MAFATLAL INDUSTRIES LTD, MUMBAI V. ASST CIT 6(3), MUMBAI

ITA 6963/MUM/2012

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 3570 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 18-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule of consistency; Tax effect; Earning of tax free income; Revenue expenditure; Rule 8D
• Section: 43B; 143(3); 14A; 64; 43; 48; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, HON'BLE JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER ITA NO. 6085/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963/MUM/2012 (A.Y. 2007-08) M/s. Mafatlal Industries Limited Mafatlal House, Backbay Reclamation H.T. Parekh Marg, Mumbai - 400020 PAN: AAACM2813L v. Addl. CIT – 6(3) Aayakar Bhavan, M.K. Road Mumbai - 400020 (Appellant) (Respondent) ITA.NO. 4369/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited Kaledonia, Office No.3 6th Floor, Sahar Road Andheri (E), Mumbai - 400069 PAN: AAACM2813L v. Addl. CIT – 6(3) Aayakar Bhavan, M.K. Road Mumbai - 400020 (Appellant) (Respondent) ITA NO. 6357/MUM/2011 (A.Y. 2006-07) ITA NO. 6855/MUM/2012 (A.Y. 2007-08) ITA NO. 4596/MUM/2013 (A.Y. 2008-09) 2 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited Addl. CIT – 6(3) Room No. 522, 5 th Floor Aayakar Bhavan, M.K. Road Mumbai - 400020 v. M/s. Mafatlal Industries Limited Mafatlal House, 4 th Floor Backbay Reclamation H.T. Parekh Marg, Mumbai - 400020 PAN: AAACM2813L (Appellant) (Respondent) Assessee by : Arati Vissanji & Rohit Adlja Department by : Nimesh Yadav Date of Hearing : 22.06.2022 Date of Pronouncement : 25.07.2022 O R D E R PER S. RIFAUR RAHMAN (AM) 1. These cross appeals are filed by the assessee and revenue against different orders of Learned Commissioner of Income Tax (Appeals)-12, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 16.06.201, 01.08.2012 and 28.03.2013 for the A.Y. 2006-07, 2007-08 and A.Y. 2008-09 respectively. 2. Since the issues raised in all these appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and 3 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited disposed off by this consolidated order. We are taking Appeal in ITA.No. 6085/MUM/2011 for Assessment Year 2006-07 as a lead appeal. 3. Assessee has raised following concise grounds in its appeal: - “1. Disallowance of interest of Rs.2,58,04,542/- u/s.36(1)(iii) of the Income Tax Act, 1961 (the Act): Disallowance of interest of Rs.2,58,04,542/- made by the Assessing Officer u/s.36(1)(iii) of the Act requires to be deleted in its entirety. Without prejudice to the above and in the alternate 1.1 Disallowance of interest on advance of Rs.3,91,15,000/-considered as due from Mafatlal Engineering Industries Limited: No disallowance of interest of Rs.58,67,250/- being the attributable interest on advance of Rs.3,91,15,000/- is required to be made keeping in view such disallowance deleted by the AO vide Order dated 29th December, 2009 passed U/s.143(3) r.w.s. 254 of the Act for the assessment year 1994-95 pursuant to the Order of the Hon'ble Income Tax Appellate Tribunal dated 26th February, 2008 restoring the matter to AO for fresh decision. 1.2 Disallowance of balance interest of Rs.1,99,37,292/- (i.e., Rs.2,58,04,542 - Rs.58,67,250): in any view of the matter, disallowance of interest if any, has to be quantified based on the following applicable facts of each of the loans/ advances outstanding. (a) Disallowance of interest, if any, has to be by taking average cost of borrowings which is 8.65% per annum and not at 15% per annum applied by the AO. (b) Disallowance of interest, in any view of the matter, cannot exceed interest expenditure as may be finally considered as allowable. 4 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited 2. Disallowance of expenses of Rs. 10,27,350/- u/s.14A of the Act: 2.1 no part of expenditure is required to be disallowed against administrative and managerial expenses. Without prejudice to the above and in the alternate 2.2 such disallowance has to be restricted only to 2% of dividend income of Rs. 17,15,060/- received during the year under appeal. 3. Disallowance of Pooja expenses of Rs.1,29,928/ disallowance of Pooja expenses of Rs.1,29,928/ requires to be deleted in its entirety. 4. Disallowance of payment to relatives of deceased employees of Rs. 75,275/ disallowance of payment to relatives of deceased employees of Rs. 75,275/- requires to be deleted in its entirety. 5. Addition to closing stock of finished goods of Textile Division of Rs.25,00,000/-: 5.1 addition of Rs.25,00,000/- representing enhancement made to the value of closing stock of finished goods of Textile Division requires to be deleted in its entirety. Without prejudice to the above and in the alternate 5.2 consequent to confirmation of said addition, in assessing income for the year, the value of opening stock of finished goods of Textile Division as of 01 April, 2006 is to be enhanced by the value assigned to such goods as of 31 March, 2006 by Rs.25,00,000/- being addition made in assessing the income of the appellant for the previous year ended 31 March, 2006 relevant to assessment year 2006-2007. 6. Disallowance of unpaid sales tax of Rs.8,27,366/- u/s.43B of the Act. disallowance of unpaid sales tax of Rs.8,27,366/- u/s. 43B of the Act requires to be deleted in its entirety. 5 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited 7. Addition to income from four flats at Sea Face Park of Rs.1,00,000/ the rental income in respect of four flats at Sea Face Park is to be assessed at Rs.5,552/- being the rateable value returned by the appellant and not at Rs.1,00,000/-, being the amount quantified by him on an estimated basis, under the head "Income from house property". 