VIJAY INDUSTRIES, Alwar V. DCIT, Alwar

ITA 673/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5232 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 03-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R PAREEK JCIT DHK
• Keywords: Earning of tax free income; Reassessment proceedings
• Section: 143(3); 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI T.R.MEENA, AM VK;DJ VIHY LA -@ ITA NO. 673/JP/2015 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2006-07 M/S VIJAY INDUSTRIES, CINEMA ROAD, KHAIRTHAL (ALWAR). CUKE VS. D.C.I.T., CIRCLE-1, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAAFV 7282 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI G.R. PAREEK (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 07/06/2016. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 17/06/2016. VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 25/6/2015 PASSED BY THE LD. CIT(A), ALWAR FOR THE ASS ESSMENT YEAR 2006- 07, WHEREIN THE ASSESSEE RAISED FOLLOWING GROUNDS AS UNDER: 1. THAT THE LD AO HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN NOT FOLLOWING THE O RDER OF ITAT, JAIPUR WHILE GIVING EFFECT TO ITS ORDER IN AS MUCH AS THE ITAT, JAIPUR HAS DIRECTED TO ESTABLISH T HE ITA NO. 673/JP/2015 VIJAY INDUSTRIES VS DCIT 2 NEXUS BETWEEN THE BORROWED FUNDS AND INVESTMENT IN SHARES, WHEREAS THE LD AO HAS DISALLOW THE INTEREST WITHOUT ESTABLISHING THE NEXUS BETWEEN THE BORROWED FUNDS AND INVESTMENT IN SHARES ON THE CONTRARY, THE 'A' HAS ESTABLISH THE FACT THAT THERE IS NO NEXUS BETWEE N THE BORROWED FUND AND INVESTMENT IN SHARES AND ALSO THE 'A' FIRM IS HAVING THE INTEREST FREE FUNDS AND ITS INVESTMENT IN THE SHARES AND THE LD. CIT(A) HAS ERRE D IN SUSTAINING THE SAME. 2. THAT THE LD AO HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN NOT FOLLOWING ORDER OF HON'BLE BOMBAY HIGH COURT AS GIVEN IN THE CASE OF RELIANCE UTILITIES & POWER LTD 313 ITR 340 , WHICH IS AN AUTHORITY ON THE SUBJECT AND THUS IS BINDING AS SUBMITTED DURING THE COURSE OF HEARING AND THE LD. CIT (A) HAS ERRED IN SUSTAINING THE SAME. 3. THAT THE LD AO HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IS DISALLOWING THE INT EREST U/S 14A READ WITH SECTION RULE 8D OF THE I.TAX ACT OR IN OTHER WORDS NOT ALLOWING THE DISALLOWED INTEREST AND L D CIT(A) HAS ERRED IN SUSTAINING THE SAME. 2. IN THIS CASE, ORIGINAL ASSESSMENT WAS COMPLETED B Y THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT) AT RS. 2,01,16,644/- WHICH WAS REVISED AFTER GIVING EFFECT O F ORDER OF THE HONBLE ITAT DATED 23/9/2011 AT RS. 1,43,31,510/-. THE LD ASS ESSING OFFICER OBSERVED THAT THE HONBLE ITAT, JAIPUR BENCH IN ITA NO. 952/JP/2010 AND 902/JP/2010 HAD DIRECTED THE ASSESSING OFFICER TO E STABLISH THE NEXUS BETWEEN THE BORROWED FUND AND INVESTMENT IN SHARES A ND ACCORDINGLY ITA NO. 673/JP/2015 VIJAY INDUSTRIES VS DCIT 3 DISALLOWED THE INTEREST AS PER PROVISIONS OF SECTION 14A OF THE ACT. THE LD ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BE ING HEARD. THE AR OF THE ASSESSEE VIDE LETTER DATED 16/3/2013 SUBMITTED THAT THE ASSESSEE FIRM HAD NOT INVESTED ANY AMOUNT IN THE ACQUISITION OF T HE SHARES, THEREFORE, THERE IS NO OCCASION TO DETERMINE/ESTABLISHED THE N EXUS BETWEEN THE BORROWED FUND AND INVESTMENT IN SHARES. IT HAS GIVEN POSITION OF BORROWED FUND AND INVESTMENT UNDER THE VARIOUS HEADS AS UNDER:- S.NO. PARTICULARS AS ON 31/03/2005 31/03/2006 1.0 BORROWED FUNDS IN THE FORM OF:- PARTNERS CAPITAL 6149369.00 21980853.00 BANK LOAN-CC 8029868.00 10793432.00 BANK LOAN TERM LOAN 12281323.00 8848734.00 UNSECURED LOAN 16868432.00 24215910.00 TOTAL 43328992.00 65838929.00 2.0 INVESTMENT IN :- STOCK IN TRADE 21148408.00 12469092.00 DEBTORS 21791170.00 37068499.00 CASH & BANK 2295608.78 3529256.00 LOANS AND ADVANCES 21258567.03 4228414.00 TOTAL 57295261.00 78359135.00 IT IS FURTHER CLAIMED BY THE ASSESSEE THAT THE ENTI RE BORROWED CAPITAL REMAIN INVESTED IN OTHER ITEMS OF BALANCE SHEET AND NO PART THEREOF WAS INVESTED IN SHARES, THEREFORE, THERE WAS NO NEXUS BE TWEEN THE BORROWED FUND AND ITS INVESTMENT IN SHARES. HENCE NO AMOUNT CAN BE DISALLOWED UNDER THE PROVISIONS OF SECTION 14A OF THE ACT. IT IS FURTHER SUBMITTED THAT ITA NO. 673/JP/2015 VIJAY INDUSTRIES VS DCIT 4 INVESTMENT OF SHARES AT RS. 18,77,160/- WAS MADE IN A.Y. 1992-93 AND SUBSEQUENTLY IN THE RELEVANT ASSESSMENT YEAR THERE WERE INTEREST FREE FUND OF RS. 19,43,629/- TO THE ABOVE EXTENT, THEREF ORE, THE ASSESSEE HAS ESTABLISHED THE NEXUS BETWEEN THE INTEREST FREE FUND AVAILABLE AND THE INVESTMENT MADE THEREIN. AFTER CONSIDERING THE ASSE SSEES REPLY, THE LD ASSESSING OFFICER HELD THAT THE ASSESSEE HAD FAILED TO FURNISH DETAILS OF INVESTMENT MADE IN SHARES AND AVAILABILITY OF THE CASH AS ON FROM THE DATE OF INVESTMENT IN THE SHARES. IN ABSENCE OF SUC H DETAILS, THE NEXUS BETWEEN THE INVESTMENT IN SHARES AND AVAILABILITY OF FUND AS ON THE DATE CANNOT BE ASCERTAINED. SPECIFIC DETAILS REGARDING D ATE OF INVESTMENT IN SHARES AND AVAILABILITY OF CASH AS ON THE DATE HAS NOT BEEN FURNISHED BY THE ASSESSEE. UNDER THESE CIRCUMSTANCES, IT CANNOT BE ASCERTAINED THAT THE INTEREST FREE FUND WERE AVAILABLE TO THE ASSESSE E FOR INVESTMENT IN SHARES. HENCE, INTEREST ON UNSECURED LOAN HAD BEEN RIGHTLY DISALLOWED BY THE ASSESSING OFFICER ON PROPORTIONATE BASIS AS PER PROVISIONS OF SECTION 14A READ WITH SECTION 8D OF THE ACT FOR THE INVESTME NT IN SHARES, WHICH DERIVED EXEMPTED INCOME, BUT NO DISALLOWANCE HAS BEE N MADE IN THE COMPUTATION OF ASSESSMENT ORDER BY THE ASSESSING OF FICER IN ORDER DATED 30/3/2013. ITA NO. 673/JP/2015 VIJAY INDUSTRIES VS DCIT 5 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD ALS O CONFIRMED THE ORDER OF THE LD ASSESSING OFFICER BY OBSERVING THAT AFTER PERUSING THE ORIGINAL ASSESSMENT ORDER DATED 30/12/2008 AS WELL AS SUBMISS IONS MADE BY THE ASSESSEE, THE TOTAL ADDITION WAS MADE BY THE ASSESSI NG OFFICER AT RS. 11,26,190/- U/S 14A OF THE ACT ON THE GROUND THAT B ORROWED FUND HAD BEEN USED FOR MAKING INVESTMENT, THEREFORE, PROPORT IONATE EXPENSES HAD TO BE ALLOCATED AGAINST THE INCOME EARNED ON SUCH I NVESTMENT. THE LD ASSESSING OFFICER HAD CONSIDERED FOR THIS PURPOSE T HE INVESTMENT OF RS. 64,65,000/- MADE IN BUILDING AT HANUMAN NAGAR, JAIP UR AND IN SHARES OF RS. 18,77,160/- BY THE APPELLANT FOR WORKING OUT DIS ALLOWANCE U/S 14A OF THE ACT. IN SET ASIDE PROCEEDINGS U/S 143(3)/253 OF THE ACT, THE LD ASSESSING OFFICER HAD MADE DISALLOWANCES OF RS. 2,53 ,413/- ON INVESTMENT MADE BY THE APPELLANT IN SHARES U/S 14A OF THE ACT VIDE ORDER DATED 30/3/2013. HE FURTHER HELD THAT INTEREST FREE FUND HAD BEEN USED IN THE INVESTMENT OF SHARES WAS NOT FOUND CONVINCING TO HIM THAT THE ASSESSEES FUND WAS MIXED. THE APPELLANT HAD NOT PROVIDED DETAI LS OF SOURCE OF INVESTMENT IN SHARES ON DAY TO DAY BASIS BEFORE THE ASSESSING OFFICER IN SUPPORT OF ITS CLAIM WHEN THE INTEREST FREE INVESTME NT WERE OUT OF NON- INTEREST BEARING FUNDS, FOR WHICH HE RELIED ON THE DECISION IN THE CASE OF ITA NO. 673/JP/2015 VIJAY INDUSTRIES VS DCIT 6 DHANUKA & SONS VS. CIT 339 ITR 319 (CAL). HE FURTHER ANALYSED BALANCE SHEET FILED BEFORE HIM AS ON 31/3/1992, 31/3/1996 A ND 31/3/1997 AND HELD THAT THERE WAS INCREASE IN THE INVESTMENT AS WEL L AS INCREASE IN UNSECURED LOANS. THE CASE LAWS RELIED BY THE ASSESSEE WERE ALSO NOT FOUND APPLICABLE IN THE CASE OF ASSESSEE. HE FURTHE R RELIED ON THE DECISION IN THE CASE OF MAXOPP INVESTMENT LTD. & ORS VS. CIT 247 CTR (DEL) 162 AND HELD THAT THE INVESTMENTS ON WHICH TAX FREE INC OME GENERATED, THE ASSESSEE HAS TO PROPORTIONATELY DISALLOWED THE EXPEN SES. HE FURTHER RELIED ON THE DECISION IN THE CASE OF GODREJ & BOYCE MANUF ACTURING CO. LTD. VS. CIT 328 ITR 81 (BOM). HE FURTHER RELIED HONBLE DELHI ITAT (SPECIAL BENCH) DECISION IN THE CASE OF CHEMINVEST LTD. VS I TO 124 TTJ (DEL) SPECIAL BENCH 577. HE ALSO FOUND THE CASE LAWS REFER RED BY THE ASSESSEE I.E. CIT VS. RELIANCE UTILITIES & POWER LTD. 313 ITR 3 40 (BOM) IS DISTINGUISHABLE. RECENTLY THE HONBLE DELHI HIGH CO URT IN THE CASE OF CIT VS TAIKISHA ENGINEERING INDIA LTD. AFTER CONSIDERING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. REL IANCE UTILITIES & POWER LTD. (SUPRA) VIDE ORDER DATED 09/3/2015 HAS HE LD THAT DISALLOWANCE OF EXPENSES MADE U/S 14A OF THE IT ACT ON EXEMPT INC OME, IS VALID IF A.O. IS NOT SATISFIED WITH THE CLAIM MADE BY THE ASSESSEE . THE METHOD FOR COMPUTING SUCH DISALLOWANCE HAS BEEN PRESCRIBED UNDE