SILVASSA ESTATES P.LTD, MUMBAI V. ITO 8(3)(2), MUMBAI

ITA 7383/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3060 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 04-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 13-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS JADHAVDR
• Assessee Lawyers: N JAYENDRA
• Keywords: Earning of tax free income; Proportionate interest
• Section: 143(3); 14A

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.7383/MUM/2012 ( / ASSESSMENT YEAR : 2009-10) M/S SILVASSA ESTATES PVT. LTD., M/S NATVARLAL VEPARI & CO., ORICON HOUSE, 4 TH FLOOR, 12, K. DUBASH MARG, MUMBAI 400 023. / V. THE INCOME TAX OFFICER, WARD 8(3)(2), AAYKAR BHAVAN, 2 ND FLOOR, MAHARSHI KARVE ROAD, MUMBAI 400 020. ./ PAN : AAACS6303D ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI N. JAYENDRA REVENUE BY : SHRI VISHWAS JADHAV,DR / DATE OF HEARING : 17-03-2016 / DATE OF PRONOUNCEMENT : 14-06-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE COMPANY, BEING ITA NO. 7383/MUM/2012, IS DIRECTED AGAINST THE ORDER DATED 27-08-2012 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 18, M UMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEAR 2009- 10, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDERS DATED 29-12-2011 PASSED BY THE LEARNED ASSESSING OF FICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME TAX ACT,1961 (HE REINAFTER CALLED THE ACT). ITA 7383/MUM /2012 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE COM PANY IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL , MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. THE COMMISSIONER OF INCOME TAX (APPEALS) - 18, M UMBAI, ([CIT(A)] ERRED IN CONFIRMING THE DISALLOWANCE OF EX PENSES OF RS.7,45,425/- MADE BY THE INCOME-TAX OFFICER, WARD 8( 3)(2), MUMBAI (AO) U/S.14A OF THE ACT, AS AGAINST RS.73,740/- DIS ALLOWED BY THE APPELLANT IN THE RETURN OF INCOME. 2. THE AO ERRED IN TAKING FINANCE COST OF RS.25,75,33 3/- FOR THE PURPOSE OF WORKING OF INDIRECT EXPENSES, WHILE COMPU TING DISALLOWANCE U/S.14A OF THE ACT, READ WITH RULE 8D, WITHOUT SUBSTAN TIATING THE FACT THAT, THE LOANS ON WHICH INTEREST HAVE BEEN PAID HAS BE EN UTILIZED FOR THE PURPOSE OF INVESTMENT IN SHARES. 3. EACH OF THE ABOVE GROUNDS IS WITHOUT PREJUDICE TO ONE ANOTHER. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS CARRYING ON THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL AND IND USTRIAL HOUSES. THE ASSESSEE COMPANY WAS ASKED TO FURNISH THE DETAILS O F COMPUTATION OF DISALLOWANCE OF EXPENSES U/S 14A OF THE ACT READ WI TH RULE 8D OF THE INCOME TAX RULES, 1962 FOR EARNING EXEMPT INCOME. IT WAS ASKED BY THE A.O. THAT THE ASSESSEE COMPANY HAD OBTAINED LOANS AND PAID IN TEREST OF RS. 25,75,333/- AND THE ASSESSEE COMPANY HAD INVESTED R S. 1,47,38,012/- IN THE QUOTED SHARES, WHILE IN COMPUTING DISALLOWANCE U/S 14A OF THE ACT , THE ASSESSEE COMPANY HAS NOT CONSIDERED THE INTEREST EI THER UNDER RULE 8D(2)(II) OR 8D(2)(III) OF THE INCOME TAX RULES, 1962. THE A SSESSEE COMPANY IN REPLY SUBMITTED THAT THE LOANS TAKEN HAD BEEN APPLIED PRI MARILY TOWARDS THE PROJECTS AND NO PART OF THE MONEY HAD BEEN APPLIED TOWARDS INVESTMENTS IN SHARES. THE ASSESSEE COMPANY SUBMITTED THAT THE AS SESSEE COMPANY HAD ACQUIRED THESE SHARES LONG BACK AND NO PART OF SUCH INVESTMENTS IN SHARES HAD BEEN OUT OF BORROWED FUNDS. IT WAS SUBMITTED T HAT THE BORROWED FUNDS HAD BEEN UTILIZED BY THE ASSESSEE COMPANY FOR THE P URPOSE OF BUSINESS AND ITA 7383/MUM /2012 3 NOT FOR THE PURPOSE OF ACQUISITION OF EQUITY SHARES . IT WAS OBSERVED BY THE A.O. THAT THE OPENING AND CLOSING BALANCE OF INVEST MENT SHOWN BY THE ASSESSEE COMPANY WAS AT RS. 1,47,48,012/- AND RS. 1 ,47,48,012/- RESPECTIVELY, HOWEVER, THE ASSESSEE COMPANY HAD NOT ATTRIBUTED ANY EXPENDITURE WHICH HAD BEEN INCURRED FOR EARNING EXE MPT INCOME FROM INVESTMENTS YIELDING EXEMPT INCOME. THUS AS PER TH E AO, THE ASSESSEE COMPANY HAS NOT MADE DISALLOWANCE OF ANY EXPENDITUR E INCURRED FOR EARNING EXEMPT INCOME AS THE ASSESSEE COMPANY CANNOT EARN A NY INCOME FROM INVESTMENTS WITHOUT SYSTEMATIC MANAGEMENT. THE INVE STMENT DECISIONS ARE VERY COMPLEX AND REQUIRES SUBSTANTIAL MARKET RESEAR CH AND DAY TO DAY ANALYSIS OF MARKET TRENDS AND BOTH INDIRECT AND DIR ECT EXPENSES ARE TO BE INCURRED WHICH NEED TO BE DISALLOWED U/S 14A OF THE ACT . THE A.O. HELD THAT ALL EXPENSES CONNECTED WITH THE EXEMPT INCOME HAVE TO BE DISALLOWED U/S 14A OF THE ACT REGARDLESS OF WHETHER THEY ARE DIREC T OR INDIRECT. THE AO OBSERVED THAT DISALLOWANCE U/S 14A OF THE ACT CAN B E MADE EVEN IF NO EXEMPT INCOME IS ACTUALLY EARNED OR RECEIVED DURING THE YE AR FROM THE INVESTMENTS IN STOCK, STARES TAX FREE BONDS ETC. THE A.O. IN SUPP ORT, RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. V. DCIT IN ITXA NO. 626/2010 & WRIT PETITI ON NO. 758/2010 AND NOT BEING SATISFIED WITH THE CORRECTNESS OF THE CLAIM M ADE BY THE ASSESSEE COMPANY THAT NO EXPENDITURE HAS BEEN INCURRED BY TH E ASSESSEE COMPANY IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME AND HENCE DISALLOWANCE WAS MADE AS PER SECTION 14A OF THE ACT IN ACCORDANCE WITH THE PROVISIONS OF RULE 8D OF INCOME TAX RULES, 1962 BY THE AO AS UNDER:- I) THE AMOUNT OF EXPENDITURE DIRECTLY RELATING TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. -- -- II) PROPORTIONATE OF INTEREST EXPENDITURE COMPUTED IN ACCORDANCE WITH THE FORMULA (A X B/C) 25,75,333/- X 147,48,012 RS. 6,71,684/- ITA 7383/MUM /2012 4 GIVE IN RULE 8D(2)(II) /5,65,45,990 III) AMOUNT EQUAL TO ONE-HALF PERCENT OF THE AVERAGE OF THE VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME AS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE ON THE FIRST DAY AND LAST OF THE PREVIOUS YEAR. 0.5% OF RS. 1476,48,012/- RS. 73,741/-. TOTAL EXPENDITURE DISALLOWED U/S 14 A RS. 7,45,425/- NOTE I) A= INTEREST (FINANCE COST) DEBITED TO P&L A/C RS . 25,75,333/- II) B= AVERAGE OF EXEMPT INCOME BEARING INVESTMENTS = RS. 1,47,48,012/- III) C= AVERAGE OF TOTAL ASSETS APPEARING IN THE BA LANCE SHEET ON THE FIRST AND LAST DAY OF THE PREVIOUS YEAR = RS. 5,45,990/- B AVERAGE VALUE OF INVESTMENTS- OPENING BALANCE OF INVESTMENTS + CLOSING BALANCE OF INVESTMENTS 2 = RS. 1,47,48,012/- + RS. 1,47,48,012 2 = RS. 1,47,48,012 THUS, TOTAL EXPENDITURE DISALLOWED U/S 14A WAS RS. 7,45,425/- OUT OF WHICH INTEREST EXPENDITURE OF RS. 6,71,684/- AND AMOUNT E QUAL TO ONE HALF PERCENT OF THE AVERAGE OF THE VALUE OF INVESTMENT, INCOME F ROM WHICH DOES NOT FORM PART OF THE TOTAL INCOME OF RS. 73,741/- WAS DISALL OWED UNDER RULE 8D OF INCOME TAX RULES, 1962, VIDE ASSESSMENT ORDERS DATE D 29.12.2011 PASSED BY THE AO U/S 143(3) OF THE ACT. ITA 7383/MUM /2012 5 4. AGGRIEVED BY THE ASSESSMENT ORDERS DATED 29.12.2 011 PASSED BY THE A.O. U/S 143(3) OF THE ACT, THE ASSESSEE COMPANY CARRIED THE MATTER BEFORE THE LEARNED CIT(A) IN FIRST APPEAL. 5. BEFORE THE LEARNED CIT(A), THE ASSESSEE COMPANY SUBMITTED THAT THE INTEREST EXPENSES OF RS. 25,13,455/- INCURRED BY TH E ASSESSEE COMPANY ON ACCOUNT OF BORROWINGS WAS NOT UTILIZED FOR THE PURP OSE OF INVESTMENTS IN SHARES AND THEREFORE NO PART OF THE MONEY HAS BEEN APPLIED TOWARDS INVESTMENT IN EQUITY SHARES. IT WAS SUBMITTED THAT THE ASSESSEE COMPANY ACQUIRED THESE EQUITY SHARES LONG BACK AND NO PART OF SUCH INVESTMENTS HAS BEEN OUT OF BORROWED FUNDS, HENCE, NO PART OF INTER EST CAN BE DISALLOWED U/S 14A OF THE ACT READ WITH RULE 8D OF INCOME TAX RUL ES, 1962. IT WAS SUBMITTED THAT THE ASSESSEE COMPANY HAD NET WORTH O F RS. 1.9 CRORES AS ON 1ST APRIL, 2008 AND THE AMOUNT OF INVESTMENT IN SHA RES WERE RS. 1.47 CRORES. THE ASSESSEE COMPANY RELIED ON THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. RELIANCE UTILITIES & POWER LT D., (2009) 313 ITR 340(BOM. HC) WHEREBY THE HONBLE BOMBAY HIGH COURT HELD THAT IF THERE BE INTEREST FREE FUNDS AVAILABLE TO AN TAX-PAYER SUFFICIENT TO MEET ITS INVESTMENTS AND AT THE SAME TIME THE TAX-PAYER RAISES AN INTEREST BEARING LOAN, IT CAN BE PRESUMED THAT THE INVESTMENTS WERE MADE FROM THE INTEREST FR EE FUNDS AVAILABLE WITH THE TAX-PAYER. THE ASSESSEE COMPANY ALSO RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF MAXOPP INVESTMENT LTD. V. CIT, (2011) 203 TAXMAN 364(DEL.HC) WHEREIN IT WAS HELD THAT THE REQ UIREMENT OF THE A.O. EMBARKING UPON A DETERMINATION OF THE AMOUNT OF EXP ENDITURE INCURRED IN RELATION TO EXEMPT INCOME WOULD BE TRIGGERED ONLY I F THE A.O. RETURNS A FINDING THAT HE IS NOT SATISFIED WITH THE CORRECTNESS OF TH E CLAIM OF THE TAX-PAYER . THE ASSESSEE COMPANY SUBMITTED THAT THE FINANCE COST OF RS. 25,13,455/- IS NOT BE CONSIDERED AS INDIRECT EXPENSES FOR THE PURPOSE OF DISALLOWANCE U/S 14A OF THE ACT. IT WAS ALSO SUBMITTED THAT WHILE COMPUTIN G THE INDIRECT EXPENSES FOR THE PURPOSE OF DISALLOWANCE U/S 14A, THE A.O. HAS T AKEN AVERAGE TOTAL ASSETS ITA 7383/MUM /2012 6 AT RS. 5,65,45,990/- AS AGAINST RS. 8,34,70,490/- F OR WHICH NO WORKING HAS BEEN PROVIDED TO THE ASSESSEE COMPANY FOR TAKING AV ERAGE TOTAL ASSET AT RS.5,65,45,990/-. THUS IT WAS SUBMITTED THAT AVERA GE TOTAL ASSETS WORKED OUT BY THE A.O. OF RS. 5.65 CRORES IS AD-HOC AND AR BITRARY. THE CORRECT AMOUNT OF AVERAGE TOTAL ASSETS AS WORKED OUT BY THE ASSESS EE COMPANY IS FOLLOWS:- SR NO. 31 ST MARCH,2009 31 ST MARCH, 2009 1 FIXED ASSETS 44,76,237 42,19,014 2 INVESTMENTS 1,47,48,012 1,47,48,012 3 CURRENT ASSETS AND LOANS AND ADVANCES 7,10,49,650 5,77,00,054 TOTAL ASSETS (A)9,02,73,899 (B)7,66,67,080 THE AVERAGE OF TOTAL ASSETS A+B = 8,34,70,490 2 THE ASSESSEE CONTENDED THAT BASED UPON THE CORRECT WORKING, THE TOTAL DISALLOWANCE U/S 14A OF THE ACT WOULD WORK OUT TO RS. 5,17,831/- AS UNDER:- 1. EXPENDITURE DIRECTLY RELATED TO DIVIDEND INCOME RS .4,44,091 2. INTEREST NOT DIRECTLY ATTRIBUTABLE A*B/C A. INTEREST 25,13,455 B. AVG. VALUE OF INVESTMENT 1,47,48,012 OPENING BAL. 1,47,48,012 CLOSING BALANCE 1,47,48,012 C AVG. OF TOTAL ASSETS 8,34,70,490 OPENING BAL. 7,66,67,080 CLOSING BAL. 9,02,73,899 3. 0.5% OF AV. VALUE OF INVESTMENTS 73,740__ TOTAL (1+2+3) 5,17,831 ITA 7383/MUM /2012 7 THE ASSESSEE COMPANY SUBMITTED THAT NO INTEREST IS DISALLOWABLE U/S 14A OF THE ACT. THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE COMPA NY HAS CONTENDED THAT THE PROPORTIONATE INTEREST SHOULD RS. 25,13,455/- A S AGAINST RS. 25,75,333/- TAKEN BY THE AO, AS THE FOLLOWING THREE FACTORS WIL L HAVE TO BE EXCLUDED SINCE THEY ARE RELATING TO THE BUSINESS AND HAVE NO RELAT ION TO THE EXEMPT INCOME:- (I) BANK CHARGES RS. 45,878/- (II) LOAN PROCESSING CHARGES RS. 4,000/- (III) INSPECTION CHARGES RS. 12,000/- RS. 61,878/- HENCE , THE LEARNED CIT(A) HELD THAT THE AMOUNT OF RS. 61,878/- HAS TO BE EXCLUDED FROM THE TOTAL INTEREST PAYMENT OF RS. 25, 75,333/- AND INTEREST WILL BECOME RS. 25,13,455/- ON WHICH THE DISALLOWANCE HA S TO BE WORKED OUT. THE LEARNED CIT(A) ALSO OBSERVED THAT THE A.O. HAS ERRED IN TAKING THE AVERAGE OF TOTAL ASSETS ON 1ST AND LAST DAY OF PREVIOUS YEA R AT RS. 5,65,45,990/- WHEREAS THE CORRECT FIGURE IS RS. 8,34,70,490 WHICH IS AS UNDER:- SR NO. 31 ST MARCH, 2009 31 ST MARCH, 2009 1 FIXED ASSETS 44,76,237 42,19,014 2 INVESTMENTS 1,47,48,012 1,47,48,012 3 CURRENT ASSETS AND LOANS AND ADVANCES 7,10,49,650/- 5,77,00,054 TOTAL ASSETS (C) 9,02,73,899 (D) 7,66,67,080 THE AVERAGE OF TOTAL ASSETS A+B = 8,34,70,490 2 ITA 7383/MUM /2012 8 HENCE AS PER LEARNED CIT(A), THE DISALLOWANCE UNDER THIS HEAD COMES TO RS. 4,44,091/- AND NOT RS. 6,71,684/- AS DONE BY THE A. O. AND DISALLOWANCE OF RS.4,44,091/- WAS CONFIRMED BY LEARNED CIT(A) VIDE APPELLATE ORDERS DATED 27-08-2012. THE OTHER CONTENTION OF THE ASSESSEE COMPANY WAS WITH REGARD TO 0.5% OF THE AVERAGE VALUE OF INVESTMENTS, WHICH WAS DISMISSED BY THE LD. CIT(A) BECAUSE AS PER LEARNED CIT(A) THE AO HAS FOL LOWED RULE 8D OF INCOME TAX RULES, 1962 CORRECTLY AND DISALLOWANCE OF RS.73 ,741/- WAS CONFIRMED BY LEARNED CIT(A) VIDE APPELLATE ORDERS DATED 27-08-20 12. 6. AGGRIEVED BY THE APPELLATE ORDERS DATED 27-08-20 12 OF THE LEARNED CIT(A), THE ASSESSEE COMPANY FILED SECOND APPEAL WITH THE T RIBUNAL. 7. THE LEARNED COUNSEL FOR THE ASSESSEE COMPANY SUB MITTED THAT DISALLOWANCE OF 0.5% OF AVERAGE INVESTMENT AS CONTE MPLATED U/S 14A OF THE ACT READ WITH RULE 8D(2)(III) OF INCOME TAX RULES, 1962 WAS VOLUNTARILY DISALLOWED BY THE ASSESSEE COMPANY ON ITS OWN IN TH E COMPUTATION OF INCOME FILED WITH RETURN OF INCOME FILED WITH THE REVENUE. THE LEARNED COUNSEL DREW OUR ATTENTION TO PAGE 7 OF PAPER BOOK FILED BEFORE THE TRIBUNAL WHICH IS COMPUTATION OF INCOME WHEREBY DISALLOWANCE U/S 14A OF THE ACT OF RS.73,740/- WAS MADE BY THE ASSESSEE COMPANY OF ITS OWN WHILE FILING RETURN OF INCOME WITH REVENUE WHICH HAS NOT BEEN CONSIDERE D BY THE AO AND THE LEARNED CIT(A). IT IS STATED THAT THE INVESTMENTS ARE VERY OLD AND NO FRESH INVESTMENTS WERE MADE DURING THE PREVIOUS YEAR. IT IS SUBMITTED THAT THE NET OWNED FUNDS OF THE ASSESSEE COMPANY COMPRISING OF RESERVES AND SURPLUS AND SHARE CAPITAL ARE MUCH MORE THAN THE INVESTME NTS MADE BY THE ASSESSEE COMPANY IN THE SHARES YIELDING EXEMPT INCOME. THE A SSESSEE COMPANY SUBMITTED THAT IT HAS MADE INVESTMENT OF RS. 1.47 C RORES AS AT 31-03-2009 WHICH WAS ALSO THE OPENING BALANCE AS ON 01-04-2008 AS NO NEW INVESTMENTS WERE MADE BY THE ASSESSEE COMPANY DURING THE RELEVA NT PREVIOUS YEAR. THE ASSESSEE COMPANYS OWN FUNDS COMES TO RS. 1.86 CROR ES AS ON 31 ST MARCH, ITA 7383/MUM /2012 9 2009 AND RS. 1.91 CRORES AS ON 31 ST MARCH, 2008. THE ASSESSEE COMPANY RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COU RT IN THE CASE OF CIT V. RELIANCE UTILITIES AND POWER LTD. (2009) 313 ITR 34 0(BOM HC) AND IN THE CASE OF HDFC BANK LTD. V. DCIT (2014) 366 ITR 505(BOM HC ) AND DECISION OF HONBLE BOMBAY HIGH COURT IN WRIT PETITION IN HDFC BANK LIMITED V. DCIT(2016) 67 TAXMANN.COM 42(BOM. HC) . THE ASSESS EE COMPANY SUBMITTED THAT THE IT HAS MADE INVESTMENT IN THE GR OUP COMPANIES WHICH COMES TO RS. 1,43,50,400/- WHICH ARE UNQUOTED SHARE S OUT OF TOTAL INVESTMENTS OF RS.1,47,48,012/-. ALL THE INVESTMENT S ARE OLD INVESTMENTS. THERE IS NO CHANGE IN THE INVESTMENTS DURING THE YE AR. THE INVESTMENTS TO THE TUNE OF RS.1.44 CRORES WERE MADE INTO THE GROUP COMPANIES AS STRATEGIC INVESTMENTS. THE ASSESSEE COMPANY FURTHER RELIED U PON THE DECISION IN THE CASE OF J.M. FINANCIAL LTD. V. CIT IN ITA NO. 4521/ MUM/2012 AND THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S SYLVEX CABLE CO. PVT. LTD. V. DCIT IN ITA NO. 8581/MUM/2011 FOR THE ASSESSMENT YEAR 20 08-09 DATED 24 TH FEBRUARY, 2016. 6. THE LEARNED D.R. SUBMITTED THAT THE LEARNED CIT( A) HAS ALREADY GIVEN THE RELIEF TO THE ASSESSEE COMPANY. HE FURTHER REL IED UPON THE ORDER OF THE LEARNED CIT(A). 7. WE HAVE CONSIDERED THE RIVAL CONTENTION AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE CASE LAWS RELIED UPON BY THE ASSESSEE COMPANY . WE HAVE OBSERVED THAT THE ASSESSEE COMPA NY HAS MADE INVESTMENTS OF RS. 1.47 CRORES IN SHARES YIELDING E XEMPT INCOME WHICH IS SAME AS IN THE PRECEDING YEAR AS NO FRESH INVESTMEN T HAS BEEN MADE DURING THE YEAR, WHILE NET OWNED FUNDS OF THE ASSESSEE COM PANY COMPRISING SHARE CAPITAL AND RESERVES ARE TO THE TUNE OF RS.1.86 CRO RES AS ON 31-03-2009 AND RS.1.91 CRORES AS ON 31-03-2008 WHICH ARE FAR IN EX CESS OF THE INVESTMENTS MADE BY THE ASSESSEE COMPANY OF RS.1.47 CRORES IN S HARES YIELDING EXEMPT ITA 7383/MUM /2012 10 INCOME. THE ASSESSEE COMPANY HAS STATED THAT THE BO RROWED FUNDS ARE UTILIZED FOR PROJECT AND NONE OF THE BORROWED FUNDS WERE USED FOR THE PURPOSES OF MAKING INVESTMENTS IN SHARES YIELDING E XEMPT INCOME WHICH IS ALSO NOT CONTROVERTED BY THE REVENUE. IN ANY CASE S INCE THERE ARE NET OWNED FUNDS WHICH ARE FAR IN EXCESS OF INVESTMENT IN SHAR ES AS SET OUT ABOVE, PRESUMPTION WILL APPLY AS PER DECISIONS OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. RELIANCE UTILITIES AND POWER LTD. (2 009) 313 ITR 340(BOM HC) AND IN THE CASE OF HDFC BANK LTD. V. DCIT (2014) 36 6 ITR 505(BOM HC) AND DECISION OF HONBLE BOMBAY HIGH COURT IN WRIT PETIT ION IN HDFC BANK LIMITED V. DCIT(2016) 67 TAXMANN.COM 42(BOM. HC) AND HENCE NO DISALLOWANCE IS WARRANTED FOR INTEREST PAID BY THE ASSESSEE COMPANY UNDER SECTION 14A OF THE ACT READ WITH RULE 8D(2)(II) OF INCOME TAX RULES, 1 962 . FURTHER, WE HAVE OBSERVED THAT THE ASSESSEE COMPANY HAD MADE DISALLO WANCE OF RS.73,740/- VOLUNTARILY OF ITS OWN UNDER SECTION 14A OF THE ACT READ WITH RULE 8D(2)(III) OF INCOME TAX RULES, 1962 AND THE LEARNED CIT(A) CONF IRMED THE SAME AMOUNT IN HIS APPELLATE ORDERS DATED 27-08-2012 WHICH HAS LED TO DOUBLE DISALLOWANCE OF THE SAME AMOUNT WHICH IS ADDED TWIC E TO THE INCOME OF THE ASSESSEE COMPANY WHICH IS NOT PERMITTED UNDER THE A CT. HENCE WE ORDER DELETION OF THE ADDITIONS MADE BY THE AO AS SUSTAIN ED BY LEARNED CIT(A) U/S 14 A OF THE ACT READ WITH RULE 8D OF INCOME TAX RUL ES, 1962. IT IS ALSO NOT BROUGHT ON RECORD THAT THE REVENUE IS IN APPEAL AGA INST THE APPELLATE ORDERS OF THE LEARNED CIT(A) . WE ORDER ACCORDINGLY ITA 7383/MUM /2012 11 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE COMPANY IN ITA N0. 7383/MUM/2012 FOR THE ASSESSMENT YEAR 2009-10 IS AL LOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JUNE , 2016. # $% &' 14-06-2016 ( ) SD/- SD/- (C.N.PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 14-06-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI G BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI