ADDL CIT 7(2), MUMBAI V. RELIANCE NATURAL RESOURCES LTD, NAVI MUMBAI

ITA 6711/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3187 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: L
• Next Hearing Date: 25-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 02-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASBIR CHOUHAN
• Assessee Lawyers: JITENDRA SANGHAVI DEEPAK JAIN
• Keywords: Double taxation relief; Opportunity of being heard; Earning of tax free income; Revenue expenditure; Capital expenditure
• Section: 143(3); 14A; 37(1); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 6711/MUM/2012 (ASSESSMENT YEAR : 2008-09) THE DCIT -7(2), AAYKAR BHAVAN,M.K.ROAD, MUMBAI 400 020 ..... APPELLANT VS. M/S. RELIANCE NATURAL RESOURCES LTD. H-BLOCK, 1 ST FLOOR, DHIRUBHAI AMBANI KNOWLEDGE CITY, THANE-BELAPUR ROAD, KOPERKHAIRANE, NAVI MUMBAI 400 710 PAN:AABCR 7656P .... RESPONDENT ITA NO. 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) [ M/S. RELIANCE NATURAL RESOURCES LTD. H-BLOCK, 1 ST FLOOR, DHIRUBHAI AMBANI KNOWLEDGE CITY, THANE-BELAPUR ROAD, KOPERKHAIRANE, NAVI MUMBAI 400 710 PAN:AABCR 7656P ... APPELLANT VS. THE ADDL.CIT -7(2), AAYKAR BHAVAN,M.K.ROAD, MUMBAI 400 020 .... RESPONDENT REVENUE BY : SHRI JASBIR CHOUHAN ASSESSEE BY : S/SHRI JITENDRA SANGHAVI/ DEEPAK JAIN DATE OF HEARING : 17/8/2016 DATE OF PRONOUNCEMENT : 24/08/2016 2 ITA NO. 6711& 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) ORDER PER G.S.PANNU,A.M: THE CAPTIONED CROSS-APPEALS FILED BY THE REVEN UE AND ASSESSEE PERTAINING TO A.Y. 2008-09 ARE DIRECTED AGAINST AN ORDER PASSED BY LD. CIT(A)-13, MUMBAI DATED 06/08/2012, WHICH IN TURN A RISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 28 /12/2010. 2. THE ASSESSEE COMPANY IS INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS, INTER-ALIA, ENGAGED IN THE BUSINESS OF PROVIDING FUEL AND FACILITATION SERVICES IN VARIO US FORMS TO POWER PLANTS RELIANCE INFRASTRUCTURE LTD., AND ALSO ENGAGED IN J OINT VENTURE OPERATIONS FOR EXPLORATION AND PRODUCTION OF COAL B ASED METHANE BLOCKS IN THE STATES OF MADHYA PRADESH, ANDHRA PRA DESH, RAJASTHAN AND MIZORAM. THE ASSESSEE COMPANY HAD FIELD THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.30,59,16,629/-, WHICH WAS SUBJECT TO SCRUTINY ASSESSMENT, WHEREBY THE TOTAL INCOME HAS B EEN ASSESSED AT RS.44,40,41,772/-, AFTER MAKING CERTAIN ADDITION/DI SALLOWANCES. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A), WHO HAS ALLOWED PARTIAL RELIEF. THE ASSESSEE IS IN APPEAL ON THE ISSUES WHERE THE CIT(A) HAS SUSTAINED THE ACTION OF THE ASSESSING OF FICER AND THE REVENUE IS IN APPEAL CHALLENGING THE ORDER OF THE C IT(A), WHEREIN RELIEFS HAVE BEEN ALLOWED. 3. IN THIS BACK GROUND WE MAY NOW TAKE UP THE APPEA L OF THE REVENUE, WHEREIN THE FOLLOWING GROUNDS OF APPEAL HA VE BEEN RAISED:- (I) THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACT S IN DELETING THE DISALLOWANCE OF EXPENSES OF RS.12,46,31,327/- ON IS SUE OF FOREIGN 3 ITA NO. 6711& 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) CURRENCY CONVERTIBLE BONDS IGNORING THE FACT THAT T HESE EXPENSES ARE FOR THE PURPOSE OF EXPANSION OF THE CAPITAL BASE OF COMPANY. (II) THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS THAT THE AMOUNT CLAIMED AS DEDUCTION PERTAINING TO RAISING OF FOREI GN CURRENCY CONVERTIBLE BONDS (FCCB) AS REVENUE EXPENDITURE WER E NOT ALLOWABLE AND REQUIRED TO BE CAPITALIZED BECAUSE TH E FCCB WAS RAISED WITH THE PURPOSE OF BEING REQUIRED FOR WORKI NG CAPITAL WHEREAS THE SAME WAS USED IN A MANNER CONTRARY TO P ERMITTED USE AS REQUIRED BY RBI REGULATION. (III) WITHOUT PREJUDICE TO GROUND NO.1&2 THE LEARN ED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWA NCE MENTIONED ABOVE BECAUSE IN THE ALTERNATIVE EVEN IF THE EXPEND ITURE WAS TREATED AS REVENUE IN NATURE TDS WAS NOT DEDUCTED A S REQUIRED U/S.195 OF THE ACT AND SECTION 40(A)(IA) OF THE INC OME TAX ACT, 1961 HAD TO BE REVOKED. (IV) THE LD.CIT(A)'S ORDER IS CONTRARY IN LAW AND O N FACTS AND DESERVES TO BE SET ASIDE. (V) THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO RESTORED. T HE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND THAT MAY BE NECESSARY. 