8. Non granting of deduction of deferred revenue expenditure (i.e., voluntary retirement compensation) of Rs. 13,63,58.401/- u/s. 35DDA of the Act. deduction is to be granted u/s. 35DDA of the Act of deferred revenue expenditure in respect of voluntary retirement compensation of Rs.13,63,58,401/-, representing 1/5th of the total expenditure incurred.” 4. With regard to Ground No. 1 which is in respect of disallowance of interest u/s. 36(1)(iii) of the Act, Ld. AR submitted that assessee is engaged in the business of manufacturing and trading of textiles. The Board for Industrial and Financial Reconstruction (BIFR) had declared the Company, a sick industrial undertaking within the meaning of section 3(1)(0) of Sick Industrial Companies (Special Provisions) Act, 1985 on 19.09.2000. It sanctioned a scheme for rehabilitation of the Company on 30.10.2002, issued on 15.11.2002 and appointed Industrial Development Bank of India as the Monitoring Agency. 5. Ld. AR submitted that disallowance of interest is made in relation to the outstanding advances granted by the Company prior to year 2000 by 6 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited treating the said advances as non-business advances. Particulars of the advances on which interest is disallowed are stated at Page No. 2 para 4.1. of the assessment order. Save and except increase in the outstanding balance of cash credit as compared to the immediate preceding year, there is no increase in the balance as of 31.03.2006 as compared to 31.03.2005 in relation to other outstanding loans. Total interest expenditure incurred during the year is ₹.35,86,15,000/- out of which disallowance of interest of ₹.8,95,84,878/-is made by the Assessing Officer u/s. 43B of the Act. The total disallowance of interest made is ₹.2,58,04,542/-, the particulars whereof are stated at Page No. 9, Para 4.8 of the order of the Assessing Officer. 6. Disallowance of ₹.2,58,04,542/- includes as below: - (a) Disallowance of ₹.58,67,250/- made on loan granted by the Company to Mafatial Engineering Industries Limited which was considered as non-business advance in the assessment order for the assessment year 1985-86 dated 14-03-1988 (Refer Page No. 6 and 7 of the AO's Order). Note: Such disallowance was deleted by the AO vide Order dated 29th December, 2009 passed U/s.143(3) r.w.s. 254 of the Act (in pursuance to the order dated 26.02.2008 of the Hon. ITAT setting aside the matter to the file of AO for fresh adjudication) for the assessment year 1995-96 (Refer Page No. 2 and 3, Para No. 6). Hence, the said disallowance be deleted in its entirety. (b) Disallowance of interest of Rs. 41,62,500/- on loan granted to Mafatlal Fine Spinning Mfg. Co. Ltd which was amalgamated with the 7 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited Company in the preceding years. (Refer Page 7 of the Order of the AO). Hence, the said disallowance be deleted in its entirety, as it represents amount due from own division. (c) The balance disallowance of Rs.1,57,74,792/- (i.e. Rs.2,58,04,542 - Rs.58,67,250 - Rs.41,62,500) on other outstanding advances as stated at Page No. 2 para 4.1 of the order of the AO represents disallowance made by the AO by applying interest rate of 15% on such advances, which is excessive. 7. Ld. AR brought to our notice that similar ground which assessee has raised before the Coordinate Bench for Assessment Years i.e., A.Y.2001- 02 to 2005-06. Copies of the orders for the Assessment Years 2001-02 to 2005-06 are placed on record. Ld. AR submitted that in the immediately preceding assessment year in ITA.No. 5203/Mum/2011 dated 20.04.2020 the Coordinate Bench has considered and adjudicated the issue and he brought to our notice Para No. 2.2 of the order. 8. Ld. DR relied on the orders of the Assessing Officer. 9. Considered the rival submissions and material placed on record, we observed that similar issue was considered and adjudicated by the Coordinate Bench in assessee’s own case for the A.Y. 2005-06 and decided the issue in favour of the assessee. While holding so the Coordinate Bench held as under: - 8 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited “2.2 Ground Nos. 1 to 11 of the appeal are concerned with disallowance of interest u/s 36(1)(iii) for Rs.257.82 Lacs, being estimated interest @15% on interest free loans advanced by the assessee amounting to Rs.1718.80 Lacs to 9 of its subsidiaries / associate group companies. The details of the same has been extracted in the chart submittedbyLd.AR. The Ld. CIT(A) confirmed the same relying upon appellate orders for AYs 1997-98 to 2004-05. This issue, as done in latest Tribunal order for AY 2004-05 ITA Nos. 5202/Mum/2011 & ors., common order dated 20/09/2019, would stand remitted back to the file of Ld. Assessing Officer for fresh adjudication in the light of earlier orders of the Tribunal as well as in the light of judgement of Hon’ble Apex Court in S.A.Builders(288ITR1).These grounds stand allowed for statistical purposes. 10. Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee’s own case for the A.Y. 2005-06 and also following the principle of “Rule of consistency” we remit back this issue to the file of the Assessing Officer for fresh adjudication in the light of earlier orders of the Tribunal. Ground raised by the assessee is allowed for statistical purpose. 11. With regard to Ground No. 2 which is in respect of Disallowance administrative expenditure u/s. 14A of the Act, Ld. AR submitted that assessee had earned dividend income of ₹.17,15,060/ during the year under consideration. The value of investments held as of 31 st March, 2006 and 31 st March, 2005 is ₹.19,574,53 lakhs and ₹.19,574.18 lakhs respectively. There is no movement in the value of investments held 9 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited during the year under appeal vis a vis the preceding year, save and except investment of ₹.76,000/- in 8.75% Tax free US 64 Bonds. The Assessing Officer had made disallowance of administrative expenses of ₹.97,87,000/- u/s. 14A of the Act by applying Rule 8D(2)(i) of I.T. Rules. Rule 8D is not applicable for the year under reference. On appeal before the Ld.CIT(A) the said disallowance was restricted to ₹.10,27,350/- vide the order of the Ld.CIT(A) dated 16-06-2011 under appeal, by following the order for the preceding year, wherein disallowance made by the Assessing Officer, being 15% of the value of investments from which dividend income is received, was upheld by the Ld. CIT (A). The expenditure incurred during the year is attributable towards manufacturing of textiles and for earning of rental income, as evident from audited financial statements. Further Ld.AR submitted in respect of Legal Proposition as (a) No disallowance of administrative expenditure. (b) Alternatively, the said disallowance be restricted to 2% of dividend income earned of ₹.17,15,060/. 12. Ld. AR relied on Order dated 08.01.2013 of the Hon'ble Bombay High Court in the case of CIT v. Godrej Agrovet Ltd in income tax appeal no. 934 of 2011 dated 08.01.2013 (Para No. 4) wherein it is held that 10 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited disallowance u/s. 14A of the Act is restricted to 2% of exempt income and also the decision of the ITAT in assessee’s own case for the A.Y. 2005-06 and Coordinate Bench has restored this matter to the file of the Assessing Officer by following the Hon. ITAT Order dated 20-09-2019 (Page No. 26, Para No. 16 to 18) for assessment year 2004-05. 13. Ld. DR relied on the orders of the Assessing Officer. 14. Considered the rival submissions and material placed on record, we observed that similar issue was considered and adjudicated by the Coordinate Bench in assessee’s own case for the A.Y. 2005-06 and decided the issue as under: - “2.7 Ground Nos. 18 to 21 are related with disallowance u/s 14A. The assessee earned exempt income of Rs.13.47 Lacs and submitted that no expenditure was incurred to earn the same. However, Ld.AO estimated the disallowance @15% of year-end investments of Rs.68.37 Lacs and computed disallowance of Rs.10.25 Lacs. The Ld. CIT(A) confirmed the same. The said issue would stand restored back to the file of Ld.AO on similar lines as done in paras 16 to 18 of the Tribunal order for AY2004-05. The grounds stand allowed for statistical purposes.” 15. Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee’s own case for the A.Y. 2005-06 and also following the principle of “Rule of 11 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited consistency” we remit back this issue to the file of the Assessing Officer for fresh adjudication in the light of earlier orders of the Tribunal. Ground raised by the assessee is allowed for statistical purpose. 16. With regard to Ground No. 3 and 4 which are in respect of disallowance of Pooja expenses and disallowance of payment of relatives of deceased employees respectively. Ld. AR submitted that identical issues were adjudicated by the Coordinate Bench in assessee’s own case for the A.Y. 2005-06 in ITA.No. 5203/Mum/2011 dated 20.04.2020 and prayed that the same may be adopted for the assessment year under consideration. 17. Ld. DR vehemently supported the orders of the Assessing Officer. 18. Considered the rival submissions and material placed on record, we observed that similar issues were considered and adjudicated by the Coordinate Bench in assessee’s own case for the A.Y. 2005-06 and decided the issues in favour of the assessee. While holding so the Coordinate Bench held as under: - “2.4 Ground No.13 is related with disallowance of Puja Expenses for Rs. 1.11 Lacs. The same was disallowed on the reasoning that the same was not incurred for business purposes. The Ld. CIT(A) 12 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited confirmed the same. This ground would stand allowed in view of the decision of Tribunal for AY 2004-05, wherein at para-9, the expenditure has been allowed relying upon the earlier orders of the Tribunal. Respectfully following the same, this addition stands deleted. 2.5 Ground No. 14 is related with deduction of payment to relatives of the deceased employee for Rs.0.36 Lacs. This issue stand decided in assessee’s favor in terms of para-11 of Tribunal’s order for AY2014-15.” 19. Since the issues are exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee’s own case for the A.Y. 2005-06 and also following the principle of “Rule of consistency” we delete the addition made by the Assessing Officer. Ground Nos. 3 and 4 raised by the assessee are allowed. 20. With regard to Ground No. 5 which is in respect of addition to closing stock of finished goods of textile division, Ld. AR submitted that for the immediately preceding assessment year (i.e., A.Y. 2005-06) identical issue has been considered and decided by the Tribunal in ITA.No. 5203/Mum/2011 dated 20.04.2020. Ld. AR prayed that the same may be adopted for the year under consideration. 21. Ld. DR relied on the orders of the Assessing Officer. 13 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited 22. Considered the rival submissions and material placed on record, we observed that similar issue was considered and adjudicated by the Coordinate Bench in assessee’s own case for the A.Y. 2005-06 and held that any addition made to the closing stock should also be reflected in the corresponding value of opening stock. While holding so the Coordinate Bench held as under: - “2.3 Ground No.12 is related with addition of Rs.25 Lacs arising out of valuation of closing stock. It transpired that the assessee valued its stock at lower of cost or net realizable value. The Ld. AO opined that as done in earlier years, the finished goods of textile division should be at market value and therefore, the valuation should constitute selling price and excise duty, In the absence of any information forthcoming from the assessee, an adhoc addition of Rs.25 Lacs was made on account of excise duty to arrive at market value of finished goods. The Ld. CIT(A)confirmed the same following the order of Tribunal for AY2003-04. As noted by Ld. CIT(A), this issue would stand decided against the assessee. However, as held in Tribunal order for AY 2004-05, the effect of change in value of closing stock has got to be reflected in the corresponding opening balance of the stock. We order so. This ground stands partly allowed.” 23. Respectfully following the above said decision and also following the principle of “Rule of consistency” we direct that effect of change in value of closing stock has get reflected in the corresponding opening balance of the stock. Ground raised by the assessee is allowed. 14 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited 24. With regard to Ground No. 6 which is in respect of disallowance u/s. 43B of the Act of unpaid sales tax, Ld. AR submitted that unpaid sales tax of ₹.8.27.366/- is not debited to Profit and Loss Account. This finding is recorded vide Pg. No. 8, Para No. 84. Ld. AR submitted that disallowance cannot be made u/s. 43B of the Act if expenditure is not debited. In support of the above contention she relied on the following case law: - (i). CIT Vs Noble & Hewitt (I) (P) Ltd [2008] 166 Taxman 48 (Delhi) (Para 6) (ii). CIT Vs. Everest Litho Press [2006] 285 ITR 297 (Madras) 25. Ld. DR vehemently supported the orders of the Assessing Officer. 26. Considered the rival submissions and material placed on record. After considering the facts and circumstances of the case and also the case law relied by the Ld. AR, in our view this issue should be verified by the Assessing Officer afresh, accordingly, we remit this issue to the file of the Assessing Officer for denovo adjudication. Ground raised by the assessee is allowed for statistical purpose. 27. With regard to Ground No. 7 which is in respect of addition to income from four flats at Sea Face Park, Ld. AR submitted that in 15 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited assessee’s own case the Hon'ble ITAT has remitted the issue to the file of Assessing Officer for fresh consideration in the light of judgement of the Hon'ble Bombay High Court in the case of Tiptop Typography. 28. Ld. DR vehemently supported the orders of the Assessing Officer. 29. Considered the rival submissions and material placed on record, we observed that similar issue was considered and adjudicated by the Coordinate Bench in assessee’s own case for the A.Y. 2005-06 and decided as under: - “22.10 Ground No.26 is concerned with Income from House Property for Rs.1.00 Lacs. This issue would stand remitted back to the file of Ld. AO, on similar lines, in terms of paras 36 to 40 of Tribunal order for AY2004-05. 30. Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee’s own case for the A.Y. 2005-06 and also following the principle of “Rule of consistency” we remit back this issue to the file of the Assessing Officer for fresh adjudication in the light of earlier orders of the Tribunal. Ground raised by the assessee is allowed for statistical purpose. 16 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited 31. With regard to Ground No. 8 which is in respect of non granting of deduction of deferred revenue expenditure (i.e. voluntary retirement compensation) u/s. 35DDA, Ld. AR submitted that the claim for granting of deduction of voluntary retirement compensation expenditure u/s.35DDA of the Act was made before the Ld.CIT(A) and the same was not adjudicated by the Ld.CIT(A). Ld. AR further submitted that the similar claim of ₹.1,06,64,274/-, being 1/5th of expenditure incurred of ₹.5,33,21,371/- for AY 2004-05 and ₹.12,56,94,127/- being 1/5th of expenditure incurred of ₹.62,84,70,633/ for AY 2005-06 was granted while assessing total income for AY 2004-05 and 2005-06 respectively, as evident vide Para 9 of the order(s) of assessment passed us 143(3) for the said years (relevant extract of assessment orders for AY 2004-05 and 2005-06 are placed on record). Ld. AR prayed that similar deduction of ₹.13,63,58,401/- (i.e, ₹.1,06,64,274 + ₹.12,56,94,127/-) be granted for the assessment year under consideration. 32. Ld. DR relied on the orders of the Authorities below. 33. Considered the rival submissions and material placed on record, we observe from the record that Assessing Officer has allowed the similar 17 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited claim for the A.Y. 2004-05. Accordingly, we direct the Assessing Officer to allow ₹.12,56,94,127/- being 1/5th of expenditure incurred of ₹.62,84,70,633/ for AY 2005-06 in line with the Assessment Order for A.Y. 2004-05. Therefore, we are inclined to remit the issue to the file of the Assessing Office. Ground raised by the assessee is allowed for statistical purpose. 34. In the result, appeal filed by the assessee is allowed as indicated above. 35. Coming to revenue’s appeal in ITA.No. 6357/Mum/2011, revenue has raised following grounds in its appeal: - 1. "On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in holding that disallowance u/s. 14A could not be computed by applying Rule 8D relying on the decision of jurisdictional High Court in the case of M/s. Godrej & Mfg. Ltd. vs. DCIT [2010] 328 ITR 81 (Bom) without appreciating fact that the said decision had been challenged by the Revenue by filing SLP in the Supreme Court." 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating income of 85,12,751/- under the head 'Income from other sources' inspite of the fact that it contained service charges from Air-conditioning and other services received, being integral part of the let out property and thus treating 'Income from house property' as Income from other sources." 18 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited 36. Ground No.1 is similar to Ground No. 2 of grounds of appeal raised by the assessee for the A.Y. 2006-07 and the decision taken therein shall apply mutatis-mutandis to the appeal of the revenue also. Accordingly, ground raised by the revenue is allowed for statistical purpose. 37. With regard to Ground No. 2 which is in respect of Assessment of recovery of charges for providing air conditioning and other services under the head Income from house property instead and in place of Income from Other sources, Ld. AR submitted that in assessee’s own case for the A.Y. 2005-06, it is held that recovery of charges for providing air conditioning and other services is to be assessed under the head Income from other sources. Copy of the order is placed on record. 38. Ld. DR relied on the orders of the Assessing Officer. 39. Considered the rival submissions and material placed on record, we observed that similar issue was considered and adjudicated by the Coordinate Bench in assessee’s own case for the A.Y. 2005-06 and decided the issue in favour of the assessee. While holding so the Coordinate Bench held as under: - 19 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited “3.2 The computation of income would reveal that assessee earned receipts from air-conditioning and other receipts of Rs.140.17 Lacs and incurred expenditure against the same for Rs.131.33 Lacs. The net income i.e. Rs.8.83 Lacs was offered to tax as income from other sources. It transpired that the assessee reflected rental income from 3 properties i.e. Mafatlal Centre, Mafatlal House and Sea face park which was offered as Income from House Property. The assessee also entered into utility agreement for providing services to various occupants of Mafatlal Centre and Mafatlal House. Accordingly, air- conditioning charges and charges for other services were recovered. The assessee was incurring expenditure towards electricity, water charges, repairs etc. to provide the said services. The net charges thus recovered were offered to tax as Income from other sources. However, Ld. AO opined that activity of letting out by the assessee with service charges would be one and the same and therefore, the service income was to be brought to tax as Income from House Property. Accordingly, the receipts of Rs.140.17 Lacs were added as Income from House Property, against which standard deduction of 30% was allowed to the assessee. In other words, the expenditure of Rs.131.33 Lacs claimed by the assessee was disregarded and against the same, a standard deduction of 30% was allowed to the assessee. The Ld. CIT(A) held that there were two sets of income derived under two different heads. Therefore, rentals from property should be taxed as Income from House Property whereas the amount received as service charges were to be taxed as Income from other sources. Against the said decision, the department was in further appeal before this Tribunal wherein the appeal got dismissed due to low tax effect. The assessee, in the cross-objections, is aggrieved by non-adjudication of Ground Nos.20 to 22 of the appeal as raised before Ld.CIT(A). 3.3 We find that issue of head under which service charges would be assessable has already attained finality. As a logical consequence, the assessee should get deduction of expenditure incurred to earn such income. Therefore, we direct Ld. AO to examine assessee’s claim of deduction of expenditure in the light of adjudication by Ld. CIT(A). The cross-objection stands allowed for statistical purposes.” 40. Since the issue is exactly similar and grounds as well as the facts are also identical, respectfully following the above decision in assessee’s 20 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited own case for the A.Y. 2005-06 and also following the principle of “Rule of consistency” we observe that this issue has already attained finality. Therefore, we direct the Assessing Officer to follow the direction of earlier bench decision in A.Y. 2005-06. Accordingly, Ground raised by the revenue is dismissed. 41. In the result, appeal filed by the Revenue is partly allowed. ASSESSMENT YEAR - 2007-08 42. Coming to assessee’s appeal in ITA.No. 6963/Mum/2012 (A.Y. 2007-08), assessee has raised following grounds in its appeal: - 1. Re: Disallowance out of interest U/s.36(1)(iii) of the Income Tax Act, 1961 (the Act) of Rs. 2,57,25,715/-: In the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ought to have held that the disallowance made by the AO requires to be deleted in its entirety. Without prejudice to the above and in the alternate 1.1 Disallowance of interest on Rs.6,68,65,000/-considered as due from Mafatlal Engineering Industries Limited: In the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ought to have held that (i) no disallowance is required to be made keeping in view of the following applicable facts and accordingly, 21 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited disallowance of Rs.1,00,29,750/- being attributable interest on Rs.6,68,65,000/ is required to be deleted: (a) Disallowance made for assessment year 1994-1995 was deleted by the AO vide order dated 29th December, 2009 passed U/s.143(3) r.w.s. 254 of the Act in giving effect to the order of the Hon'ble Income Tax Appellate Tribunal for assessment year 1994-1995. b) The said amount was written off in the financial year prior to the year under appeal; 1.2 Disallowance of balance interest of ₹.1,56,95,965/- (₹.2,57,25,715/-- ₹.1,00,29,750/-): In the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ought to have held that in any view of the matter, disallowance of interest, if any, has to be quantified based on the applicable facts of each of the loans / advances outstanding. (a) Disallowance of interest, if any, has to be by taking average cost of borrowings which is 8.65% per annum and not at 15% per annum applied by the AO. (b) Disallowance of interest, in any view of the matter, cannot exceed interest expenditure as may be finally considered as allowable. 2. Re: Disallowance U/s.14A of the Act Rs.10,45,98,000/-: 2.1 In the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ought not to have held that disallowance U/s. 14A of the Act has to be at 50% of the disallowance made by the AO. 2.2 Interest Expenditure: (i) In the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ought to have: (a) held that no disallowance of interest expenditure can be made U/s. 14A of the Act. Without prejudice to the above and in the alternate 22 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited (b) Held that disallowance of interest expenditure, if any, has to be made net of disallowance, if any, made of interest expenditure U/s. 36(1)(iii)/43B of the Act. 2.2 Other Expenditure: (a) In the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ought to have held that no part of expenditure is required to be disallowed against administrative and managerial expenses; Without prejudice to the above and in the alternate (b) such disallowance has to be restricted only to the variable components of administrative and managerial expenses. 3. Re: Closing stock of finished goods of Textile Division made Addition of Rs.25,00,000/-: 3.1 In the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ought to have directed the AO for deletion of the addition made of Rs.25,00,000/- representing enhancement made to the value of closing stock of finished goods of a Textile Division on the basis of such addition made in the hands of the amalgamating company. Without prejudice to the above and in the alternate 3.2 In the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ought to have held that consequent to confirmation of said addition, in assessing income for the year, the value of opening stock of finished goods of the Textile Division as of 01.04.2006 is to be enhanced by the value assigned to such goods as of 31st March, 2006 by Rs.25,00,000/- being addition made in assessing the income of the appellant for the previous year ended 31st March, 2006 relevant to Assessment year 2006-2007. Re: Disallowance U/s.43B of the Act-Rs.9,51,35,534/-: In the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ought to have directed the AO for deletion of the disallowance made U/s.43B of the Act representing interest on funded interest on term loans from 23 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited scheduled banks which had accrued but was not payable as of year end. 5. Re: disallowance of Capital work-in-progress ₹.1,23,83,000/- 6. Revenue expenditure: Employees contribution to PF/EPF/ESIC ₹. 2,55,68,663/- 7. Re: Deduction of deferred revenue expenditure-Rs. 13,65,58,401/-:. The Learned Commissioner of Income Tax (Appeals) ought to have directed the AO to grant deduction of amount of deferred revenue expenditure in respect of VRS scheme of Rs. 13,65,58,401/-.” 43. Ground Nos. 1, 2, 3 & 7 are similar to Ground No. 1, 2, 5 & 8 of grounds of appeal raised by the assessee for the A.Y. 2006-07 respectively, therefore, the decision taken therein shall apply mutatis- mutandis to the appeal for the A.Y. 2007-08. We order accordingly. 44. Ground No. 4 in respect of disallowance u/s. 43B of interest of funded interest term loan from scheduled bank, Ld. AR submitted that this ground is not pressed, Accordingly, the same is dismissed as not pressed. 45. With regard to Ground No. 5 which is in respect of disallowance of capital work in progress, brief facts are, the assessee had accounted ₹.1,23,83,000/- to the Profit and Loss Account under the head "Capital Work-in-Progress Written off. The said expenditure represents 24 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited expenditure incurred on spare parts, stores, labour charges and other materials for the purpose of fabrication of machinery and equipment for the unit's uninstalled machinery written off in the accounts consequent to the status of the said machinery and equipment found as unviable for putting into operation. The said expenditure incurred did not bring out creation of any profit earning apparatus. Hence, it represents expenditure incurred on revenue field. Ld. AR submitted that loss on abandonment/write off of capital work in progress is an allowable business expenditure expenditure u/s. 28/37(1) of the Act. 46. In support of the above contentions she relied on the following case law: - (i). Tamilnadu Magnesite Ltd Vs. ACIT [2018] 407 ITR 543 (Madras HC) (Refer Pg. Nos.6 and 7, Para Nos. 25 and 26) (ii). Binani Cement Ltd Vs. CIT [2016] 380 ITR 116 (Calcutta HC) (Refer Pg. No.11 Para Nos. 11 to 13) (iii). CIT Vs. Idea Cellular Ltd [2016] 76 taxmann.com 77 (Bombay HC) (Refer Pg. No. 14, Para Nos. 9 and 10) (iv). CIT Vs. Graphite India Ltd [1996] 221 ITR 420 (Calcutta HC) (Refer Pg. No. 18). 47. Ld. DR relied on the orders of the Authorities below. 25 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited 48. Considered the rival submissions and material placed on record, we observe from the record that assessee has incurred certain expenditure on spare parts etc., for fabrication of machinery and debited the same in work-in-progress. Subsequently it was found that these expenditures on the machinery are not fruitful since those machineries were already abandoned. Therefore, these expenses are incurred on the abandonment machineries or on abandoned project. The issue is whether those expenditures are to be considered as Revenue or Capital. In CIT v. Graphite India Ltd (supra) case, the Hon'ble High Court held that expenditure incurred on new facility subsequently abandoned at the work- in-progress stage was allowable as incurred wholly or exclusively for the purpose of business. The relevant ratio is given below: - “So far as question No. 4 is concerned, the Tribunal recorded the finding that the assessee spent an amount of Rs. 56,665 as project expenditure. The expenditure represented fees paid to Engineering India Ltd. in connection with the petro-chemical project report. The amount was paid by the assessee in order to explore the possibility of setting up of a petro-chemical project which could provide a captive plant for manufacture of raw material at the assessee's own factory which would help the assessee in getting continuous supply of raw material even during periods of acute shortage. In fact, the project did not materialize. The Income-tax Officer as well as the Commissioner of Income-tax (Appeals), therefore, held that the expenditure was capital in nature. However, the Tribunal found that the expenditure did not result in bringing into existence any capital asset of enduring in nature. The Tribunal further found that the decision of the Calcutta High Court in the case of Hindusthan Aluminium Corporation Ltd. v. CIT [1986] 159 ITR 673 26 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited was applicable and following that decision held that the expenditure was allowable as incurred wholly and exclusively for the purpose of the assessee's business. Therefore, the Tribunal deleted the disallowance. The case relied upon by the Tribunal was subsequently followed in the case of Asiatic Oxygen Ltd. v. CIT [1991] 190 ITR 328 (Cal). This court in the said case reiterated the view taken in Hindusthan Aluminium Corporation Ltd.'s case [1986] 159 ITR 673 (Cal). According to us, question No. 4 in this reference stands concluded by the aforementioned two decisions. We, accordingly, answer question No. 4 in the affirmative and in favour of the assessee and against the Revenue.” 49. Respectfully following the same, we are inclined to allow the ground raised by the assessee. 50. With regard to Ground No. 6 which is in respect of disallowance of Employee’s Contribution to PF/FPF/ESIC u/s. 36(1) (va) of the Act, Ld. AR drawn our attention to Note No. 3 of notes forming a part of statement of total income (refer Compilation furnished vide letter dated 10.06.2022, Pg. No. 70), wherein it is submitted without prejudice that though employees contribution to PF/FPF/ESIC of Rs 2,55,68,663/- is suo motu offered for disallowance u/s. 36(1)(va) of the Act (as the same is paid after the due date prescribed under the relevant statutes), the said contribution is paid before the due date of filing of return of income (as 27 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited certified by the tax auditors vide Clause 21 of tax audit report) and hence, deduction be granted u/s. 36(1)(va). 51. Ld. AR submitted that no disallowance can be made u/s. 36(1)(va) where assessee made contribution to statutory funds after due date as specified in Explanation to section 36(1)(va) but before due date of filing of return of income. In support of the above contention he relied on the following case law: - (i). Prin. CIT Vs. Hind Filter Ltd [2018] 90 taxmann.com 51 (Bombay HC) (Refer Pg. No.23, Para Nos. 10 and 11) (ii). CIT Vs. Ghatge Patil Transports Ltd [2015] 53 taxmann.com 141 (Bombay HC) (Refer Pg. No. 28, Para Nos. 15 and 16) ‘ (iii). CIT Vs. Alom Extrusions Ltd [2009] 185 Taxman 416 (SC) (Refer Pg. Nos. 32 to 34, Para Nos. 9 and 10) 52. Ld. AR submitted that Explanatory memorandum to Finance Act, 2021 proposing amendment in section 36(1)(va) is applicable prospectively from 01.04.2021. Legal decisions wherein it is held that amendment to the provisions of Section 36(1)(va) vide Finance Act, 2021 is prospective in nature and he relied on the following case law: - (i). Devarayapatana Thimmappa Paramesha Vs. DCIT [2022] 137 taxmann.com 62 (Bang. ITAT) (Refer Pg. No.37, Para No.8) (ii). Flying Fabrication Vs. DCIT [2021] 133 taxmann.com 84 (Delhi ITAT) (Refer Pg. No. 43 to 45, Para Nos. 5 to 8) 28 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited 53. Ld. DR relied on the order of the Authorities below. 54. Considered the rival submissions and material placed on record. This issue is settled in favour of the assessee that the amendment made in the provisions of section 36(1)(1)(va) of the Act is prospective in nature and the various courts have held that the respective payments made before filing the return of income is allowable expenditure u/s. 43B of the Act. Therefore, respectfully following the same, we are inclined to allow the grounds raised by the assessee. 55. In the result, appeal of the assessee is partly allowed as indicated above. 56. Coming to the appeal filed by the Revenue in ITA.No. 6855/Mum/2012 for the A.Y. 2007-08, revenue has raised following grounds in its appeal: - 1. "On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in holding that Rule 8D computation of disallowance to be made u/s. 14A was inapplicable for the instant A.Y. 2007-08 thereby not appreciating that the Department has filed SLP before the Hon'ble Supreme Court against the decision of the Hon'ble Bombay High Court in Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT." 29 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited 2. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating that the receipts from air conditioning and other services was in effect composite and ancillary to the primary intention of letting out of the premises and therefore were receipts taxable together with the property rental income to be taxed under the head 'income from house property. Ld. CIT(A) erred to not appreciate that the ratio decendi in CIT vs. Shambhu Investment Pvt. Ltd. (Cal) [249 ITR 47] (affirmed by SC) was applicable to the facts and circumstances of this case." 57. Ground Nos. 1 and 2 are similar to Ground No. 1 and 2 of grounds of appeal raised by the revenue for the A.Y. 2006-07 respectively, therefore, the decision taken therein shall apply mutatis-mutandis to the appeal for the A.Y. 2007-08. We order accordingly. 58. In the result appeal filed by the Revenue is partly allowed. ASSESSMENT YEAR - 2008-09 59. Coming to the appeal filed by the assessee in ITA.No. 4369/Mum/2013 for the A.Y. 2008-09, assessee has raised following grounds in its appeal: - “1. Disallowance of interest of Rs.1,55,62,679/- u/s.36(1)(iii) of the Income Tax Act, 1961 (the Act): disallowance of interest of Rs.1,55,62,679/- made by the AO u/s.36(1)(ii) of the Act requires to be deleted in its entirety. Without prejudice to the above and in the alternate 30 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited 1.1 in any view of the matter, disallowance of interest if any, has to be quantified based on the following applicable facts of each of the loans/ advances outstanding (a) Disallowance of interest, if any, has to be by taking average cost of borrowings which is 8.65% per annum and not at 15% per annum applied by the AO. (b) Disallowance of interest, in any view of the matter, cannot exceed interest expenditure as may be finally considered as allowable. 2. Disallowance of payment to relatives of deceased employees of Rs.36,000/- disallowance of payment to relatives of deceased employees of Rs. 36,000/- requires to be deleted in its entirety. 3. Addition to closing stock of finished goods of Textile Rs.25,00,000/-: 3.1 addition of Rs.25,00,000/- representing enhancement made to the value of closing stock of finished goods of Textile Division requires to be deleted in its entirety. Without prejudice to the above and in the alternate 3.2 consequent to confirmation of said addition, in assessing income for the year, the value of opening stock of finished goods of Textile Division as of 01st April, 2008 is to be enhanced by the value assigned to such goods as of 31st March, 2008 by Rs.25,00,000/- being addition made in assessing the income of the appellant for the previous year ended 31st March, 2008 relevant to assessment year 2008-2009.” 60. Ground Nos. 1, 2 and 3 are similar to Ground Nos. 1, 4 & 5 of grounds of appeal raised by the assessee for the A.Y. 2006-08 respectively, therefore, the decision taken therein shall apply mutatis- mutandis to the appeal for the A.Y. 2008-09. We order accordingly. 31 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited 61. In the result, appeal filed by the assessee is allowed. 62. Coming to the appeal filed by the Revenue in ITA.No. 4596/Mum/2013 for the Assessment Year 2008-09, revenue has raised following grounds in its appeal: - “1. "On the facts and circumstances of case and in law the Ld. CIT(A) erred in directing the AO to assess the rental income received by the assessee as 'Income from other sources' as against 'Income from House Property', in total disregard to the ratio laid down by the Hon'ble Calcutta High Court in the case of CIT vs Shambhu Investment Pvt. Ltd. [249 ITR 47] and affirmed by the Hon'ble Supreme Court." 63. This ground is similar to Ground No. 2 of grounds of appeal raised by the revenue for the A.Y. 2006-07 and the decision taken therein shall apply mutatis-mutandis to the appeal for the A.Y. 2008-09 also. We order accordingly. 64. In the result, appeal filed by the Revenue is dismissed. Order pronounced in the open court on 25 th July, 2022. Sd/- Sd/- (AMIT SHUKLA) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 25.07.2022 Giridhar, Sr.PS 32 ITA NO. 6085 & 6357/MUM/2011 (A.Y. 2006-07) ITA.NO. 6963 & 6855/MUM/2012 (A.Y. 2007-08) ITA.NO. 4369 & 4596/MUM/2013 (A.Y. 2008-09) M/s. Mafatlal Industries Limited Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum