS EXEMPT, THE COMPUTATION UNDER RULE 8D(2)(III) OF THE INCOME - TAX RULES WOULD RESULT IN 'NIL' AMOUNT, AS DISALLOWANCE UNDER RULE 8D(2) (III) OF THE INCOME - TAX RULES. THE APPELLANT HAS SUPPORTED THE CONTENTIONS BY SUBMITTING A COPY OF THE ANNUAL ACCOUNTS AND THE SCHEDULES THEREOF. 5.6. I FIND THAT, PRIMA FACIE, THE APPELLANT'S VERSION IS FACTUALLY CORRECT AND VERIFIABLE WITH REFERENCE TO THE DETAILS SUBMITTED. SINCE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE ARRIVED AT BY THE A.O., IN TERMS OF RULE 8D(2)(III) OF THE INCOME - TAX RULES, IS BASED ON INCORRECT FACTS AND METHODOLOGY, A.O. IS HEREBY DIRECTED TO VERIFY TH E FACTUAL DATA SUBMITTED BY THE APPELLANT AND DELETE THE DISALLOWANCE MADE. 13. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT THE ISSUE UNDER CONSIDERATION IS COVERED BY THE DECISION OF COORDINATE BENCH IN THE CASE OF M/S TATA SECURITIES LTD., ITA NO. 2164/MUM/2013 VIDE ORDER DATED 10 - 7 - 2015, WHEREIN THE TRIBUNAL HELD AS UNDER : - 5. WE NOTICE THAT WHEN THE AO FOUND THAT THE AVERAGE VALUE OF INVESTMENT CALCULATED AS PER THE FORMULA PRESCRIBED UNDER THE INCOME TAX RULES WAS ALMOST NEGLIGIBLE AND THE D ISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D WAS WORKED OUT AT A MEAGER AMOUNT OF RS.16/ - ONLY, HE, THEN, HAS ADOPTED ANOTHER FORMULA WHICH HAS NEITHER BEEN PRESCRIBED NOR RECOMMENDED UNDER THE PROVISI ONS OF THE STATUTE AND THE RELEVANT RULES. AS PER THE PROVISIONS OF SECTION 14A , IF THE AO IS NOT SATISFIED WITH THE WORKING OF DISALLOWANCE GIVEN BY THE ASSESSEE, HE CAN RESORT TO THE FORMULA PRESCRIBED UNDER RULE 8D. IF THE AO FINDS THAT THE DISALLOWANCE COMPUTED UNDER RULE 8D IS A VERY MEAGER AMOUNT, IT IS NOT OPEN TO THE AO TO COMPUTE THE DISALLOWANCE ADOPTING HIS OWN OR ANY OTHER FORMULA. AO IS BOUND TO COMPUTE THE DISALLOWANCE AS PER THE PROVISIONS O F THE ACT AND THE RULES THERETO. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DIRECT THE AO TO COMPUTE THE DISALLOWANCE UNDER SECTION 14A STRICTLY AS PER THE PROVISIONS OF RULE 8D OF T HE INCOME TAX RULES AND NOT BY ADOPTING ANY OTHER FORMULA AT HIS OWN. 1 4 . AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SIMILAR, RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH ON THE ITA NOS. 4092 & 6462 / 11 &3859 / 13 , 4286&4927 / 14 9 SIMILAR FACTS IN THE CASE OF M/S TAT A SECURITIES LTD (SUPRA) , THE MATTER IS RESTORED TO THE FILE OF AO FOR DECIDING AFRESH AS PER THE DIRECTION GIVEN IN THE SAID ORDER. 15. IN THE INSTANT CASE, T HE CIT(A) RESTORED THE MATTER BACK TO THE FILE OF AO WITH A DIRECTION TO VERIFY THE FACTUAL DATA SUBMITTED BY THE ASSESSEE AND TO DELETE THE DISALLOWANCE . HOWEVER, WE MODIFY THE DIRECTION OF CIT(A) SO AS TO EMPOWER THE AO TO RECOMPUTE THE DISALLOWANCE U/S.14A R.W.RULE 8D AFTER VERIFYING THE ACTUAL FIGURES OF INVESTMENT MADE FOR EARNING EXEMPT INCOME, IN TERMS OF DECISION OF CO - ORDINATE BENCH DISCUSSED ABOVE. WE DIRECT ACCORDINGLY. 1 6 . IN THE RESULT, ALL APP EAL S OF THE ASSESSEE (I.E. ITA NOS.4092& 6462/MUM/2011, ITA NO.3859/2013 AND ITA NO.4286/2014) ARE ALLOWED IN PART FOR STATISTICAL PURPOSES , WHEREAS APPEAL OF THE REVENUE (I.E ITA NO.4927/MUM/2014) IS ALLOWED IN PART FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 23/09 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 23/09 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6 . / GUARD FILE. //TRUE COPY//