ADDL CIT RG 2(3), MUMBAI V. RAYMOND APPAREL LTD, MUMBAI

ITA 720/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83613 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 03-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TRIPURA SUNDARI
• Keywords: Business income; Earning of tax free income
• Section: 143(3); 234B; 14A; 11

Judgement Text

, INCOME TAX APPELLATE TRIBUNALMUMBAI BENCHE S I MUMBAI , . ! ! ! ! . ' ' ' ' . ! ! ! ! . # # # # , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & DR. S.T.M. PAVALAN,JUDICIAL MEMBER ./ ITA/720/MUM/2012 # # # # % % % % / AY 2008-09 ./ ITA/255/MUM/2012 # # # # % % % % / AY 2008-09 ( &' / APPELLANT) ( ()&' / RESPONDENT) #*+ #*+ #*+ #*+ , , , , / ASSESSEE BY : SHRI NITESH JOSHI - , / REVENUE BY : SMT. TRIPURA SUNDARI # # # # - -- - + + + + / DATE OF HEARING : 08/08/2014 ./% - + / DATE OF PRONOUNCEMENT : 27/08/2014 # # # # , 1961 - -- - 254(1) +0+ +0+ +0+ +0+ 1 1 1 1 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM # # # # : CHALLENGING THE ORDER 04.11.2011OF THE CIT(A)-6,MUM BAI AND ASSESSEE AND THE ASSESSING OFFICER(AO) HAVE FILED CROSS APPEALS.THE ASSESSEE H AS RAISED FOLLOWING GROUNDS OF APPEAL: ITA/255/MUM/2012-AY.2007-08: 1) (A) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN UPHOLDING THE ACTION OF THE LEARNED ADDITIONAL COMMISSIONER OF INCOME-TAX (HERE INAFTER REFERRED TO AS 'THE ASSESSING OFFICER') IN DISALLOWING A SUM OF RS.31,74,000/- BY APPLYING THE PROVISIONS OF SECTION 14A OF THE INCOME TAX ACT, 1961 (THE ACT) READ WITH RULE 8D OF THE INCOME TAX RULES, 1962 (THE RULES). (B) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN HOLDING THAT THE ASSESSING OFFICER HAD RECORDED HIS DISSATISFACTION WITH REGARD TO THE CLAIM MADE BY THE APPELLANT THAT NO EXPENDITURE IS INCURRED TO EARN EXEMPT INCOME. (C) THE APPELLANT SUBMITS THAT ITS 99.87% INVESTMEN T IS ONLY IN ONE GROUP COMPANY VIZ. COLORPLUS FASHIONS LTD. AND ACCORDINGLY, NO EXPENDITURE HAD B EEN INCURRED IN RELATION TO EARNING EXEMPT INCOME AND THEREFORE THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DISALLOWING A SUM OF RS.31,74,000/- BEING 0.5% OF THE AVERAGE INVESTMENT AS PER RULE 8D(III) OF THE RULES. 2)WITHOUT PREJUDICE TO WHAT IS STATED ABOVE, THE AP PELLANT SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE RESTRICTED TH E DISALLOWANCE UNDER SECTION 14A OF THE ACT TO A SUM OF RS.11,663/- BASED ON SCIENTIFIC AND RATIONAL BASIS. 3WITHOUT PREJUDICE TO WHAT IS STATED ABOVE, THE APP ELLANT SUBMITS THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE ACTI ON OF THE ASSESSING OFFICER OF INCLUDING THE INVESTMENT IN IT'S SUBSIDIARY COMPANY I.E. COLORPLU S FASHIONS LTD. AMOUNTING TO RS.6339.65 LAKHS ACIT 2(3), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 VS # RAYMOND APPAREL LTD. NEW HIND HOUSE, NAROTAM MORARJEE MARG, BALLARD ESTATE, MUMBAI-400001 PAN:AAACJ2732K RAYMOND APPAREL LTD. NEW HIND HOUSE, NAROTAM MORARJEE MARG, BALLARD ESTATE, MUMBAI-400001 VS # ACIT 2(3), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 2 ITA NO. 255 & 720/MUM/2012 RAYMOND APPAREL LTD. IN COMPUTING DISALLOWANCE UNDER SECTION 8D(III). 4)THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE LEVY OF INTEREST UNDER SECTION 234B OF THE ACT. 6) THE ASSESSING OFFICER BE DIRECTED TO: (A) DELETE THE DISALLOWANCE MADE UNDER SECTION 14A AMOUNTING TO RS.31,74,000/-; (B) WITHOUT PREJUDICE TO WHAT IS STATED ABOVE, TO R ESTRICT THE DISALLOWANCE TO RS.11,663/- UNDER SECTION 14A OF THE ACT. (C) WITHOUT PREJUDICE TO WHAT IS STATED ABOVE, NOT TO CONSIDER INVESTMENT IN COLOURPLUS FASHIONS FOR WORKING OUT THE DISALLOWANCE UNDER SECTION 14A AND RESTRICT THE DISALLOWANCE TO RS.4,045/-. (D) TO DELETE THE INTEREST LEVIED UNDER SECTION 234 B OF THE ACT. AND TO MODIFY THE ASSESSMENT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. 7)EACH OF THE ABOVE GROUNDS OF APPEAL ARE INDEPENDE NT AND WITHOUT PREJUDICE TO EACH OTHER. 8)THE APPELLANT CRAVES LIBERTY TO ADD, TO ALTER AND /OR AMEND THE GROUNDS OF APPEAL AS AND WHEN GIVEN. ITA/720/MUM/2012-AY.2007-08: GROUNDS OF APPEALS FILED BY THE AO READ AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING RELIED TO THE ASSESSEE TO THE EXTENT IMPUGNED IN TH E GROUNDS ENUMERATED BELOW: 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING INTEREST COMPONENT CALCULATED AS PER RULE 8D(2)(II) IN LINE WITH JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF M/S GODREJ & BOYCE MFG. CO. LTD. FOR CA LCULATION OF DISALLOWANCE U/S 14A. 2.FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE DECISION OF THE CIT(A) MAY BE SET ASIDE AND THAT OF THE AO RESTORED. ITA/720/MUM/2012 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF MANUFAC TURING AND TRADING OF GARMENTS AND APPARELS,FILED ITS RETURN OF INCOME ON 24.09.2008 D ECLARING INCOME OF RS.18,90, 36, 616/-.THE AO COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ON 2 2.11.2010 DETERMINING THE INCOME OF THE ASSESSEE AT RS.21,04,05,620/-.THE ONLY ISSUE IN BOT H THE APPEALS PERTAINS TO DISALLOWANCE MADE U/S 14A OF THE ACT.DURING THE YEAR, THE ASSESSEE HAD EA RNED DIVIDEND OF RS.4,517/- AND HAD CLAIMED THE SAME AS EXEMPT INCOME. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, THE ASSESEE WAS SHOW CAUSED AS TO WHY PROPORTIONATE EXPENDITURE SHOULD N OT BE DISALLOWED U/S 14A OF THE ACT R.W.RULE 8D OF THE INCOME TAX RULES,1962(RULES).IN RESPONSE THERETO, THE ASSESSEE,VIDE LETTER DATED 05. 07. 2010 SUBMITTED ITS REPLY.AFTER CONSIDERING THE SAME THE AO HELD THAT THE EXPLANATION FURNISHED BY THE ASSESSEE WAS NOT ACCEPTABLE,THAT IT HAS SHOWN I NCOME THAT DID NOT FORM PART OF TOTAL INCOME, THAT PROVISIONS OF SECTION 14 A WERE APPLICABLE.REL YING UPON THE ORDER OF TRIBUNAL IN THE CASE OF DAGA CAPITAL MANAGEMENT(ITA8507/MUM/93)HE MADE A DI SALLOWANCE OF RS.213.69 LAKHS U/S. 14A R.W. R.8D OF THE RULES. 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).BEFORE HIM,IT WAS SUBMITTED THAT TH E COMPANY HAD EQUITY SHARE CAPITAL OF RS.200.00 LACS AND RESERVES AND SURPLUS OF RS.8,113 .67 LACS AS ON 31.03 . 2008,THAT IT HAD NOT BORROWED ANY AMOUNT FOR MAKING INVESTMENT IN EARNIN G TAX FREE INCOME,THAT THE COMPANY HAD ALSO NOT INCURRED ANY INTEREST EXPENSES DURING THE YEAR TO EARN TAX FREE DIVIDEND INCOME,THAT THE LOAN FUNDS WERE AVAILED FOR SPECIFIC PURPOSES OF AC QUISITION OF PLANT AND MACHINERY OR FOR WORKING CAPITAL AS PER THE TERMS AND CONDITIONS LAID DOWN B Y THE LENDERS AND HAD NOT AND COULD NOT HAVE BEEN USED FOR INVESTMENT PURPOSES,THAT VARIOUS EXPE NSES HAD BEEN INCURRED IN THE COURSE OF CARRYING ON BUSINESS ACTIVITY AND NO SPECIFIC EXPEN SES HAD BEEN INCURRED BY THE COMPANY IN RELATION TO EXEMPT INCOME,THAT THE DIVIDEND DISTRIB UTED BY THE COMPANY HAD ALREADY SUFFERED TAX IN THE HANDS OF THE COMPANY WHILE DISTRIBUTING DIVI DEND INCOME,THAT IT HAD NOT MADE ANY BORROWING FOR INVESTMENT IN SHARES OF COMPANY FOR E ARNING TAX FREE INCOME,THAT SECTION 14A OF 3 ITA NO. 255 & 720/MUM/2012 RAYMOND APPAREL LTD. THE INCOME TAX WAS NOT APPLICABLE.,THAT THE ENTIRE INTEREST EXPENSES WAS DIRECTLY RELATED TO NON- EXEMPT INCOME ,THAT THE SAME OUGHT NOT TO BE CONSID ERED FOR WORKING OUT DISALLOWANCE UNDER RULE 8D,THAT IF THE INTEREST EXPENSES AND THE INVES TMENT IN THE SUBSIDIARY COMPANY NAMELY, COLOUR PLUS FASHIONS LTD.(CPFL) WERE NOT CONSIDERED THE DISALLOWANCE UNDER RULE 8D WOULD WORK OUT TO RS.4,045/- 3.1 AFTER CONSIDERING THE ORDER OF THE AO AND THE ARGUM ENTS OF THE ASSESSEE,THE FAA HELD THAT THE ASSESSEES EXPLANATION THAT NO EXPENDITURE WAS INCU RRED TOWARDS EARNING EXEMPT INCOME WAS NOT SATISFACTORY,THAT FINANCIAL COST,ADMINISTRATIVE CO ST AND VERY IMPORTANTLY SALARY OF DIRECTORS AND TOP MANAGEMENT PERSONNEL WHO TOOK DECISIONS REGARDING M AKING INVESTMENTS WERE DEFINITELY ATTRIBUTABLE TOWARDS EARNING OF EXEMPT INCOME,THAT THE AO GAVE OPPORTUNITY TO THE ASSESSEE, THAT HE WAS NOT SATISFIED WITH THE EXPLANATION OF THE AS SESSEETHAT NO AMOUNTS WAS ATTRIBUTABLE TOWARDS EARNING OF EXEMPT INCOME,THAT THE AO HAD RECORDED H IS DISSATISFACTION BY STATING THAT THE ASSESSEES SUBMISSIONS WERE CAREFULLY CONSIDERED,TH AT HE HAD MENTIONED THAT THE EXPLANATION GIVEN BY THE ASSESSEE WAS NOT ACCEPTABLE ON THE FAC TS,THAT THE AOS ACTION TO APPLY RULE 8D WAS CORRECT.HE FURTHER HELD THAT THE AO HAD MADE MISTAK E IN COMPUTATION OF DISALLOWANCE AS PER RULE 8D BY CONSIDERING INTEREST EXPENDITURE FOR THE PURP OSE OF RULE 8D (2) (II),THAT THE ASSESSEE HAD DEMONSTRATED THAT IT HAD BORROWED LOANS FROM VARIOU S BANKS FOR SPECIFIC PURPOSE LIKE PURCHASE OF PLANT, MACHINERY OTHER ASSETS WORKING CAPITAL FOR B USINESS,PURCHASE OF RAW MATERIAL,PACKING MATERIAL, STORES & SPARES,ETC,THAT THE OTHER INTERE ST AND FINANCE CHARGES HAD ALSO BEEN INCURRED TOWARDS BUSINESS OF MANUFACTURING OF READYMADE GARM ENTS,THAT AS PER BALANCE SHEET AS ON 31,03. 2008,IT HAD MADE INVESTMENT OF RS.63.47 CRORES,THAT IT HAD SHARE CAPITAL AT 36.30 CRORES AND RESERVE AND SURPLUSES AT RS.81.13CRORES,THAT THE LO ANS WERE FOR THE SPECIFIC PURPOSE OF THE BUSINESS,THAT THE INTEREST EXPENDITURE WAS DIRECTLY RELATED TOWARDS BUSINESS INCOME WHICH WAS TAXABLE,THAT INTEREST FOR THE PURPOSE OF RULE 8D(2) (II) WAS ,THEREFORE, REQUIRED TO BE TAKEN AT NIL,THAT THE SUBMISSION MADE BY THE ASSESSEE THAT T HE INVESTMENT MADE IN SUBSIDIARY COMPANY NAMELY CPFL,AMOUNTING TO 6339.65,LACS SHOULD BE EXC LUDED FROM THE AVERAGE VALUE OF INVESTMENT FOR THE PURPOSE OF RULE 8D(2)(III) WAS FOUND TO BE INCORRECT,THAT THE DIVIDEND FROM CPFL,THE SUBSIDIARY COMPANY OF THE APPELLANT,WOULD BE EXEMPT WHEN DIVIDEND IS DECLARED AND DIVIDEND DISTRIBUTION TAX WOULD BE PAID BY THE SUBS IDIARY COMPANY,THAT THE INVESTMENT IN CPFL APPEARED ON THE FIRST DAY AND LAST DAY OF THE PREVI OUS YEAR OF THE BALANCE-SHEET OF THE ASSESSEE,THAT THE INVESTMENT IN CPFL WAS REQUIRED TO BE CONSIDERE D FOR THE PURPOSE OF RULE 8D(2)(III). FINALLY, HE HELD THAT THE AMOUNT OF DISALLOWANCE U/R. 8D WAS TO BE RESTRICTED TO RS.31.74 LACS I.E: 0.5% OF THE AVERAGE VALUE OF INVESTMENT.HE DELETED ADDITION OF RS 181.95 LACS OUT OF THE TOTAL ADDITION MADE BY THE AO. 4. BEFORE US,AUTHORISED REPRESENTATIVE(AR)SUBMITTED TH AT THAT THE ASSESSEE-COMPANY HAD RECEIVED RS. 4517/-ONLY AS DIVIDEND,THAT PROVISIONS OF RULE 8D WERE NOT APPLICABLE,THAT THE AO HAD NOT RECORDED SATISFACTION ABOUT THE WORK GIVEN BY THE A SSESSEE, THAT ONLY AFTER REJECTING THE EXPLANATION OF THE ASSESSEE HE COULD HAVE INVOKED T HE PROVISIONS OF THE ACT, THAT THE ASSESSEE HAD NOT INCURRED ANY EXPENDITURE,THAT INVESTMENT MADE B Y THE ASSESSEE IN CPFL & J.K.INVESTORES WERE STRATEGIC INVESTMENTS,AS SAME WERE MADE IN THE GROUP COMPANIES.HE REFERRED TO CASES OF GODREJ & BOYCE MANUFACTURING CO. LTD.(328ITR 81),RE LIANCE INDUSTRIES LTD.(339 ITR 632), SHAPOORJI PALLONJI AND CO. LTD.(318 ITR 417), GLENM ARK PHARMACEUTICAL LTD.(351 ITR 359).HE REFERRED TO CASES OF GARWARE WALL ROPES(ITA/5408/MU M/2012-AY.2009-10,DATED 15.01.2014) AND J.M.FINANCIAL LTD.(ITA/4521/2012-AY.2009-10,DTD .26.03.2014) AND CONTENDED THAT INVEST - MENT NOT YIELDING EXEMPT INCOME SHOULD BE EXCLUDED FROM THE COMPUTATION OF DISALLOWANCE, THAT MOST OF THE INVESTMENT WERE MADE FOR BUSINESS PURPO SES,THAT REMAINING INVESTMENT WOULD BE NO MORE THAN RS. 4 LAKHS, THAT THE FAA HAD CONFIRMED D ISALLOWANCE OF RS.31.74 LAKHS.CASES OF SHIVAM MOTORS AND CORRTECH ENGERGY PVT.LTD. OF HON BLE HIGH COURTS OF ALLAHABAD AND GUJARAT 4 ITA NO. 255 & 720/MUM/2012 RAYMOND APPAREL LTD. (INCOME TAX APPEAL NO.88OF 2014)AND(TAX APPEAL NO.2 39 OF 2014) RESPECTIVELY,WERE ALSO RELIED UPON BY THE AR.DEPARTMENTAL REPRESENTATIVE (DR)STAT ED THAT AS PER THE RULES NO EXCLUSION COULD BE MADE FOR STRATEGIC INVESTMENT, THAT POTENTIALITY OF INVESTMENT HAD TO BE SEEN, THAT WHEN ADMINISTRATIVE/ MANAGERIAL AND CLERICAL EXPENSES,DE CISION ABOUT INVESTMENT COULD NOT BE MADE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD RECEIVED DIVIDEND OF RS.4,17 DURING TH E YEAR UNDER CONSIDERATION,THAT ON ITS OWN IT HAD CALCULATED THE DISALLOWANCE OF RS.11,663/- U/S. 14A R.W.R.8D OF THE RULES,THAT THE FAA HAD DELETED THE ADDITION OF RS. 181.95 LAKHS AND HAD CO NFIRMED THE BALANCE ADDITION OF RS.31.74 LACS, THAT THE AO HAD FILED APPEAL AGAINST THE DELETED OF THE DISALLOWANCE WHEREAS THE ASSESSEE HAS CHALLENGED THE ORDER OF THE FAA FOR CONFIRMING THE DISALLOWANCE OF RS.31.74 LAKHS.WE FIND THAT THE FAA HAS DELETED THE ADDITION BECAUSE HE WAS OF THE OPINION THAT RULE 8D (2) (II) WAS NOT PROPERLY APPLIED BY THE AO. HE FOUND THAT INTEREST EXPENSES WERE RELATED TO THE BUSINESS OF THE ASSESSEE AND NOT TO THE INVESTMENT THAT YIELDED EXE MPT INCOME.IN OUR OPINION,NO INTEREST DISALLOWANCE CAN BE MADE IF THE ASSESSEE UTILISES B ORROWED FUNDS FOR PURPOSES OTHER THAN INVESTMENT.IN THE CASE OF GLENMARK PHARMACEUTICAL L TD. (SUPRA)THE HONBLE BOMBAY HIGH COURT HELD AS UNDER: THE TRIBUNAL HAS ARRIVED AT A FINDING OF FACT THAT NO EXPENDITURE WAS INCURRED FOR EARNING THE EXEMPT INCOME AS THE INVESTMENT WERE MADE FROM ITS OWN FUNDS AND NOT BORROWED FUNDS. THE REVENUE HAS NOT BEEN ABLE TO SHOW HOW THE FINDING O F FACT ARRIVED AT BY THE TRIBUNAL THAT NO EXPENSES WERE INCURRED TO EARN THE DIVIDEND INCOME IS EITHER ARBITRARY OR PERVERSE. IN VIEW OF THE FINDING OF FACT, QUESTION (A) DOES NOT RAISE ANY QU ESTION OF LAW AND IS, THEREFORE, DIS- MISSED.(351ITR359) IN THE MATTER UNDER APPEAL THE FAA HAS GIVEN A FIND ING OF FACT THAT THE ASSESSEE HAD BORROWED LOANS FROM VARIOUS BANKS FOR SPECIFIC PURPOSE LIKE PURCHASE OF PLANT, MACHINERY OTHER ASSETS WORKING CAPITAL FOR BUSINESS,PURCHASE OF RAW MATERI AL,PACKING MATERIAL, STORES & SPARES,ETC,THAT THE OTHER INTEREST AND FINANCE CHARGES HAD ALSO BEE N INCURRED TOWARDS BUSINESS OF MANUFACTURING OF READYMADE GARMENTS,THAT THE LOANS WERE FOR THE S PECIFIC PURPOSE OF THE BUSINESS,THAT THE INTEREST EXPENDITURE WAS DIRECTLY RELATED TOWARDS B USINESS INCOME WHICH WAS TAXABLE.DR COULD NOT CONTROVERT THE FINDING GIVEN BY HIM.THEREFORE,C ONFIRMING HIS ORDER WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO AND HOLD THAT INTER EST EXPENDITURE INCURRED BY THE ASSESSEE WAS NOT HIT BY THE PROVISIONS OF RULE 8D (2)(II)OF THE RULES. ITA/255/MUM/2012: 6. NOW WE WOULD DEAL WITH THE APPEAL OF THE ASSESSEE.F IRST EFFECTIVE GROUND IS ABOUT PROPORTIONATE DISALLOWANCE MADE U/S.14A.WE FIND THAT THE AO HAD C ALLED FOR EXPLANATION FROM THE ASSESSEE,BEFORE INVOKING THE PROVISIONS OF SECTION 14A R.W.R.8D.DURING THE ASSESSMENT PROCEEDINGS, THE AO HAD SHOW CAUSED THE ASSESSEE, AS TO WHY PROPORTIONATE EXPENDITURESHOULD NOT BE DISALLOWED U/S.14 A OF THE ACT.NOT ONLY THIS HE CONSIDERED THE REPLY FILED BY THE ASSESSEE AND ONLY THEN INVOKED THE PROVISIONS OF THE ACT FOR MAKING PROPORTIONATE DISALLOWANCE. THEREFORE,WE ARE OF THE OPINION THAT THE AO HAD REC ORDED HIS SATISFACTION.USING OF WORDS I AM SATISFIED IS NOT A MUST-WHAT IS REQUIRED BY THE AC T IS THE SATISFACTION MUST BE THERE BEFORE INVOKING THE PROVISIONS OF SECTION 14A.IN OUR OPINI ON OBJECTION RAISED BY THE AR IN THIS REGARD CANNOT BE ACCEPTED. 6.1. NOW,WE WOULD LIKE TO DISCUSS THE MERITS.WE FIND THA T THE FAA HAS HELD THAT INVESTMENT IN CPFL APPEARING ON FIRST AND LAST DAY OF THE YEAR HA D TO BE CONSIDERED FOR DISALLOWANCE.WE FIND THAT REASON FOR INCLUSION OF SAID AMOUNT IS NOT GIV EN BY THE FAA.SECONDLY,IN THE CASES OF GARWARE WALL ROPES AND J.M. FINANCIAL LTD.(SUPRA)THE TRIBUN AL HAS LAID DOWN CERTAIN PRINCIPLES ABOUT THE INVESTMENT MADE FOR STRATEGIC INVESTMENT BY AN ASSE SSEE.IT IS ALSO A FACT THAT THE ASSESSEE ITSELF HAD 5 ITA NO. 255 & 720/MUM/2012 RAYMOND APPAREL LTD. DISALLOWED RS.11,663/- IN ITS WORKING OF 14A DISALL OWANCE THAT WAS CLAIMED TO RATIONAL AND SCIENTIFIC.CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION,INCLUDING THE WORKING OF DISALLOWANCE MADE BY THE ASSESSEE AND FO LLOWING THE DECISIONS OF GARWARE WALL ROPES WE HOLD THAT THE DISALLOWANCE SHOULD BE RESTR ICTED TO RS.11,663/- ONLY.EFFECTIVE GROUND OF APPEAL FILED BY THE ASSESSEE STANDS ALLOWED,IN PART AS WE ALLOW THE ALTERNATE GROUND TAKEN BY IT. 7. SECONS EFFECTIVE GROUND IS ABOUT INTEREST LEVIED U/ S.234B OF THE ACT.IN OUR OPINION SAME IS CONSEQUENTIAL IN NATURE.HENCE,NEEDS NO ADJUDICATION . AS A RESULT,APPEAL FILED BY THE AO STANDS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 2+3#*+ - #+ - + 45 6 # *+ - 1+37 - + 45. ORDER PRONOUNCED IN TH E OPEN COURT ON 27TH,AUGUST,2014 . 1 - ./% 9 :# 27 VXLR VXLR VXLR VXLR , 201 4 / - 0 ; SD/- SD/- ( . ! ! ! ! . ' ' ' ' . ! ! ! ! . # # # # / DR.S.T.M. PAVALAN ) ( / RAJENDRA ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, :# / DATE: 27.08.2014 1 1 1 1 - -- - (+< (+< (+< (+< =<%+ =<%+ =<%+ =<%+ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / &' 2. RESPONDENT / ()&' 3. THE CONCERNED CIT(A)/ > ? , 4. THE CONCERNED CIT / > ? 5. DR D BENCH, ITAT, MUMBAI / <@0 (+# , . . . 6. GUARD FILE/ 0 2 )<+ )<+ )<+ )<+ (+ (+(+ (+ //TRUE COPY// 1# / BY ORDER, A / 4 DY./ASST. REGISTRAR , /ITAT, MUMBAI