4. IN SO FAR AS GROUND OF APPEAL NO.1 & 2 ARE CONCE RNED, THE SAME RELATE TO THE EXPENDITURE INCURRED BY THE ASSESSEE ON ISSUANCE OF FOREIGN CURRENCY CONVERTIBLE BONDS (FCCB). IN THIS CONTEXT, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS INCURRED EXPENDITURE OF RS.12,46,31,327/- IN RELATION TO THE BONDS, WHICH I S DETAILED AS UNDER:- S.NO. NAME OF THE PARTY NATURE OF EXPENSES AMOUNT ( RS.) 1. BARCLAYS BANK ARRANGER FEES 10,12,250 2. BARCLAYS BANK L/C COMMISSION AND FRONTING FEES 11,25,43,284 3. DEUTCHE BANK TRUSTEESHIP FEES 1,78,92 2 4. DEUTCHE BANK REIMBURSEMENT OF LEGAL FEE TOWARDS TRUSTEESHIP CHARGES 18,50,580 5. RELIANCE ENERGY LIMITED KEEPWELL CHARGES 90,46,291 TOTAL 12,46,31,327 4 ITA NO. 6711& 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) THE ASSESSING OFFICER NOTED THAT IN ASSESSMENT YEAR 2007-08 EXPENSES INCURRED ON ISSUANCE OF BONDS WAS DISALLOWED ON THE GROUND THAT THEY WERE CAPITAL IN NATURE. FOLLOWING HIS STAND FOR AS SESSMENT YEAR 2007- 08, IN THE INSTANT ASSESSMENT YEAR ALSO THE ASSESSI NG OFFICER HELD THAT SUCH EXPENSES ARE FOR THE PURPOSES OF EXPANSION OF CAPITAL BASE OF THE COMPANY AND, THEREFORE, THEY WERE CAPITAL IN NATURE , THUS, NOT ALLOWABLE UNDER SECTION 37(1) OF THE ACT. THE CIT( A) HAS ALLOWED THE CLAIM OF THE ASSESSEE FOR THE REASON THAT FOR ASSES SMENT YEAR 2007-08, SUCH EXPENDITURE STOOD ALLOWED AS REVENUE EXPENDITU RE. AGAINST SUCH A DECISION, REVENUE IS IN APPEAL BEFORE US. 5. BEFORE US, IT WAS A COMMON POINT BETWEEN THE PAR TIES THAT FOR ASSESSMENT YEAR 2007-08 THE TRIBUNAL HAS CONSIDERED THE ISSUE RELATING TO THE NATURE OF EXPENSES INCURRED FOR ISSUE OF FCC BS AND VIDE ITS ORDER IN CROSS- APPEALS ITA NOS.847/MUM/2011& 1425/MUM/ 2011 DATED 8/07/2016, IT HAS BEEN HELD THAT SUCH EXPENSES AR E ALLOWABLE AS REVENUE EXPENDITURE. AT THE TIME OF HEARING, LD. R EPRESENTATIVE FOR THE ASSESSEE HAS FURNISHED A COPY OF THE ORDER OF THE TRIBUNAL DATED 08/07/2016 (SURPA) AND THE RELEVANT DISCUSSION IN T HE SAID ORDER READS AS UNDER:- 11. GROUNDS NO. 1 TO 3 - DISALLOWANCE OF EXPENDITU RE ON FCCB ISSUE RS.28,58,28,246/- 11.1 IN THESE GROUNDS, THE REVENUE CONTENDS THAT T HE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE BY THE AO OF EXPENDI TURE OF `28,58,28,246/- INCURRED BY THE ASSESSEE ON THE ISSUE OF FOREIGN CU RRENCY CONVERTIBLE BONDS (FCCB), SINCE THEY WERE CAPITAL IN NATURE. IT IS FU RTHER CONTENDED THAT THE LEARNED CIT(A), WHILE DELETING THE AFORESAID DISALL OWANCE HAD WRONGLY MENTIONED THAT THE DECISION OF THE HON'BLE KARNATAK A HIGH COURT IN THE CASE OF SAMSUNG ELECTRONICS LTD. (320 ITR 209) WAS OVERR ULED BY THE HON'BLE APEX COURT, WHEN ACTUALLY IT WAS REMANDED TO THE HIGH CO URT FOR FRESH ADJUDICATION. IN GROUND NO. 3 REVENUE ALSO CONTEND S THAT, WITHOUT PREJUDICE TO THE ARGUMENTS PUT FORTH IN GROUNDS 1 AND 2, EVEN IF THE AFORESAID 5 ITA NO. 6711& 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) EXPENDITURE INCURRED ON ISSUE OF FCCBS IS HELD TO B E REVENUE IN NATURE, TDS WAS NOT MADE THEREON AS REQUIRED UNDER SECTION 195 OF THE ACT AND SECTION 40(A)(I) HAD TO BE INVOKED. THE LEARNED D.R. FOR RE VENUE WAS HEARD IN SUPPORT OF THE GROUNDS RAISED AND PLACED RELIANCE O N THE ORDER OF THE AO ON THESE ISSUES, BUT WAS NOT ABLE TO BRING MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF THE LEARNED CIT(A) ON THIS ISSUE. 11.2 IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS ISSUED FCCBS TO THE TUNE OF RS.1304.13 CRORES AND FOR THIS PURPOSE INCU RRED EXPENDITURE OF RS.28,58,28,246/-, WHICH HAS BEEN REDUCED FROM THE SHARE PREMIUM ACCOUNT IN THE BALANCE SHEET. THE AO NOTICED THAT, HOWEVER, IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS CLAIMED DEDUCTION OF THIS AMOUNT AS REVENUE EXPENDITURE UNDER SECTION 37(1) OF THE ACT. THE AO DISALLOWED THE ASSESSEES CLAIM ON THE GROUND THAT THE SAID EXPENSES ARE CAPI TAL IN NATURE. THE AO WAS ALSO OF THE VIEW THAT THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE ON THE PAYMENT OF THE SAID EXPENSES AND THEREFORE THE SAME IS TO BE DISALLOWED UNDER SECTION 40(A)(I) OF THE ACT. THE AO ALSO HELD THAT OUT OF THE TOTAL EXPENDITURE OF RS.28,58,28,246/-, AN AMOUNT OF RS.2 ,28,29,616/- WAS IN RESPECT OF PAYMENTS TO BARCLAYS BANK (INDIA) WERE N OT COVERED BY TDS CERTIFICATES AND HENCE THE SAME WAS TO BE DISALLOWE D. ON APPEAL, THE LEARNED CIT(A) HELD THAT THE FCCBS ARE IN THE NATURE OF DEB ENTURES AND UNSECURED LOANS AND HENCE THE EXPENDITURE INCURRED FOR ISSUE OF FCCBS IS ALLOWABLE DEDUCTION UNDER SECTION 37(1) OF THE ACT. 11.3 BEFORE US, THE LEARNED A.R. FOR THE ASSESSEE R EITERATED THE FACTS OF THE MATTER ON THIS ISSUE AS LAID OUT IN PARA 11.2 OF TH IS ORDER (SUPRA). ACCORDING TO THE LEARNED A.R., FCCBS IN THE CASE ON HAND ARE ISSUED BY THE ASSESSEE ONLY AS DEBT RAISING INSTRUMENTS AND THE FCCB HOLDERS NE VER HAD ANY VOTING RIGHTS AS THE SAME WERE NOT CONVERTED INTO EQUITY SHARES O F THE COMPANY. IT IS CONTENDED THAT IN SUCH CIRCUMSTANCES, THE FCCBS AR E TO BE DEEMED TO BE THE DEBENTURES ISSUED BY THE ASSESSEE FOR BUSINESS PURP OSES. IN SUPPORT OF THE PROPOSITION THAT THE SAID FCCBS WERE DEEMED AS DE BENTURES AND THE EXPENSES INCURRED IN ISSUING THE FCCBS WERE TO BE A LLOWED AS REVENUE EXPENDITURE UNDER SECTION 37(1) OF THE ACT, THE LEA RNED A.R., INTER ALIA, PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - I) PRIME FOCUS LTD. VS. DCIT (ITA NO. 836/MUM/2011 DATED 04.02.2016) II) MAHINDRA & MAHINDRA LTD. VS. JCIT (2010) 36 SO T 348 (MUM) III) CIT VS. SECURE METERS LTD. (2009) 175 TAXMAN 567 (RAJ) IV) CIT VS. TATA TELESERVICES ( ) LTD. (2014) 47 TAXMANN.COM 238 (BOM) V) CIT VS. ITC HOTELS LTD. (2011) 334 ITR 198 (KAR ) VI) CIT VS. SOUTH INDIA CORPN. (AGENCIES) LTD. (200 7) 290 ITR 217 (MAD) VII) CIT VS. HAVELLS INDIA LTD. (2013) 352 ITR 376 (DEL) 6 ITA NO. 6711& 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) VIII) CIT VS. FIRST LEASING CO. OF INDIA LTD. (2008 ) 304 ITR 67 (MAD) IX) GATI LIMITED (ITA NO. 749/HYD/2012 DATED 04.01 .2013) X) GATI LIMITED (ITA NO. 1325/HYD/2015 DATED 10.03. 2016) 11.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, IN CLUDING THE JUDICIAL PRONOUNCEMENT CITED. WE FIND THAT SIMILAR ISSUE OF TREATMENT OF EXPENSES INCURRED IN ISSUE OF FFBS ON SIMILAR FACTS, AS IN T HE CASE ON HAND, WAS DEALT WITH BY A COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF PRIME FOCUS LTD. IN ITS ORDER IN ITA NO. 8364/MUM/2011 DATED 04.02.2016 AT PARAS 3 TO 13 THEREOF. THE COORDINATE BENCH AT PARAS 8 TO 11 AND 13 THEREOF HELD THAT THE EXPENSES INCURRED IN CONNECTION WITH ISSUE OF FCCBS /RAISING OF DEBTS ARE IN PRINCIPLE OF REVENUE NATURE AND CONSTITUTE ALLOWABL E EXPENDITURE FOR THE ASSESSEES BUSINESS PURPOSES. THE SAID FINDING OF T HE COORDINATE BENCH IS EXTRACTED HEREUNDER: - 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITATIONS BY THE LD REPRESENTATIVES OF BOTH THE PARTIES. OUR ADJUDICATION ON THE CORE I SSUE IS GIVEN IN THE FOLLOWING PARAGRAPHS: 9. ASSESSEE SPENT RS. 5,82,40 ,318/- BY WAY OF PAYMENTS TO (I) FEE PAID TO THE LEAD MANAGERS TO TH E ISSUE; (II) FEES PAID TO THE LEGAL ADVISORS TO THE ISSUE AND (III) L ISTING FEES PAID. THE SAME WAS PAID TO THOSE PARTIES WHO CONTRIBUTED FOR THE SUCCESS OF THE ISSUE OF FCCB AMOUNTING TO US $5.5 MILLIONS. IN PRI NCIPLE, THE PAYMENTS OF THIS NATURE IN OUR OPINION FALLS IN REV ENUE ZONE. BUT THE FACT IS THAT THEY'D WERE INCURRED IN CONNECTION W ITH ISSUE OF FCCBS. ASSESSEE RAISED THESE FOREIGN CURRENCY BONDS OF RS 1 LAKH EACH. DETAILS OF SUCH EXPENDITURE IS GIVEN ON PAGE 42 OF THE APB. IN THIS CONTEST, ASSESSEE PAID RS. 5.82 CRS (ROUNDED OFF) T O LEAD MANAGERS / LEGAL ADVISORS AND LISTING FEES. AO TREATED THE SAM E AS CAPITAL EXPENDITURE. WILL SUCH REVENUE EXPENDITURE WHEN IN CURRED IN CONNECTION FCCB MAKES IT OF CAPITAL NATURE? WE SHAL L EXAMINE THE NATURE OF FCCBS. 10. ASSESSEE ISSUED THE FCCBS FOR THE PURPOSE OF ACQUISITION OF THE COMPANIES IN SIMILAR LINES ABROA D FOR EXPANDING THE BUSINESS PRESENCE ABROAD. WHEREAS THE RELEVANT AGRE EMENTS AND ISSUE DOCUMENTS SUGGEST THAT THEY WERE ISSUED FOR E QUITY PURPOSES. IT IS A FACT THAT THE PROCEEDS OF THE FCCBS WERE SPENT ON ACQUIRING THE COMPANIES ABROAD. BEING OPTIONALLY CONVERTIBLE, THE BOND HOLDERS HAVE THE OPTION TO CONVERT INTO EQUITY. BUT THE ASS ESSEE DID NOT ISSUE SHARES TO THE BOND HOLDERS AS THEY DID NOT EXERCISE THAT OPTION. RATHER, ASSESSEE REFUNDED THE BOND MONEY WITH PREMI UM TO THE BOND HOLDERS. CONSIDERING THE FACT OF REFUND OF ENT IRE FCC BOND MONEY, WE ARE OF THE OPINION THAT FFCB ISSUE EXERCI SE OF THE ASSESSEE AMOUNTS TO ONE RAISING DEBT FOR THE INTENDED PURPOS E AND IT IS UNCONNECTED TO THE ISSUE OF SHARES. AS SUCH THE DIF FERENCE BETWEEN BOND AND DEBENTURE IS VERY THIN AS THEY BOTH ARE TW O DIFFERENT TYPES 7 ITA NO. 6711& 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) OF DEBT INSTRUMENTS. FURTHER, WE FIND THAT THERE IS NEXUS BETWEEN THE EXPENDITURE AND THE PURPOSE OF THE BONDS OF THE ASS ESSEE. IN SUCH CASE, THE CLAIM IS ALLOWABLE IN VIEW OF THE DECISIO N OF THE HON'BLE APEX COURT IN THE CASE OF HERO CYCLES P LTD (SUPRA) . RELEVANT PARA FROM THE SAID JUDGMENT IS EXTRACTED AS UNDER:- 'INS OFAR AS LOANS TO THE SISTER CONCERN / SUBSIDIARY COMPANY ARE CONCERN ED, LAW IN THIS BEHALF IS RECAPITULATED BY THIS COURT IN THE CASE O F S.A. BUILDERS LTD. V. COMMISSIONER OF INCOME TAX (APPEALS) AND ANOTHER [2007 (288) ITR 1 (SC)]. ONCE IT IS ESTABLISHED THAT THERESO IS NEXUS BETWEEN THE EXPENDITURE AND THE PURPOSE OF BUSINESS (WHICH NEED NOT NECESSARILY BE THE BUSINESS OF THE ASSESSEE ITSELF), THE REVENU E CANNOT JUSTIFIABLY CLAIM TO PUT ITSELF IN THE ARM-CHAIR OF THE BUSINES SMAN OR IN THE POSITION OF THE BOARD OF DIRECTORS AND ASSUME THE R OLE TO DECIDE HOW MUCH IS REASONABLE EXPENDITURE HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE. IT FURTHER HELD THAT NO BUSINESSMAN CA N BE COMPELLED TO MAXIMIZE HIS PROFIT AND THAT THE INCOME TAX AUTHORI TIES MUST PUT THEMSELVES IN THE SHOES OF THE ASSESSEE AND SEE HOW A PRUDENT BUSINESSMAN WOULD ACT. THE AUTHORITIES MUST NOT LOO K AT THE MATTER FROM THEIR OWN VIEW POINT BUT THAT OF A PRUDENT BUS INESSMAN.' 11. LEGAL PROPOSITIONS : SCOPE OF LD DR - MAKING OU T A NEW CASE OF APPLICABILITY OF SECTION 35D: LD DR FOR THE REVENUE FILED WRITTEN NOTE STATING THAT THAT THE CLAIM OF SUCH EXPENSES IS TO BE CONSIDERED WITHIN THE MEANING OF THE PROVISIONS OF SECTION 35D OF THE ACT. IN THIS REGARD, LD AR FOR THE ASSESSEE TRACED THE WAY AO DE ALT WITH THIS ISSUE AND SUBMITTED THAT AO'S CASE IS IF THE SAID EXPENSE S CONSTITUTES REVENUE OR CAPITAL WITHIN THE MEANING OF SECTION 37 OF THE ACT. APPLICABILITY OF THE PROVISIONS OF SECTION 35D OF T HE ACT WAS NEVER THE ISSUE BEFORE EITHER THE AO OR BEFORE THE CIT(A). AT THE SECOND APPEAL, LD CIT DR CANNOT MAKE A NEW CASE BY INVOKING SECTIO N 35 D OF THE ACT EVEN IF IT IS CORRECTLY INVOKABLE. FOR THIS PROPOSI TION, HE RELIED ON VARIOUS BINDING JUDGMENT IN THE CASE OF MAHENDRA AN D MAHENDRA LTD (SUPRA). THEREFORE, WE DISMISS THE LD DRS ARGUMENT ON THE ISSUE. 12. ..... SUMMARY 13. WE HAVE HELD THAT THE EXPENSES IN QUESTION ARE IN PRINCIPLE OF REVENUE NATURE. IT IS THE TRITE LAW SUCH EXPENSES I NCURRED N CONNECTION WITH RAISING OF DEBTS / FCC BONDS CONSTITUTE ALLOWA BLE EXPENDITURE OF THE ASSESSEE. 11.4.2 FOLLOWING THE RATIO OF THE DECISION OF THE C OORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF PRIME FOCUS LTD. (SUPRA), W E HOLD THAT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE ON HAND, THE EXPENDITURE INCURRED BY THE ASSESSEE IN CONNECTION WITH THE ISSUE OF FCCBS WAS CORRECTLY HELD TO BE REVENUE IN NATURE BY THE LEARNED CIT(A), BEING EXPENSES INCURR ED IN CONNECTION WITH THE RAISING OF DEBTS AND ALLOWABLE EXPENDITURE UNDER SE CTION 37(1) OF THE ACT. 8 ITA NO. 6711& 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) 5.1 FOLLOWING THE AFORESAID PRECEDENT, WHICH HAS BE EN RENDERED ON A SIMILAR ISSUE WE HEREBY AFFIRM THE ORDER OF THE CIT (A) AND ACCORDINGLY, REVENUE FAILS ON GROUNDS OF APPEAL NO. 1& 2. 6. IN GROUND OF APPEAL NO.3, THE ISSUE RELATES TO A N ALTERNATE STAND OF THE ASSESSING OFFICER, WHICH IS TO THE EFFECT TH AT IF THE AFORESAID EXPENDITURE IS TO BE CONSIDERED AS REVENUE IN NATUR E, THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE UNDER SECTION 195 OF THE ACT AND SINCE ASSESSEE HAD NOT DEDUCTED THE REQUISITE TDS, SUCH EXPENDITURE WAS DISALLOWABLE UNDER SECTION 40(A)(IA) OF THE ACT . ON THIS ASPECT ALSO WE FIND THAT THE CIT(A) HAS DISAGREED WITH THE ASSE SSING OFFICER, AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 6.1 ON THIS ASPECT OF THE CONTROVERSY, THE TRIBUNAL IN ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 08/07/2016(SUPRA) HE LD THAT SUCH EXPENDITURES ARE NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE UNDER SECTION 195 OF THE ACT AND THE RELEVANT DISCUSSION IN THE ORDER OF THE TRIBUNAL READS AS UNDER:- 13.1 THE AO HAD ALSO HELD AT PARA 5 OF THE ASSESSM ENT ORDER, THAT SINCE THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE ON THE PAYM ENT OF EXPENDITURE INCURRED IN CONNECTION WITH THE ISSUE OF FCCBS UNDE R SECTION 195 OF THE ACT, THE SAME IS DISALLOWED UNDER SECTION 40(A)(I) OF TH E ACT. THE DETAILS OF THE NATURE OF PAYMENTS (I.E. ARRANGERS FEES, LEGAL AND PROFESSIONAL FEES, L/C COMMISSION AND TRUSTEESHIP FEES, PRINCIPAL AGENT FE ES, ETC.), AMOUNTS PAID AND PARTIES NAMES, ETC. ARE ALSO MENTIONED AT PARA 5 OF THE ORDER OF ASSESSMENT. ON APPEAL, THE LEARNED CIT(A) HELD THAT THE SAID PAYMENTS WERE NOT EXIGIBLE TO TAX IN INDIA BY PLACING RELIANCE ON THE JUDICIAL PRONOUNCEMENTS IN THE CASE OF ITO VS. PRASAD PRODUCTION LTD., CHEN NAI (125 ITD 263) ( SB CHENNAI) AND VAN CORD ACZ INDIA (P) LTD. VS CIT (DE LHI HC) AND THEREFORE THE QUESTION OF MAKING TDS UNDER SECTION 195 OF THE ACT ON THE SAID PAYMENTS DID NOT ARISE. 13.2 THE LEARNED D.R. PLACED RELIANCE ON THE DECI SION OF THE AO ON THIS ISSUE. 9 ITA NO. 6711& 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) 13.3 THE LEARNED A.R. FOR THE ASSESSEE REITERATED T HE SUBMISSIONS PUT FORTH BEFORE THE LEARNED CIT(A). ACCORDING TO THE LEARNED A.R. FOR THE ASSESSEE, THE SAID PAYMENTS ARE NOT COVERED WITHIN THE AMBIT OF T HE PROVISIONS OF SECTION 195 OF THE ACT AND THEREFORE THERE WAS NO LIABILITY CAST UPON THE ASSESSEE TO MAKE DEDUCTION OF TAX AT SOURCE ON SUCH PAYMENTS. I T IS CONTENDED BY THE LEARNED A.R. THAT THIS ISSUE IS COVERED IN FAVOUR O F THE ASSESSEE BY THE FOLLOWING JUDICIAL PRONOUNCEMENTS ON WHICH HE PLACE D RELIANCE EARLIER BEFORE THE LEARNED CIT(A): - I) RAYMOND LTD. VS DCIT (2003) 86 ITD 791 (MUM) II) MAHINDRA & MAHINDRA (30 SOT 374) (MUM SB) III) INTRATCK TESTING SERVICES INDIA P. LTD. (307 ITR 418) (AAR) IV) DCIT VS. BOSTON CONSULTING GROUP PTE LTD. (94 ITD 31) (MUM) V) ITO VS. DE BEERS INDIA MINERALS P. LTD. (297 IT R (AT) 1760 (BANGALORE) 13.4 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; IN CLUDING THE JUDICIAL PRONOUNCEMENT CITED. WE FIND THAT THE ISSUE UNDER C ONSIDERATION IS COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRI BUNAL IN THE CASE OF RAYMOND LTD. VS. DCIT (2003) 86 ITD 791 (MUM) WHERE IN IT WAS HELD THAT NEITHER MANAGEMENT COMMISSION NOR UNDERWRITING COMM ISSION NOR SELLING COMMISSION WOULD AMOUNT TO FTS WITHIN THE MEANING O F THE DTAA WITH U.K. AND CONSEQUENTLY THERE WAS NO OBLIGATION ON THE PAR T OF THE ASSESSEE- COMPANY TO DEDUCT TAX UNDER SECTION 195 OF THE ACT. FOLLOWING THE DECISION OF THE COORDINATE BENCH, WE HOLD THAT THERE IS NO L IABILITY CASE ON THE ASSESSEE IN THE CASE ON HAND TO WITHHOLD TAX UNDER SECTION 195 OF THE ACT ON THE SAID PAYMENTS WHICH, INTER ALIA, CONSTITUTE PAY MENT OF LEGAL AND PROFESSIONAL FEES, L/C COMMISSION, ARRANGER FEES, E TC., INCURRED IN CONNECTION WITH THE ISSUE OF FCCBS AND THEREFORE NO DISALLOWAN CE UNDER SECTION 40(A)(I) OF THE ACT IS CALLED FOR. CONSEQUENTLY, GROUNDS NO. 1 TO 3 OF REVENUES APPEAL ARE DISMISSED. FOLLOWING THE PRECEDENT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007-08, WE HEREBY AFFIRM THE ORDER OF THE CIT(A) A ND REVENUE FAILS ON THIS ASPECT ALSO. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. 8. NOW WE MAY TAKE UP THE APPEAL OF THE ASSESSEE, W HEREIN THE GROUNDS OF APPEAL READ AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) [HEREINAFTER REFERRED TO AS CIT(A)] ERRED IN CONFIRMING THE DISALLOWANCE OF RS 23,47,819/- MADE U/S 40(A)(I) DUE TO NON DEDUCTION OF TAX AT SOURCE, HOL DING THAT THE SAID PAYMENT 10 ITA NO. 6711& 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) OF RS. 23,47,819/- WAS LIABLE TO TAX IN INDIA AS FE E FOR TECHNICAL SERVICE U/S 9(1 )(VII) OF THE INCOME TAX ACT. YOUR APPELLANT SUBMITS THAT THE PAYMENT MADE TO THE INDONESIAN RESIDENT FOR TAX DUE DILIGENCE SERVICES IN INDONESIA IS NOT LIABLE TO TAX IN INDIA UNDER DOUBLE TAX AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA AND INDONESIA. THEREFORE NO TAX WAS DEDUCTIBLE U/S 195 OF THE ACT AND NO DISALLOWANCE U/S 40(A)(I) OUGHT TO HAVE BEEN MADE WITH REGARDS TO TH IS PAYMENT. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISAL LOWANCE OF RS 1,92,190/- PAID AS PROFESSIONAL FEES IN CONNECTION WITH LISTIN G OF GLOBAL DEPOSITORY RECEIPTS (GDRS) HOLDING THE SAME AS CAPITAL EXPENDI TURE. YOUR APPELLANT SUBMITS THAT THE SAID PROFESSIONAL F EE WAS PAID FOR LISTING OF GDRS ISSUED IN CONNECTION WITH RESTRUCTURING AND RE ORGANIZATION OF EXISTING BUSINESS AND NOT FOR EXPANSION OF CAPITAL BASE. THE EXPENDITURE OUGHT TO HAVE BEEN ALLOWED AS INCURRED WHOLLY AND EXCLUSIVEL Y FOR THE PURPOSES OF BUSINESS. 3.THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALL OWANCE OF ADMINISTRATIVE EXPENSES U/S 14A FOR RS.1,68,976/-. YOUR APPELLANT SUBMITS THAT THOSE INVESTMENT WHI CH DID NOT YIELD ANY INCOME DURING THE YEAR SHOULD HAVE BEEN EXCLUDED WHILE COMPUTING DISALLOWANCE U/S 14A. 4. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AME ND OR VARY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL AS IT MAY THINK FIT. 9.1 IN SO FAR AS GROUND OF APPEAL NO.1 IS CONCERNED , THE RELEVANT FACTS ARE THAT THE ASSESSEE HAD MADE PAYMENT OF RS. 23,47,819/- TO THE FOLLOWING FOUR CONCERNS, WHO WERE RESIDENTS OF IND ONESIA, ON WHICH NO TAX WAS DEDUCTED UNDER SECTION 195 OF THE ACT. S.NO. NAME OF THE PARTY AMOUNT(RS.) COUNTRY OF RESIDENCE 1. P.T.KILPADY AND ASSOCIATE 15,85,010 INDONESIA 2 P.T.KILPADY AND ASSOCIATE 51,956 INDONESIA 3 CENTER FOR INVESTMENT AND BUSINESS ADVISORY 4,66,577 INDONESIA 4. PT PARAM DWI JAYA 2,44,272 INDONESIA 11 ITA NO. 6711& 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) AS A CONSEQUENCE, THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE DISALLOWED THE CORRESPONDING EXPENDITURE BY INVOKIN G SECTION 40(A)(IA) OF THE ACT. AGAINST SUCH A DECISION ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 9.2 BEFORE THE LOWER AUTHORITIES AS WELL AS BEFOR E US THE PLEA OF THE ASSESSEE HAS BEEN THAT THE IMPUGNED PAYMENTS HAVE B EEN MADE TO THE TAX RESIDENTS OF INDONESIA FOR DUE DILIGENCE SERVI CES RENDERED IN INDONESIA AND THUS, NOT LIABLE TO TAX IN INDIA HAV ING REGARD TO THE DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA A ND INDONESIA. ON THIS BASIS IT IS SOUGHT TO BE MADE OUT THAT THER E WAS NO REQUIREMENT TO DEDUCT TAX AT SOURCE UNDER SECTION 195 OF THE AC T AND AS A CONSEQUENCE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT IS NOT MERITED. AT THE TIME OF HEARING LD. REPRESENTATIV E FOR THE ASSESSEE SUBMITTED THAT SIMILAR ISSUE HAD COME BEFORE THE TR IBUNAL IN THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2007-08 AND VID E ORDER DATED 08/07/2016 (SUPRA), THE MATTER WAS RESTORED BACK TO THE FILE OF CIT(A) TO RE-EXAMINE THE CLAIM OF THE ASSESSEE IN THE LIGH T OF INDO-INDONESIA DOUBLE TAXATION AVOIDANCE AGREEMENT. 9.3 THE SAID FACTUAL MATRIX HAS NOT BEEN CONTESTED BY THE LD. DEPARTMENTAL REPRESENTATIVE, AND THE PLEA OF THE AS SESSEE FOR SIMILAR REMAND TO THE FILE OF THE CIT(A) WAS NOT OPPOSED. 9.4 WE FIND THAT IN PARA 5.5.1 OF THE ORDER, THE TR IBUNAL IN ITA NO.847/MUM/2011(SUPRA) HAS CONSIDERED THE PAYMENTS MADE BY THE ASSESSEE TO INDONESIAN ENTITIES FOR TAX DUE DILIGEN CE SERVICE RENDERED IN ASSESSMENT YEAR 2007-08 IN FOLLOWING WORDS:- 12 ITA NO. 6711& 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) 5.5.1 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, IN CLUDING THE JUDICIAL PRONOUNCEMENT CITED. IT IS SEEN THAT THERE IS NO DI SPUTE WITH THE FINDING OF THE LEARNED CIT(A) THAT THE AMOUNT OF RS.7,31,115/- PAID BY THE ASSESSEE TO THE INDONESIAN ENTITY FOR TAX DUE DILIGENCE IS EXIG IBLE TO TAX IN INDIA UNDER SECTION 9(1)(VII) OF THE ACT AS FTS. THE DISPUTE PU T FORTH BY THE ASSESSEE IS THAT SINCE THE ASSESSEE, IN THIS REGARD, IS ENTITLE D TO THE BENEFIT OF THE INDIA- INDONESIA DTAA OR THE ACT, WHICHEVER IS FAVOURABLE TO IT, THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE DTAA, WHICH IS FAVOURA BLE TO IT, WHILE PASSING THE IMPUGNED ORDER. IT HAS BEEN SUBMITTED THAT THE INDIA-INDONESIA DTAA DOES NOT CONTAIN ANY ARTICLE IN RESPECT OF FTS. IN THESE CIRCUMSTANCES, IT IS CONTENDED THAT THE SAID PAYMENT FOR TAX DUE DILIGEN CE FEES TO THE INDONESIAN ENTITY WOULD CONSTITUTE A PART OF ITS BUSINESS INC OME AS PER ARTICLE 7 THEREOF AND THEREFORE THERE IS NO REQUIREMENT TO DEDUCT TAX AT SOURCE ON THE SAID PAYMENT UNDER SECTION 195 OF THE ACT. A COPY OF THE SAID DTAA HAS ALSO BEEN PLACED ON RECORD AND WE HAVE PERUSED THE SAME. AS C ONTENDED BY THE LEARNED A.R. FOR THE ASSESSEE, A PERUSAL OF THE IMP UGNED ORDER SHOWS THAT THE LEARNED CIT(A), IN COMING TO THE FINDING HE DID , HAS NOT EXAMINED THE INDIA-INDONESIA DTAA AND ADJUDICATED THEREON WHILE PASSING THE IMPUGNED ORDER WHICH THE ASSESSEE CLAIMS IS FAVOURABLE TO IT AND OUGHT TO HAVE BEEN APPLIED. IN THESE CIRCUMSTANCES, IN THE INTEREST OF EQUITY AND JUSTICE, WE RESTORE THIS ISSUE TO THE FILE OF THE LEARNED CIT(A ) TO EXAMINE THE ASSESSEES CLAIM IN THIS REGARD WITH RESPECT TO THE INDIA-INDO NESIA DTAA AND TO ALLOW THE ASSESSEE THE BENEFIT OF THAT WHICH IS FAVOURABL E TO IT, I.E. THE DTAA OR THE ACT, IN ACCORDANCE WITH LAW AND AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO SUBMIT DETAILS/SU BMISSIONS IN THIS REGARD. IT IS ACCORDINGLY ORDERED. CONSEQUENTLY, GROUND NO. 1 OF THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOS ES. 9.5 FOLLOWING THE AFORESAID PRECEDENT, IN THE PRES ENT YEAR TOO AS THE ISSUE INVOLVED IS SIMILAR, THE MATTER IS REMANDED B ACK TO THE FILE OF THE CIT(A) TO RE-ADJUDICATE THE CLAIM OF THE ASSESSEE B ASED ON THE INDO- INDONESIA DTTA, KEEPING IN MIND THE DIRECTIONS OF T HE TRIBUNAL DATED 08/07/2016 (SUPRA). CONSEQUENTLY, GROUND OF APPEAL NO.1 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. IN GROUND OF APPEAL NO.2 THE ISSUE RELATES TO A DISALLOWANCE OF RS.1,92,190/-, WHICH REPRESENTED PROFESSIONAL FEE P AID IN CONNECTION WITH LISTING OF GLOBAL DEPOSITARY RECEIPTS(GDRS). THE EXPENDITURE WAS 13 ITA NO. 6711& 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) DISALLOWED BY THE LOWER AUTHORITIES ON THE GROUND THAT AS IT RELATES TO LISTING OF GDRS, IT WAS CAPITAL IN NATURE. 10.1 AT THE TIME OF HEARING, IT WAS BROUGHT OUT TH AT SIMILAR EXPENDITURE INCURRED IN ASSESSMENT YEAR 2007-08 HAS BEEN HELD TO BE CAPITAL IN NATURE BY THE TRIBUNAL VIDE ITS ORDER DA TED 08/07/2016(SUPRA). AS A CONSEQUENCE OF THE AFORESAID PRECEDENT, THE SA ID GROUND OF APPEAL IS DECIDED AGAINST THE ASSESSEE. THUS, GROUND OF AP PEAL NO.2 RAISED BY THE ASSESSEE IS DISMISSED. 11. THE LAST ISSUE IN THE APPEAL OF THE ASSESSEE R ELATES TO A DISALLOWANCE OF RS.1,68,976/- SUSTAINED BY THE CIT( A) UNDER SECTION 14A OF THE ACT OUT OF ADMINISTRATIVE EXPENSES. 11.1 IN THIS CONTEXT, THE RELEVANT FACTS ARE THAT I N THE RETURN OF INCOME ASSESSEE HAD OFFERED A DISALLOWANCE OF RS.26,62,02, 449/- UNDER SECTION 14A OF THE ACT. THE ASSESSING OFFICER HOWEVER, COM PUTED THE DISALLOWANCE AT RS.26,63,71,425/-, RESULTING IN AN ADDITIONAL DISALLOWANCE OF RS.1,68,976/-. THE ASSESSEE AS WEL L AS ASSESSING OFFICER COMPUTED THE DISALLOWANCE BY APPLYING THE FORMULA C ONTAINED IN RULE 8D(2) OF THE INCOME TAX RULES,1962( IN SHORT THE R ULES). THE ASSESSEE COMPUTED THE DISALLOWANCE BY APPLYING RULE 8D OF TH E RULES BY CONSIDERING ONLY THOSE INVESTMENTS WHICH HAD ACTUAL LY YIELDED DIVIDEND INCOME DURING THE YEAR, WHEREAS THE ASSESSING OFFIC ER CONSIDERED ALL THE INVESTMENTS WHICH WERE LIABLE TO GENERATE EXEMP T INCOMES, AND THE AFORESAID DIFFERENCE HAD RESULTED IN THE INCREA SED DISALLOWANCE OF RS.1,68,976/-, WHICH IS THE SUBJECT MATTER OF DISPU TE BEFORE US. THE CIT(A) HAS ALSO AFFIRMED STAND OF THE ASSESSING OFF ICER. 14 ITA NO. 6711& 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) 12. BEFORE US, THE ONLY PLEA RAISED BY THE ASSESSEE IS BASED ON THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CHE MINVEST LTD V/S CIT ( 378 ITR 33 )(DELHI) . ON THE STRENGTH OF THE AFORESAID JUDGM ENT, THE PLEA OF THE ASSESSEE IS THAT THE INVESTMENTS WHICH HAVE NOT YIELDED ANY EXEMPT INCOME DURING THE YEAR, SHOULD BE EXCLUDED F OR THE PURPOSE COMPUTING DISALLOWANCE UNDER SECTION 14A OF THE ACT R.W.S. RULE 8D(2) OF THE RULES. 13. WE HAVE CONSIDERED THE PLEA OF THE ASSESSEE AND FIND NO MERIT IN THE SAME INASMUCH AS THE ISSUE BEFORE THE HONBLE D ELHI HIGH COURT STOOD ON AN ENTIRELY DIFFERENT FOOTING. THE QUESTI ON BEFORE THE HONBLE HIGH COURT WAS AS TO WHETHER DISALLOWANCE UNDER SEC TION 14A OF THE ACT CAN BE MADE IN CASE NO EXEMPT INCOME HAS BEEN EARNE D OR RECEIVED BY THE ASSESSEE. ACCORDING TO THE HONBLE HIGH COURT SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. IN THE PRESENT CASE BEFORE US, THE FACT-SITUATION IS DIFFERENT INASMUCH AS IT IS NOT A CASE WHETHER NO E XEMPT INCOME HAS BEEN EARNED DURING THE YEAR UNDER CONSIDERATION. T HUS, THE CONTROVERSY BEFORE US IS NOT TO BE GOVERNED BY THE RATIO OF THE JUDGMENT OF THE HONBLE DELHI HIGH COURT (SUPRA). IN FACT, THE HONBLE DELHI HIGH COURT ITSELF, WHILE DISTINGUISHING ITS E ARLIER JUDGMENT IN THE CASE OF MAXOPP INVESTMENT LTD. & ORS. VS. CIT, 347 ITR 272(DEL) NOTED SUCH A DISTINCTION BY OBSERVING THAT MAXOPP INVES TMENT LTD. (SUPRA) WAS A CASE WHERE THE DIVIDEND INCOME WAS EARNED, WH EREAS THE CASE BEFORE IT I.E. M/S. CHEMINVEST LTD. (SUPRA) WAS A CASE WHERE NO EXEMPT INCOME AT ALL WAS EARNED DURING THE YEAR. THEREFO RE, EVEN GOING BY THE PARITY OF REASONING INITIATED THE HONBLE DELHI HIG H COURT IN THE CASE OF CHEMINVEST LTD. (SUPRA), THE IMPUGNED CONTROVERSY I S NOT LIABLE TO BE 15 ITA NO. 6711& 6843/MUM/2012 (ASSESSMENT YEAR : 2008-09) DECIDED IN FAVOUR OF THE ASSESSEE. THUS, THE PLEA OF THE ASSESSEE IS REJECTED AND ASSESSEE FAILS IN ITS GROUND OF APPEAL NO.3. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 15. AS A RESULT, APPEAL OF THE REVENUE IS DISMISSED AND THAT OF ASSESSEE IS PARTLY ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 24/08/2016 SD/- SD/- (RAVISH SOOD) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED 24/08/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// DY./ASSTT. REGISTRAR) ITAT, MUMBAI