The DCIT, Circle-4(1)(2), Ahmedabad V. Venus Infrastructure & Developers Ltd., Ahmedabad

ITA 727/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6074 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 31-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALBINEES TIRKEY
• Keywords: Business income; Earning of tax free income; Source of fund; Commercial expediency
• Section: 14A; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 727/AHD/2015 & C.O. NO. 64/AHD/15 (ASSESSMENT YEAR: 2010-11) D.C.I.T., CIRCLE-4(1)(2), AHMEDABAD VENUS INFRASTRUCTURE & DEVELOPERS LIMITED 801, BROADWAY BUSINESS CENTRE, OPP. MAYORS BUNGLOW, NR. LAW GARDEN, ELLISBRIDGE, AHMEDABAD- 380006 V/S V/S VENUS INFRASTRUCTURE & DEVELOPERS LIMITED 801, BROADWAY BUSINESS CENTRE, OPP. MAYORS BUNGLOW, NR. LAW GARDEN, ELLISBRIDGE, AHMEDABAD-380006 D.C.I.T., CIRCLE-4(1)(2), AHMEDABAD (APPELLANT) (RESPONDENT) ITA. NO: 1916/AHD/2015 & C.O. NO. 151/AHD/15 (ASSESSMENT YEAR: 2011-12) D.C.I.T., (OSD), CIRCLE-8, AHMEDABAD VENUS INFRASTRUCTURE & DEVELOPERS LIMITED 801, BROADWAY BUSINESS CENTRE, OPP. MAYORS V/S V/S VENUS INFRASTRUCTURE & DEVELOPERS LIMITED 801, BROADWAY BUSINESS CENTRE, OPP. MAYORS BUNGLOW, NR. LAW GARDEN, ELLISBRIDGE, AHMEDABAD-380006 D.C.I.T., (OSD), CIRCLE-8, AHMEDABAD ITA NO. 727 & C.O. 64/AHD/2015 & OTHERS . A.YS. 201 0-11 & 2011-12 2 BUNGLOW, NR. LAW GARDEN, ELLISBRIDGE, AHMEDABAD- 380006 (APPELLANT) (RESPONDENT) ITA. NO: 1969/AHD/2015 (ASSESSMENT YEAR: 2011-12) VENUS INFRASTRUCTURE & DEVELOPERS LIMITED 801, BROADWAY BUSINESS CENTRE, OPP. MAYORS BUNGLOW, NR. LAW GARDEN, ELLISBRIDGE, AHMEDABAD- 380006 V/S VENUS INFRASTRUCTURE & DEVELOPERS LIMITED 801, BROADWAY BUSINESS CENTRE, OPP. MAYORS BUNGLOW, NR. LAW GARDEN, ELLISBRIDGE, AHMEDABAD-380006 PAN: AAHCS6254J APPELLANT BY : SHRI ALBINEES TIRKEY, SR. D.R. RESPONDENT BY : SHRI DHIREN SHAH, A.R. ( )/ ORDER DATE OF HEARING : 20 -02-201 8 DATE OF PRONOUNCEMENT : 23 -02-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NO. 727//AHD/2015 & C.O. NO. 64/AHD/2015 ARE AP PEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE PREFERR ED AGAINST THE ORDER OF THE LD. CIT(A)-8, AHMEDABAD DATED 01.01.2015 PERTAINING TO A.Y. 2010-11. ITA NO. 1916/AHD/2015 & C.O. NO. 151/AHD/2015 ARE APPEA L BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE PREFERRED AGAIN ST THE ORDER OF THE LD. CIT(A)-8 AHMEDABAD DATED 27.04.2015 PERTAINING TO A .Y. 2011-12 AND ITA NO. 1969/AHD/2015 IS THE CROSS APPEAL BY THE ASSESS EE FOR A.Y. 2011-12. ITA NO. 727 & C.O. 64/AHD/2015 & OTHERS . A.YS. 201 0-11 & 2011-12 3 ITA NO. 727/AHD/2015 WITH C.O. NO. 64/AHD/2015 FOR A.Y. 2010-11 . 2. THE FIRST GROUND RELATES TO THE DELETION OF THE ADD ITION MADE U/S. 14A R.W. RULE 8D OF THE ACT. 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS MADE INVESTMENTS, THE INCOME FROM WHICH DOES NOT FORM PART OF TOTAL INCOME, THEREFORE, FORM A BELIEF THAT DISALLOWANCE U/S. 14A READ WITH RULE 8D HAS TO BE MADE. THE A.O. ACCORDINGLY C OMPUTED THE DISALLOWANCE AT RS. 46,25,310/-. 4. WHEN THE MATTER WAS AGITATED BEFORE THE LD. CIT(A). THE ASSESSEE FURNISHED CHART SHOWING THE SOURCE OF FUNDS WHICH WERE UTILIZ ED FOR INVESTMENT ACTIVITIES AND IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THE INVESTMENT IN SHARES IS NOT OUT OF BORROWED FUNDS. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) FOUND THAT DURING THE YEAR THE ASSES SEE HAS NOT EARNED ANY EXEMPT INCOME. THEREFORE STRONG RELIANCE FROM THE D ECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CORRTECH E NERGY PVT. LTD. 372 ITR 97 DELETED THE ADDITION. 5. BEFORE US, THE LD. D.R. COULD NOT BRING ANY DISTING UISHING DECISION IN FAVOUR OF THE REVENUE. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CORRTECH ENERGY PVT. LTD. (SUPRA), HAS HELD THAT IF THERE IS NO EXEMPT INCOME, NO DISALLOWANCE IS TO BE MADE U/S. 14A READ WITH RULE 8D. SINCE THE FAA HAS FOLLOWED THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, NO INTERFERENCE IS CALLED FOR. GROUND NO. 1 IS DISMIS SED. ITA NO. 727 & C.O. 64/AHD/2015 & OTHERS . A.YS. 201 0-11 & 2011-12 4 6. GROUND NO. 2 RELATES TO THE DELETION OF THE DISALLO WANCE OF GIHED EXPENSES OF RS. 17,95,620/-. 7. ON PERUSAL OF THE DETAILS OF VARIOUS EXPENDITURE AS FURNISHED BY THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH E A.O. NOTICED THAT THE ASSESSEE HAS CLAIMED GIHED PROPERTY SHOW EXPENSES A MOUNTING TO RS. 17,95,620/-. THE ASSESSEE WAS ASKED TO SHOW CAUSE W HY THE SAID EXPENSES SHOULD NOT BE DISALLOWED. IN ITS REPLY, THE ASSESSE E EXPLAINED THAT THE IMPUGNED AMOUNT HAS BEEN PAID TO GUJARAT INSTITUTE OF HOUSIN G AND ESTATE DEVELOPMENT WHICH HAS BEEN INCURRED FOR THE PURPOSE OF SELLING OF THE PROPERTIES CONSTRUCTED BY THE ASSESSEE, THE DETAILS OF VARIOUS PROJECTS UNDERTAKEN WERE FURNISHED AND IT WAS BROUGHT TO THE NOTICE OF THE A .O. THAT THE TOTAL REVENUE EARNED BY THE ASSESSEE DURING THE YEAR UNDER CONSID ERATION WAS RS. 62 CRORES. IT WAS STRONGLY CONTENDED THAT THE IMPUGNED AMOUNT HAS BEEN INCURRED SOLELY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS AN D THE SAME HAS TO BE ALLOWED. 8. THE CONTENTION OF THE ASSESSEE DID NOT FIND ANY FAV OUR WITH THE A.O. WHO WAS OF THE FIRM BELIEF THAT BY INCURRING SUCH EXPENDITU RE, THE ASSESSEE HAS BUILD ITS BRAND WHICH HAS ENDURING BENEFITS AND IS THEREFORE OF CAPITAL IN NATURE. THE A.O. MADE THE DISALLOWANCE OF RS. 17,95,620/-. 9. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CONTENTION. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) FOUND THAT HIS PREDECESSOR HAS DELETED SIMILAR ADDITION MADE IN A. Y. 2009-10 AND FOLLOWING THE FINDINGS OF HIS PREDECESSOR, THE LD. CIT(A) DEL ETED THE ADDITION OF RS. 17,95,620/-. ITA NO. 727 & C.O. 64/AHD/2015 & OTHERS . A.YS. 201 0-11 & 2011-12 5 10. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO OUR NOTICE. THE DECISION OF THE CO-ORDINATE BENCH IN A.Y. 2008-09 & 2009-10 AND POINTED OUT THAT SIMILAR DISALLOWANCE IN EARLIER YEARS WHICH WERE DE LETED BY THE LD. CIT(A), THE DELETION HAS BEEN CONFIRMED BY THE TRIBUNAL. THE LD . D.R. COULD NOT BRING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. 11. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. WE FIND FORCE IN THE CONTENTION OF THE LD. C OUNSEL. THE TRIBUNAL IN ITA NO. 2725/AHD/2011, 1675 & 1604/AHD/2012 FOR A.Y. 20 08-09 & 2009-10 HAS HELD AS UNDER:- 32. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US. REVENUE THROUGH THIS GROUND NO.4 FOR ASST. YEAR 2008-09 AND GROUND NO.2 FOR ASST. YEAR 2009-10 HAS CHALLENGED THE ORDERS OF ID. CIT(A) DELETING THE DISALLOWANCE OF EXPENSES PAID TO GIHED AT RS.26,08, 028/- FOR ASST. YEAR 2008-09 AND RS.11,01,8277-FOR ASST. YEAR 2009-10 TOWARDS SP ONSORSHIP AND ORGANIZING A FAIR. WE OBSERVE THAT ASSESSEE BEING INTO THE BUSIN ESS OF DEVELOPMENT OF INFRASTRUCTURE AND RESIDENTIAL PROJECTS IS ALWAYS I N NEED TO ADVERTISE ITS PROJECTS AT VARIOUS PLATFORMS. WE FIND THAT ASSESSEE IN ITS REGULAR COURSE OF BUSINESS HAS BECOME A CO-SPONSOROR OF A SHOW ORGANIZED BY GIHED. ASSESSEE ALSO PARTICIPATED IN THE SHOW FOR PROMOTION OF ITS BUSINESS. GENUINEN ESS OF THE PAYMENT IS NOT CHALLENGED. NO PARTICULAR OBSERVATIONS HAS BEEN MAD E BY ASSESSING OFFICER TO LINK UP THE IMPUGNED EXPENSES TO A PARTICULAR PROJECT. F URTHER WE OBSERVE FROM THE AUDITED FINANCIAL STATEMENTS THAT AS ON 31 ST MARCH, 2008 AS MANY AS 12 PROJECTS WERE UNDERGOING HAVING WIP OF RS.139.93 CRORES APPR OX. HOWEVER, FOR ASST. YEAR 2008-09 INCOME OF RS.13.54 CRORES HAVE BEEN OFFERED TO TAX. LOOKING TO THESE FACTS, WE FIND THAT THE IMPUGNED EXPENSES OF RS.26, 08,028/- FOR ASST. YEAR 2008- 09 AND RS.11,01,827/- FOR ASST. YEAR 2009-10 WERE I NCURRED BY ASSESSEE IN THE REGULAR COURSE OF BUSINESS TO DEVELOP ITS PROJECTS AND NOT FOR A PARTICULAR PROJECT. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE IN OUR VIEW IT IS PURELY OF REVENUE IN NATURE. THEREFORE, WE FIND NO REASON TO INTERFER E WITH THE ORDERS OF LD. CIT(A). WE UPHOLD THE SAME. ACCORDINGLY, GROUND NO.4 FOR AS ST. YEAR 2008-09 AND GROUND NO.2 FOR ASST. YEAR 2009-10 ARE DISMISSED. ITA NO. 727 & C.O. 64/AHD/2015 & OTHERS . A.YS. 201 0-11 & 2011-12 6 12. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDIN ATE BENCH, THIS GROUND IS DISMISSED. 13. THE THIRD GROUND RELATES TO THE DELETION OF THE ADD ITION OF RS. 4,67,798/- MADE U/S. 2(22)(E) OF THE ACT. 14. BY SCRUTINIZING THE RETURN OF INCOME, THE A.O. NOTI CED THAT THE ASSESSEE HAS RECEIVED LOANS FROM BETTERHOME MALL MANAGEMENT PVT. LTD. AND FOUND THAT THE DIRECTOR SHRI RAJESH S VASWANI WAS HOLDING SUBSTANT IAL INTEREST IN THE SAID COMPANY. THE A.O. WAS OF THE OPINION THAT PROVISION S OF SECTION 2(22)(E) SQUARELY APPLY ON THE FACTS OF THE CASE AND ACCORDI NGLY MADE THE ADDITION OF RS. 4,67,798/- TO THE EXTENT OF THE ACCUMULATED PROFIT OF BETTERHOME MALL MANAGEMENT PVT. LTD. 15. THE ASSESSEE AGITATED THE MATTER BEFORE THE LD. CIT (A). PLACING STRONG RELIANCE ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF ANDITECH (P) LTD. 340 ITR 14 AND ON THE DECISION OF THE JURISDIC TIONAL HIGH COURT IN THE CASE OF DAISY PACKERS (P.) LTD. 40 TAXMANN.COM 480. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) WAS CONVI NCED WITH THE CONTENTION OF THE ASSESSEE AND DELETED THE ADDITION OF RS. 4,67,7 98/-. 16. WE FIND THAT THIS ISSUE HAS BEEN REFERRED BY THE HO NBLE SUPREME COURT TO A LARGER BENCH ON FINDING TWO DIVERSE DECISION OF THE HONBLE SUPREME COURT ON THE SAME ISSUE. IN OUR CONSIDERED OPINION, SINCE THE MATTER IS SUBJUDICED BEFORE THE LARGER BENCH OF THE HONBLE SUPREME COUR T, WE DO NOT FIND IT FIT TO DECIDE THE ISSUE AT OUR STAGE. WE, THEREFORE, SET A SIDE THIS ISSUE TO THE FILES OF THE A.O. THE A.O. IS DIRECTED TO DECIDE THE ISSUE A FRESH IN THE LIGHT OF THE ITA NO. 727 & C.O. 64/AHD/2015 & OTHERS . A.YS. 201 0-11 & 2011-12 7 JUDGMENT OF THE LARGER BENCH OF THE HONBLE SUPREME COURT. GROUND NO3 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 17. GROUND NO. 4 RELATES TO THE DELETION OF THE DISALLO WANCE OF INTEREST EXPENSES OF RS. 59,98,774/-. 18. THE A.O. NOTICED THAT THE ASSESSEE HAS CLAIMED HUGE INTEREST EXPENSES WHICH HAS BEEN NETTED AGAINST INTEREST INCOME. ON PERUSAL OF THE BALANCE SHEET, THE A.O. FOUND THAT THE ASSESSEE HAS GIVEN INTEREST FRE E LOAN TO VARIOUS PERSONS. THE ASSESSEE WAS ASKED TO EXPLAIN WHY PROPORTIONATE DISALLOWANCE OF INTEREST EXPENDITURE SHOULD NOT BE MADE ON INTEREST FREE LOA NS GIVEN BY THE ASSESSEE. ASSESSEE FILED A DETAILED REPLY EXPLAINING EACH AND EVERY ADVANCE. HOWEVER, NONE OF HIS EXPLANATION FOUND FAVOUR FROM THE A.O. WHO COMPUTED THE DISALLOWANCE AT RS. 59,98,774/-. 19. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CONTENTION. IT WAS EXPLAINED THAT MOST OF THE ADVANCES WERE MAD E IN THE ORDINARY COURSE OF BUSINESS TOWARDS PURCHASE OF PROPERTY. THEREFORE, T HE SAME SHOULD NOT BE CONSIDERED AS INTEREST FREE LOANS. IT WAS FURTHER P OINTED OUT THAT THE ASSESSEE WAS HAVING PAID UP SHARE CAPITAL OF RS. 10 CRORES A ND FREE RESERVES AND SURPLUS OF RS. 49.22 CRORES. THE ASSESSEE WAS ALSO HAVING INTEREST FREE FUNDS FROM THE MEMBERS BOOKING DEPOSIT COLLECTION TO THE EXTENT OF RS. 53.47 CRORES. AGGREGATING TO THE TOTAL INTEREST FREE FUNDS AVAILA BLE WITH THE ASSESSEE TO RS. 109.68 CRORES. IT WAS CONTENDED THAT ON THESE FACTS , NO DISALLOWANCE NEED TO BE MADE. AFTER CONSIDERING THE FACTS AND THE SUBMISSIO NS, THE LD. CIT(A) WAS CONVINCED WITH THE CONTENTION OF THE ASSESSEE AND D ELETED THE DISALLOWANCE OF RS. 59,98,774/-. ITA NO. 727 & C.O. 64/AHD/2015 & OTHERS . A.YS. 201 0-11 & 2011-12 8 20. BEFORE US, THE LD. D.R. STRONGLY SUPPORTED THE FIND INGS OF THE A.O. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HA S BEEN STATED BEFORE THE LOWER AUTHORITIES. 21. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. IT IS TRUE THAT MOST OF THE ADVANCES WERE TO WARDS PURCHASE OF PROPERTIES AND IN FACT ON SUCH PROPERTY, THE ASSESSEE EARNED P ROFITS WHICH HAVE BEEN SHOWN AS INCOME IN SUBSEQUENT YEARS. FURTHER, WE FI ND THAT THE TOTAL INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE WERE TO THE TUNE OF RS. 109.68 CRORES. CONSIDERING THESE FACTS IN TOTALITY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 4 IS DIS MISSED. 22. GROUND NO. 5 RELATES TO THE DELETION OF THE DISALLO WANCE OF RS. 15,50 LACS. 23. THE A.O. FOUND THAT THE ASSESSEE HAS CLAIMED EXPENS ES ON ACCOUNT OF LOSS FROM PROPERTY OF RS. 15.50 LACS. THE ASSESSEE WAS A SKED TO JUSTIFY ITS CLAIM. IN ITS REPLY, THE ASSESSEE POINTED OUT THAT IN HIS PRO JECT AT VENUS ATLANTIS GROUND FLOOR OFFICE NO. 9 ALONG WITH OFFICE NO. 1,2 & 3 WE RE AGREED TO BE SHOWED TO MANISHA ENTERPRISES AND MANOHAR MERCANTILE PVT. LTD . IT WAS FURTHER EXPLAINED THAT ON RECEIVING MORE BENEFICIAL OFFER F ROM OTHER PARTIES, THE ASSESSEE AGREED TO CANCEL THE AGREEMENT WITH MANOHA R MERCANTILE PVT. LTD. AND MANISHA ENTERPRISES. ON CANCELLATION OF SUCH AGREEM ENT, THE ASSESSEE COMPENSATED THE TWO PARTIES BY PAYING RS. 15.50 LAC S. IT WAS STRONGLY CONTENDED THAT SINCE THE AMOUNT HAS BEEN INCURRED O N THE GROUND OF COMMERCIAL EXPEDIENCY, THE SAME HAS TO BE ALLOWED. THE REPLY OF THE ASSESSEE ITA NO. 727 & C.O. 64/AHD/2015 & OTHERS . A.YS. 201 0-11 & 2011-12 9 DID NOT FIND CONVINCING BY THE A.O WHO MADE THE DIS ALLOWANCE OF RS. 15.50 LACS. 24. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CONTENTION. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) WAS CONVINCED WITH THE COMMERCIAL EXPEDIENCY OF THE PAYMENT OF CO MPENSATION OF RS. 15.50 LACS AND ACCEPTED THE SAME AS ALLOWABLE REVENUE EXP ENDITURE U/S. 37(1) OF THE ACT. THE ADDITION WAS DELETED. 25. BEFORE US, THE LD. D.R. STRONGLY SUPPORTED THE FIND INGS OF THE A.O. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HA S BEEN STATED BEFORE THE LOWER AUTHORITIES. 26. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. IT IS TRUE THAT THE ASSESSEE HAS RECEIVED AD VANCE OF RS. 58 LACS FROM MANISHA ENTERPRISES AND RS. 2.62 CRORES FROM MANOHA R MERCANTILE PVT. LTD. TOWARDS BOOKING AMOUNT FOR ITS COMMERCIAL PROJECT A T VENUS ATLANTIS. THE SAID BOOKING AMOUNT WAS RECEIVED FOR UNIT NO. 9 AND 1,2 & 3 AT GROUND FLOOR. ON FINDING A BETTER OPPORTUNITY, THE ASSESSEE CANCELLE D THESE TWO AGREEMENTS AND AGREED TO PAY A COMPENSATION OF RS. 15.50 LACS. WE FIND THAT UNIT NO. 1, 2 & 3 WERE SOLD FINALLY FOR A TOTAL CONSIDERATION OF RS. 13.05 CRORES AFTER INCURRING CONSTRUCTION COST OF RS. 2.76 CRORES ONLY. UNIT NO . 9 WAS CONVERTED INTO ALPHA BAZAR WITH MANY SMALL SHOPS WHICH WERE SOLD TO DIFFERENT PERSONS AT A MUCH HIGHER PRICE. WE FIND THAT TOTAL SALES OF PROJ ECT VENUS ATLANTIS WAS AT RS. 50.16 CRORES WHICH JUSTIFIES THE COMMERCIAL EXPEDIE NCY OF THE COMPENSATION SO PAID. WE, THEREFORE DECLINE TO INTERFERE. GROUND NO . 5 IS DISMISSED. ITA NO. 727 & C.O. 64/AHD/2015 & OTHERS . A.YS. 201 0-11 & 2011-12 10 27. GROUND NO. 6 & 7 ARE OF GENERAL IN NATURE AND NEEDS NO SEPARATE ADJUDICATION. 28. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS P ARTLY ALLOWED. 29. CROSS OBJECTION BY THE ASSESSEE IS IN SUPPORT OF TH E ORDER OF LD. CIT(A)AND NEEDS NO SEPARATE ADJUDICATION. ITA NO. 1916/AHD/2015 WITH C.O. NO. 151/AHD/2015. F OR A.Y. 2011-12. 30. THE FIRST GROUND RELATES TO THE DELETION OF THE DIS ALLOWANCE OF GIHED EXPENSES OF RS. 40,92,252/-. 31. AN IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY US IN ITA NO. 727/AHD/2015 (SUPRA) QUA GROUND NO. 2 OF THAT APPEA L. FOR OUR DETAILED DISCUSSION THEREIN, THIS GROUND IS DISMISSED. 32. GROUND NO. 2 RELATES TO THE DELETION OF THE DISALLO WANCE OF INTEREST EXPENSES OF RS. 9.90 LACS. 33. AN IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY US IN ITA NO. 727/AHD/2015 (SUPRA) QUA GROUND NO. 4 OF THAT APPEA L. FOR OUR DETAILED DISCUSSION THEREIN, THIS GROUND IS DISMISSED. 34. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. 35. CROSS OBJECTION BY THE ASSESSEE IS IN SUPPORT OF TH E ORDER OF LD. CIT(A)AND NEEDS NO SEPARATE ADJUDICATION. ITA NO. 727 & C.O. 64/AHD/2015 & OTHERS . A.YS. 201 0-11 & 2011-12 11 ITA NO. 1969/AHD/2015 ASSESSEES APPEAL FOR A.Y. 20 11-12. 36. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO THE D ISALLOWANCE OF RS. 96.08 LACS MADE U/S. 14A READ WITH RULE 8D OF THE ACT. 37. THE A.O. NOTICED THAT THE ASSESSEE HAS EARNED DIVID END INCOME OF RS. 33,031/- AND WAS OF THE FIRM BELIEF THAT DISALLOWANCE U/S. 1 4A READ WITH RULE 8D HAS TO BE MADE. THE A.O. ACCORDINGLY COMPUTED THE DISALLOW ANCE AT RS. 96,08,508/-. 38. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 39. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE EXEMPT INCOME EARNED BY THE ASSESSEE WAS A MEAGER RS. 33,000/- ON WHICH THE DISALLOWANCE HAS BEEN COMPUTED BY THE A.O. AT RS. 96 LACS. 40. WE HAVE GIVEN A DISPASSIONATE CONSIDERATION TO THIS CONTENTION OF THE LD. COUNSEL. IN OUR CONSIDERED OPINION, THE DISALLOWANC E SHOULD BE RESTRICTED TO THE EXEMPT INCOME AND THEREFORE WE DIRECT THE A.O. TO R ESTRICT THE DISALLOWANCE TO THE EXTENT OF RS. 33,031/-. WE DIRECT ACCORDINGLY. 41. APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 23 - 02- 20 18 SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 23 /02/2018