R RULE 8D OF THE IT ITA NO. 673/JP/2015 VIJAY INDUSTRIES VS DCIT 7 RULES. IT WAS ALSO HELD THAT IF RULE 8D APPLIES, ASS ESSEES CLAIM THAT INTEREST IS NOT DISALLOWABLE ON GROUND OF OWN FUNDS IS NOT ACCEPTABLE. HE FURTHER RELIED ON THE DECISION IN THE CASE OF THE SO UTH INDIAN BANK LTD. VS. CIT IN ITA APPEAL NO. 189 OF 2011 ORDER DATED 22 ND JANUARY, 2014/105 DTR (KER) 299 (2014), THEREFORE, HE UPHELD THE ADDIT ION OF RS. 2,53,417/- U/S 14A OF THE ACT. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. ALL THE THREE GROUNDS OF APPEAL ARE AGAINST THE DISALLOWANCES MADE U/S 14A OF THE ACT. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS SHOWN INVESTMENT OF RS.18,77,160/- IN SHARES IN ITS BALANCE SHEET FOR T HE YEAR ENDED 31.03.2006, WHICH WAS MADE IN EARLIER YEARS FROM A.Y . 1992-93 TO 2001- 02. IN THE ORIGINAL ASSESSMENT THE LD ASSESSING OFF ICER MADE DISALLOWED OF RS. 2,53,416/-. IN APPEAL IT WAS DIRECTED BY THE LD CIT(A) TO THE LD ASSESSING OFFICER THAT BROUGHT CLARITY REGARDING TH E INCOME EARNED AND EXPENDITURE MADE FOR EARNING SUCH INCOME. THE HONBL E ITAT ALSO CONSIDERED THIS ISSUE VIDE ORDER DATED 23.09.2011 I N ITA NO. 902 AND 952/JP/10. AFTER CONSIDERING VARIOUS DECISIONS ON T HIS ISSUE, IT SET ASIDE TO THE ASSESSING OFFICER TO ESTABLISH THE NEXUS BETWEEN BORROWED FUND AND INVESTMENT IN SHARES AND WILL ACCORDINGLY DISALLOW TH E INTEREST. THE ITA NO. 673/JP/2015 VIJAY INDUSTRIES VS DCIT 8 ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THA T THERE IS NO NEXUS BETWEEN THE BORROWED FUNDS AND INTEREST FREE INVESTME NT THE ASSESSEE HAS SUBMITTED POSITION OF INVESTMENTS IN SHARES BEF ORE THE LD ASSESSING OFFICER AS WELL AS LD CIT(A) BUT BOTH THE AUTHORITIES HAVE NOT CONSIDERED THE EVIDENCES FURNISHED BEFORE THEM. IT IS FURTHER SUBMITTED THAT NO DISALLOWANCE U/S 14A CAN BE MADE WHERE NO DIVIDEND IS RECEIVED. THE LD CIT(A) HAS RELIED UPON THE DECISION IN THE CASE OF CHEMINVEST LTD. VS. ITO (SUPRA) WHERE IT WAS HELD THAT DISALLOWANCE U/S 1 4A CAN BE MADE EVEN NO DIVIDEND INCOME IS RECEIVED. THIS DECISION O F SPECIAL BENCH HAS BEEN OVERRULED BY HONBLE DELHI HIGH COURT VIDE ORD ER DATED 02.09.2015 REPORTED AT 378 ITR 0033 WHERE IT WAS HELD THAT THE E XPRESSION DOES NOT FORM PART OF TOTAL INCOME IN SEC. 14A ENVISAGES TH AT THERE SHOULD BE AN ACTUAL RECEIPT OF INCOME, WHICH WAS NOT INCLUDIBLE IN THE TOTAL INCOME, DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE O F DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME . IN OTHER WORDS, SEC. 14A WILL NOT APPLY IF NO EXEMPT INCOME IS RECEIVED O R RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. HE FURTHER RELIED ON THE FO LLOWING DECISIONS:- (I) CIT VS. HOLCIM INDIA (P.) LTD. (2014) 111 DTR 158 (DEL) ORDER DT. 05.09.2014. (II) CIT VS. SHIVAM MOTORS (P.) LTD. APPEAL NO. 88 O F 2014 (ALL.) ORDER DT. 05.05.2014 . ITA NO. 673/JP/2015 VIJAY INDUSTRIES VS DCIT 9 (III) CIT VS. CORRTECH ENERGY (P.) LTD. (2014) 372 I TR 0097 (GUJ.) ORDER DT. 24.03.2014. (IV) CIT VS. LAKHANI MARKETING INCL. (2014) 111 DTR 149 (P&H) ORDER DT. 02.04.2014 . (V) CIT VS. WINSOME TEXTILE INDUSTRIES LTD. (2009) 31 9 ITR 0204 (P&H) ORDER DT. 25.08.09 THE HONBLE SUPREME COURT IN CASE OF CIT VS. WALFORT SHARE & STOCK BROKERS PVT. LTD. 326 ITR 001 IN PARA 17 HAS OBSERVE D THAT FOR ATTRACTION OF SECTION 14A, THERE HAS TO BE A PROXIMATE CAUSE F OR DISALLOWANCE, WHICH IS ITS RELATIONSHIP WITH THE TAX EXEMPT INCOME. IN T HE PRESENT CASE, ASSESSEE HAS INTEREST FREE FUNDS AND THERE IS NO PR OXIMATE RELATION WITH THE INTEREST BEARING BORROWED FUNDS AND INVESTMENT I N SHARES. DURING THE REASSESSMENT PROCEEDINGS BEFORE THE LD ASSESSING OF FICER, THE ASSESSEE HAS SUBMITTED FUND POSITION AS ON 31/3/2009 AND IT IS A FACT THAT BORROWED FUND OF RS. 6.58 CRORES WERE ENTIRELY CONSUMED IN BU SINESS ASSETS OF RS. 7.86 CRORES. BEFORE THE LD CIT(A), IT WAS FURTHER SUB MITTED THAT THE ASSESSEE WAS HAVING RESERVE AND SURPLUS IN A.Y. 1999 -2000 AT RS. 48.32 LACS. FURTHER MAJOR PART OF INVESTMENT IS CARRY FOR WARDED FROM A.Y. 1992- 93. THE ASSESSEE HAD PROVIDED SUFFICIENT MATERIAL ON RECORD TO PROVE THAT NO BORROWED FUND IS UTILIZED IN MAKING INVESTMENT IN SHARES. THE REQUIREMENT OF THE ASSESSING OFFICER TO FURNISH THE DETAILS OF INVESTMENT IN SHARES AND AVAILABILITY OF CASH ON THE DATE OF INVE STMENT IN SHARES IS ITA NO. 673/JP/2015 VIJAY INDUSTRIES VS DCIT 10 NEITHER AS PER THE DIRECTION OF THE HONBLE ITAT NO R IT IS POSSIBLE TO PROVIDE SUCH INFORMATION CONSIDERING THE FACT THAT THE INVESTMENTS IN SHARES WERE MADE BETWEEN A.Y. 1992-93 TO A.Y. 2001-0 2 AND EVEN RULE 6F(5) OF THE INCOME TAX RULES, 1962 (IN SHORT THE RU LES) REQUIRES THE ASSESSEE TO KEEP AND MAINTAIN THE BOOKS OF ACCOUNTS FOR A PERIOD OF 6 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE LD AO HAS NOT BROUGHT ANY MATERIAL TO PROVE OTHERWISE AS HAS BEEN DIRECTED BY HONBLE ITAT, THEREFORE, HE PRAYED TO DELETE THE ADDITION. HE FURTHER PLACED RELIANCE ON THE FOLLOWING CASE LAWS:- (I) CIT VS. TAIKISHA ENGINEERING INDIA LTD. (2015) 3 70 ITR 338 (DEL.) (HC) (II) CIT VS. HDFC BANK LTD. (2014) 366 ITR 0505 (BOM .) (HC) (III) CIT VS. UTI BANK LTD. (2013) 215 TAXMAN 8 (GUJ .) (HC) (MAGZ.) (IV) CIT VS. SUZLON ENERGY LTD. (2013) 354 ITR 630 (GUJ.) (HC) (V) CIT VS. RELIANCE UTILITIES & POWER LTD. 313 ITR 3 40 (BOM.)(HC) (VI) CIT VS. HDFC BANK LTD. (2014) 366 ITR 0505 5. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORTE D THE ORDER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. AS PER COORDI NATE BENCHS DECISION DATED 23/09/2011 PASSED IN ITA NO. 902/JP/2010 AND 952/JP/2010 IN ASSESSEES OWN CASE, THE ISSUE HAS BEEN SET ASIDE IN FOLLOWING TERMS THE ITA NO. 673/JP/2015 VIJAY INDUSTRIES VS DCIT 11 A.O. SHOULD ESTABLISH THE NEXUS BETWEEN THE BORROWED FUND AND INVESTMENT IN SHARES AND WILL ACCORDINGLY DISALLOWED THE INTEREST. AT THE TIME OF SET ASIDE PROCEEDINGS BEFORE THE LD ASSESSI NG OFFICER, THE ASSESSEE HAS SUBMITTED FUND FLOW STATEMENT AS ON 31/3/2005 AN D 31/3/2006. THE ASSESSEE HAS BORROWED FUND AT RS. 6.58 CRORES, WHICH HAS BEEN UTILIZED IN STOCK IN TRADE, DEBTORS, CASH AND BANK AND LOAN ADV ANCES TO THE TUNE OF RS. 7.83 CRORES AS ON 31/3/2006. THE LD ASSESSING OF FICER HAS NOT ESTABLISHED ANY NEXUS BETWEEN THE INTEREST BEARING B ORROWED FUND AND INVESTMENT MADE ON THE BASIS OF FUND POSITION SUBMI TTED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. HE ASKED THE ASS ESSEE TO FILE THE DETAILS ON THE BASIS OF DAY TO DAY BASIS OF INVESTM ENT MADE IN SHARES AND ON PARTICULAR DATE, CASH AVAILABLE WITH THE ASSESSEE . IT IS UNDISPUTED FACT THAT THIS INVESTMENT IN SHARES AT RS. 18,77,160/- H AS BEEN MADE IN A.Y. 1992-93 TO 2001-02. THESE FACTS HAVE NOT BEEN CONTRO VERTED BY THE LOWER AUTHORITIES AS WELL AS DR DURING THE COURSE OF HEARI NG. DURING THE YEAR, THE ASSESSEE DOES NOT HAVE DIVIDEND INCOME AND NO I NVESTMENT HAS BEEN MADE DURING THE YEAR IN SHARES BUT ALL THE INVESTME NTS ARE CARRY FORWARDED FROM A.Y. 1992-93. THE LD CIT(A) RELIED ON THE DECISION OF ITAT DELHI (SPECIAL BENCH) IN THE CASE OF CHEMINVEST LTD . VS ITO (SUPRA) WHEREIN IT HAS BEEN HELD BY THE COORDINATE BENCH OF DELHI ITAT THAT IN ITA NO. 673/JP/2015 VIJAY INDUSTRIES VS DCIT 12 POSITION OF NO DIVIDEND INCOME, DISALLOWANCE CAN BE MADE BY THE ASSESSING OFFICER U/S 14A, WHICH HAS BEEN OVERRULED BY THE HONBLE DELHI HIGH COURT VIDE ORDER DATED 2/9/2015 AND HELD THAT THERE SHOULD BE ACTUAL RECEIPT OF INCOME FOR DISALLOWANCE U/S 14A OF THE AC T. THE OTHER ARGUMENTS OF THE ASSESSEE ALSO SUPPORT THAT THE ASS ESSEE HAS EXEMPT FUND PARTICULARLY RESERVE AND SURPLUS TO MAKE INVES TMENT IN THE SHARES. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES & POWER LTD. (SUPRA) IS SQUARELY APPLICABLE. IN ABSENC E OF DIRECT NEXUS BETWEEN THE INTEREST BEARING FUND AND INVESTMENT IN SHARES, NO DISALLOWANCE CAN BE MADE BY THE ASSESSING OFFICER U/ S 14A. ACCORDINGLY, WE REVERSE THE ORDER OF THE LD CIT(A) AND ALLOW THE AS SESSEES APPEAL. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/06/2016. SD/- SD/- DQYHKKJR VH-VKJ-EHUK (KUL BHARAT) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 17 TH JUNE, 2016 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S VIJAY INDUSTRIES, ALWAR. 2. IZR;FKHZ @ THE RESPONDENT- THE DCIT, CIRCLE-1, ALWAR. ITA NO. 673/JP/2015 VIJAY INDUSTRIES VS DCIT 13 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 673/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR