ACIT, Circle- 7(1), New Delhi V. DLF Utilities Ltd., New Delhi

ITA 7800/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9469 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 07-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Source of fund; Notional interest; Commercial expediency; TDS; Rule 8D
• Section: 143(3); 14A; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: B NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.7800/DEL/2018 ASSESSMENT YEAR: 2013-14 ACIT, CIRCLE-7(1), NEW DELHI VS. DLF UTILITIES LTD., 9 TH FLOOR, DLF CENTRE, SANSAD MARG, NEW DELHI PAN :AAACN3199A (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST ORD ER DATED 26/09/2018 PASSED BY THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS)-3, DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2013-14 RAISING FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDIT ION OF RS.3,15,81,435/- MADE BY THE A.O. ON ACCOUNT OF INT EREST CHARGEABLE U/S 36(1)(III) OF THE ACT ON INTEREST FR EE ADVANCES GIVEN TO GROUP COMPANIES. APPELLANT BY SH. SATYAJEET GOEL, CA RESPONDENT BY SH. MAHESH THAKUR, SR.DR DATE OF HEARING 14.07.2021 DATE OF PRONOUNCEMENT 30.07.2021 2 ITA NO.7800/DEL/2018 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE AD DITION OF RS.40,06,714/- MADE BY THE AO ON ACCOUNT OF DISALLO WANCES U/S 14A OF THE ACT TO RS.21,95,216/-. 2. BRIEFLY STATED FACTS OF THE CASE, AS CULLED OUT FR OM THE ORDER OF THE LOWER AUTHORITIES, ARE THAT THE ASSESSEE COM PANY WAS ENGAGED IN THE BUSINESS OF GENERATION OF POWER THRO UGH GAS TURBINES AND GAS ENGINES, RUNNING OF MULTIPLEX THEA TRES, PROVIDING FACILITY MANAGEMENT SERVICES AND REAL EST ATE DEVELOPMENT. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME, WHICH WAS REVISED ON 30/11/2014, DECLARING LOSS OF 238,21,63,825/-. THE RETURN WAS FURTHER REVISED ON 04/02/2015 FOR CLAIM OF TDS CERTIFICATES. THE RETUR N OF INCOME FILED BY THE ASSESSEE WAS SELECTED FOR THE SCRUTINY ASSESSMENT AND STATUTORY NOTICES UNDER INCOME-TAX ACT, 1961 (I N SHORT THE ACT) WERE ISSUED AND COMPLIED WITH. THE SCRUTINY A SSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 22 /12/2016 AFTER MAKING DISALLOWANCE OF 3,15,81,435/- IN TERMS OF SECTION 36(1)(III) AND DISALLOWANCE OF 40,06,740/- UNDER SECTION 14A OF THE ACT. ON FURTHER APPEAL, THE LD. CIT(A) DELETED THE DISALLOWANCES MADE BY THE ASSESSING OFFICER. AGGRIE VED, THE REVENUE IS IN APPEAL BEFORE THE INCOME-TAX APPELLAT E TRIBUNAL (IN SHORT THE TRIBUNAL) RAISING THE GROUNDS AS REPROD UCED ABOVE. 3. BEFORE US, THE PARTIES APPEARED THROUGH VIDEO CONF ERENCING FACILITY. THE LEARNED COUNSEL OF THE ASSESSEE FILED ELECTRONICALLY COPY OF THE DECISIONS RELIED UPON. 4. IN SUPPORT OF GROUND NO.1 OF THE APPEAL, THE LEARN ED DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND SU BMITTED THAT THE 3 ITA NO.7800/DEL/2018 ASSESSEE HAS DIVERTED INTEREST-BEARING BORROWED FUN DS FOR INTEREST FREE LOANS OR LOANS AT LOWER RATE OF INTEREST TO RE LATED PARTY CONCERNS, AND THEREFORE DISALLOWANCE OF INTEREST ON BORROWED CAPITAL, WHICH WAS USED FOR ADVANCES TO ASSESSEE SU BSIDIARY COMPANY IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 36(1)(III) OF THE ACT. 4.1 ON THE OTHER HAND, THE LEARNED COUNSEL OF THE ASSE SSEE SUBMITTED THAT IDENTICAL DISALLOWANCE ON SAME BORRO WED CAPITAL WAS MADE BY THE ASSESSING OFFICER IN ASSESSMENT YEA R 2011-12 AND 2012-13, WHICH HAS BEEN DELETED BY THE TRIBUNAL . IN ASSESSMENT YEAR 2011-12, THE ORDER OF THE TRIBUNAL HAS BEEN UPHELD BY THE HONBLE DELHI HIGH COURT AND, THEREFO RE, ISSUE IN DISPUTE IN THE YEAR UNDER CONSIDERATION IS COVERED IN FAVOUR OF THE ASSESSEE. 4.2 WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON T HE ISSUE IN DISPUTE AND PERUSED THE RELEVANT MATERIAL ON REC ORD. THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD TAKEN UNSECURED LOAN AGGREGATING TO 1635,24,22,344/- ON WHICH INTEREST OF 186,46,38,574/- WAS PAID. HE FURTHER OBSERVED THAT CAPITAL AND RESERVE AND SURPLUS WAS OF 274,41,45,816/- AND, THEREFORE, BORROWED FUNDS HAVE BEEN UTILIZED FOR INVESTMENT, I NTEREST FREE LOANS AND ADVANCES AND CAPITAL WORK IN PROGRESS. AC CORDING TO THE ASSESSING OFFICER, INTEREST ON BORROWED CAPITAL WAS USED FOR ADVANCES TO ASSESSEE SUBSIDIARY COMPANY, WHICH IS N OT ELIGIBLE FOR DEDUCTION UNDER SECTION 36(1)(III) OF THE ACT. THE LEARNED ASSESSING OFFICER RELIED ON VARIOUS DECISIONS CITED IN THE ASSESSMENT ORDER INCLUDING THE DECISION OF THE HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS ABHISHEK 4 ITA NO.7800/DEL/2018 INDUSTRIES REPORTED IN 286 ITR 1 . THE LEARNED ASSESSING OFFICER COMPUTED DISALLOWANCE OF 3,15,81,435/- AS UNDER: SOURCES OF FUNDS PARTICULARS BALANCE AS ON 31.03.2012 BALANCE AS ON 31.03.2013 TOTAL OF FIN. YEARS 2011- 12 & 2012-13 SHARE CAPITAL 1070746410 1070746410 2141492820 RESERVE &. SURPLUS 2908878279 1673400406 4582278685 SECURED LOANS 6429612918 6005281359 12434894277 UNSECURED LOANS 10722793461 10347140985 21069934446 TOTAL 21132031068 19096569160 40228600228 AVERAGE ADDITIONS- SOURCE OF FUNDS 20114300114 UTILIZATION OF FUNDS: INVESTMENT IN IMMOVABLE PROPERTY 64914400 64914400 129828800 INVESTMENT IN PARTNERSHIP FIRMS 5189000 7384856 12573856 ADVANCE RECOVERABLE 207024481 290860362 497884843 ADVANCE PAID TO DLF LTD. 11753416 11753416 23506832 OTHER ADVANCES 8162462 9407080 17569542 TOTAL 297043759 384320114 681363873 AVERAGE ADDITIONS- UTILIZATION OF FUNDS: 340681937 INTEREST CLAIMED AS PER BOOK 1864608574 AMOUNT OF DISALLOWANCE U/S 36(L)(III) 1864608574*340681937/20114300114 = 31581435 4.3 BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED THAT THE ISSUE IN DISPUTE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF LD. CIT(A) IN EARLIER ASSESSMENT YEARS. IT WAS ALSO SUBMITTED THAT AVERAGE OF TOTAL INTEREST-FREE FUND (OWN FUNDS) BEI NG SHARE CAPITAL AND RESERVE AND SURPLUS WAS OF 336.19 CRORES AS COMPARED TO AVERAGE OF LOANS AND ADVANCES/INVESTMENT OF 34.07 CRORES. ACCORDING TO THE ASSESSEE, THE COMPANY HAD SUFFICIE NT INTEREST- FREE FUNDS FOR MAKING ADVANCES/INVESTMENTS. IT WAS ALSO 5 ITA NO.7800/DEL/2018 SUBMITTED THAT ADVANCES/INVESTMENT ARE PART OF THE BUSINESS ACTIVITY AND COMMERCIAL EXPEDIENCY AND SAME HAD BEE N GIVEN/MADE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE O F THE BUSINESS ONLY. IT WAS SUBMITTED THAT INVESTMENT IN IMMOVABLE PROPERTY COMPRISES OF INVESTMENT IN GOLF LAND ON WH ICH THE ASSESSEE COMPANY HAS EARNED RENTAL INCOME. THE INVE STMENT IN PARTNERSHIP FIRM M/S DLF SOUTH POINT HAS BEEN MADE TO PROMOTE REAL ESTATE IN DUE COURSE OF BUSINESS ACTIVITIES. T HE ADVANCE GIVEN TO MR. PRADEEP SINGH WAS FOR DEVELOPMENT OF PARKING , WHICH WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSIN ESS. THE ADVANCES GIVEN TO DLF LTD. WERE ALSO IN THE NATURE OF BUSINESS ADVANCES. THE LEARNED CIT(A) IN THE YEAR UNDER CONS IDERATION FOLLOWED THE FINDING OF HER PREDECESSOR FOR ASSESSM ENT YEAR 2012- 13 AND DELETED THE ADDITION. BEFORE US, THE LEARNED DR HAS NOT DISPUTED THE CONTENTION OF THE LEARNED COUNSEL OF T HE ASSESSEE THAT IDENTICAL DISALLOWANCE HAS BEEN DELETED BY THE TRIBUNAL IN EARLIER YEARS. WE FIND THAT TRIBUNAL IN ITA NO.1998 /DEL/2016 FOR ASSESSMENT YEAR 2011-12 HAS DELETED THE IDENTICAL D ISALLOWANCE OBSERVING AS UNDER: 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE AL SO PERUSED THE MATERIAL ON RECORD. AS FAR AS THE ISSUE OF DISALLOW ANCE OF INTEREST U/S 36(1)(III) OF THE ACT IS CONCERNED, WE FIND THA T THE LD. CIT (A) HAS DISCUSSED THE ISSUE AT LENGTH IN PARAGRAPH 3.2 OF T HE IMPUGNED ORDER WHEREIN HE HAS GIVEN A CATEGORICAL FINDING TH AT THE LOANS AND ADVANCES INCLUDE INVESTMENT IN IMMOVABLE PROPERTY W HICH WAS PART OF THE BUSINESS ACTIVITY OF THE ASSESSEE. IT HAS BE EN FURTHER RECORDED BY THE LD. CIT (A) THAT THE INVESTMENT IN THE PARTN ERSHIP FIRM WAS MADE EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. I T HAS ALSO BEEN NOTED BY THE LD. CIT (A) THAT THE ADVANCES RECOVERA BLE AND FORWARD- COVER RECEIVABLE INCLUDED IN THE ADVANCES ARE BUSIN ESS ADVANCES AND HAVE BEEN GIVEN TO SUPPLIERS WITH WHOM REGULAR BUSINESS TRANSACTIONS ARE UNDER TAKEN. SIMILARLY WITH RESPEC T TO THE ADVANCE GIVEN TO DLF LTD., THE LD. CIT (A) HAS NOTED THAT T HE SAME HAS ALSO BEEN GIVEN FOR THE PURPOSE OF BUSINESS. THE LD. CIT (A) HAS ALSO 6 ITA NO.7800/DEL/2018 NOTED THAT APART FROM THESE ADVANCES, THERE WERE OT HER ADVANCES ALSO BUT ON WHICH INTEREST HAS DULY BEEN CHARGED BY THE ASSESSEE. THE LD. CIT (A) HAS ALSO PLACED RELIANCE ON THE JUD GMENT OF THE HONBLE APEX COURT IN THE CASE OF S.A. BUILDERS LTD . REPORTED IN 288 ITR 1 WHEREIN THE HONBLE APEX COURT HAD HELD THAT AN EXPENDITURE MAY NOT HAVE BEEN INCURRED UNDER ANY LEGAL OBJECTIO N BUT YET IT IS ALLOWABLE AS A BUSINESS EXPENDITURE IF IT WAS INCUR RED ON THE GROUNDS OF COMMERCIAL EXPEDIENCY. WE NOTE THAT THE HONBLE APEX COURT HAS ALSO OBSERVED THAT THE EXPRESSION COMMER CIAL EXPEDIENCY IS AN EXPRESSION OF WIDE IMPORT AND INC LUDES SUCH EXPENDITURE AS A PRUDENT BUSINESSMAN INCURS FOR THE PURPOSE OF BUSINESS. THE LD. CIT (A) HAS ALSO REFERRED TO THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DAL MIA CEMENT (PVT.) LTD. REPORTED IN 254 ITR 377 WHEREIN IT HAD BEEN HE LD BY THE HONBLE HIGH COURT THAT ONCE IT WAS ESTABLISHED THA T THERE WAS A NEXUS BETWEEN THE EXPENDITURE AND THE PURPOSE OF BU SINESS, THE REVENUE CANNOT JUSTIFIABLY CLAIM TO PUT ITSELF IN T HE ARMCHAIR OF THE BUSINESSMAN AND TAKE UP THE ROLE TO DECIDE AS TO HO W MUCH IS REASONABLE EXPENDITURE HAVING REGARD TO THE CIRCUMS TANCES OF THE CASE. THEREAFTER, THE LD. CIT (A) HAS GIVEN A CATEG ORICAL FINDING THAT IN THE INSTANT CASE THE LOANS AND ADVANCES HAVE BEE N GIVEN ON ACCOUNT OF COMMERCIAL EXPEDIENCY. THE LD. SR. DEPAR TMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY FACTUAL INAC CURACY IN THE FINDINGS OF THE LD. CIT (A) NOR COULD SHE POINT OUT HOW THE IMPUGNED ORDER WAS NOT LEGALLY SUSTAINABLE. ACCORDINGLY, WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT (A) ON T HIS ISSUE AND WE DISMISS THE GROUNDS RAISED BY THE DEPARTMENT. 4.3.1 THE HONBLE DELHI HIGH COURT IN ITA 39/2019 REJECTE D THE APPEAL OF THE REVENUE AGAINST THE ORDER OF THE TRIB UNAL OBSERVING AS UNDER: 5. THE GROUNDS OF COMMERCIAL EXPEDIENCE ARE NOW WE LL ESTABLISHED IN TAX JURISPRUDENCE. THE POSITION OF THE CIT(A) AN D ITS AFFIRMATION BY THE ITAT ARE ESSENTIALLY BASED UPON A FACT APPRECIA TION THAT THE ASSESSEE FOREWENT INTEREST. AS TO WHETHER THERE WAS AN ELEMENT OF SACRIFICE AND IF SO, FOR WHAT PURPOSE, IS NOT FOR T HE COURT TO CONSIDER, GIVEN THAT THE LOANS OBTAINED BY THE ASSESSEE WERE FOR ITS BUSINESS PURPOSES. 6. THERE IS NOTHING ON RECORD TO DISPEL/UNDERMINE T HE FINDINGS OF THE LOWER APPELLATE AUTHORITIES THAT COMMERCIAL EXPEDIE NCE DICTATED THE NATURE OF THE TRANSACTIONS. 4.3.2 IN ASSESSMENT YEAR 2012-13 ALSO THE TRIBUNAL IN I TA NO. 4156/DEL/2017 HAS DELETED THE DISALLOWANCE OBSERVIN G AS UNDER: 7 ITA NO.7800/DEL/2018 11. THE ASSESSEE IS IN THE BUSINESS OF REAL ESTATE , ENTERTAINMENT & POWER GENERATION AND THE LOANS & ADVANCES INCLUDE I NVESTMENTS IN THE PROPERTY BUSINESS OF THE ASSESSEE. HENCE, IT CA N BE SAID THAT THE ADVANCES RECOVERABLE INCLUDED THE ADVANCES WHICH AR E BUSINESS ADVANCES ON WHICH NO INTEREST IS DISALLOWABLE. IT W AS ALSO PART OF THE RECORD THAT ANOTHER ADVANCES INTEREST HAS BEEN CHARGED BY THE ASSESSEE AS FOUND OUT BY THE LD. CIT (A) ON GOING T HROUGH THE SCHEDULE 17 OF THE BALANCE SHEET. SINCE, THE LOANS & ADVANCES HAVE BEEN GIVEN ON ACCOUNT OF COMMERCIAL EXPEDIENCY AND NOTIONAL INTEREST CAN BE CHARGED ON SUCH ADVANCES OR INTERES T CAN BE DISALLOWED U/S 36(1)(III). IN THE CASE OF TAPARIA T OOLS VS JCIT CA NO. 6366 OF 2003, THE HONBLE APEX COURT OBSERVED THAT WHILE EXAMINING THE ALLOWABILITY OF DEDUCTION, THE ASSESS ING OFFICER IS TO CONSIDER THE GENUINENESS OF THE BUSINESS BORROWINGS AND THAT THE BORROWINGS WAS FURTHER PURPOSE OF BUSINESS AND GENU INE. ONCE, THE GENUINENESS IS PROVED AND INTEREST IS PAID ON THE B ORROWINGS, NO INTEREST CAN BE DISALLOWED ON THE GROUNDS THAT THE ASSESSEE HAS NOT CORRECTLY USED THE AMOUNTS BORROWED. FURTHER, THE H ONBLE APEX COURT IN THE CASE OF SA BUILDERS HELD THAT IN CASE OF INTEREST BEARING LOANS TAKEN AND INTEREST FREE ADVANCES GIVEN, WHAT IS TO BE LOOKED INTO IS THE MEASURE OF COMMERCIAL EXPEDIENCY AND FOR THE PURPOSE OF THE BUSINESS. HENCE, KEEPING IN VIEW THE FACTS OF THE CASE AND LEGAL PREPOSITIONS LAID DOWN ON THIS ASPECT OF ALLO WABILITY OF INTEREST U/S 36(1)(III), WE HEREBY DECLINE TO INTERFERE WITH THE ORDER OF THE LD. CIT (A). THE APPEAL OF THE REVENUE ON THIS GROUND I S DISMISSED. 4.4 WE FIND FROM THE ORDER OF THE ASSESSING OFFICER TH AT MOST OF THE INVESTMENTS/ADVANCES ARE CONTINUED FROM LAST YE AR I.E. ASSESSMENT YEAR 2012-13, WHEREIN THE TRIBUNAL (SUPR A) HAS DELETED THE DISALLOWANCE UNDER SECTION 36(1)(III) O F THE ACT ON THE GROUND THAT ADVANCES/INTEREST FREE LOANS HAVE BEEN GIVEN FOR BUSINESS PURPOSES IN VIEW OF THE COMMERCIAL EXPEDIE NCY. THE FACTS OF THE YEAR UNDER CONSIDERATION ARE ALSO IDEN TICAL TO FACTS OF THE CASE FOR ASSESSMENT YEAR 2011-12. IN VIEW OF TH E ABOVE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL (SUPRA) AND DECISION OF THE HONBLE DELHI HIGH COURT (SUPRA), W E DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE 8 ITA NO.7800/DEL/2018 AND ACCORDINGLY, WE UPHOLD THE SAME. THE GROUND OF THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 5. IN GROUND NO. 2, THE REVENUE HAS RAISED OBJECTION AGAINST RESTRICTING DISALLOWANCE UNDER SECTION 14A OF THE A CT TO 21,95,216/- AS AGAINST DISALLOWANCE OF 40,06,714/- MADE BY THE ASSESSING OFFICER. 5.1 BEFORE US, THE LEARNED DR RELIED ON THE ORDER OF T HE ASSESSING OFFICER. 5.2 THE LEARNED COUNSEL OF THE ASSESSEE, ON THE OTHER HAND, SUBMITTED THAT IN VIEW OF THE DECISION OF THE HONB LE DELHI HIGH COURT IN THE CASE OF JOINT INVESTMENT PRIVATE LIMIT ED VS. CIT, PASSED IN ITA NO. 117/2015 (ORDER DATED: 25.02.2021 5), THE DISALLOWANCE HAS BEEN RESTRICTED TO THE EXEMPTED IN COME AND, THEREFORE, THE ORDER OF THE LD. CIT(A) MIGHT BE UPH ELD. 5.3 WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES ON T HE ISSUE IN DISPUTE AND PERUSED THE RELEVANT MATERIAL ON REC ORD. THE ASSESSING OFFICER NOTICED THAT AVERAGE OF INVESTMEN T IN EQUITY SHARES DURING THE YEAR WAS OF 5,52,00,000/-, HOWEVER, NO DISALLOWANCE WAS MADE BY THE ASSESSEE FOR EARNING E XEMPT INCOME. AFTER RECORDING DISSATISFACTION OVER THE AC COUNTS OF THE ASSESSEE, THE ASSESSING OFFICER INVOKED RULE 8D OF THE INCOME-TAX RULES, 1962 [IN SHORT THE RULES] AND MADE DISALLO WANCE OF 40,06,740/-. THOUGH THE LD. CIT(A), UPHELD THAT THE ASSESSING OFFICER HAS RECORDED SUFFICIENT REASONS FOR COMPUTI NG DISALLOWANCE UNDER SECTION 14A OF THE ACT, HOWEVER, SHE RESTRICTED THE DISALLOWANCE TO 21,95,216/-. BEFORE US, THE LEARNED COUNSEL OF THE ASSESSEE HAS RELIED ON THE D ECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF JOINT INVES TMENT PRIVATE 9 ITA NO.7800/DEL/2018 LTD. (SUPRA) WHEREIN THE DISALLOWANCE HAS BEEN REST RICTED TO THE QUANTUM OF EXEMPTED INCOME EARNED BY THE ASSESSEE I N THE RELEVANT YEAR. BEFORE THE ASSESSING OFFICER, THE AS SESSEE MENTIONED THAT SHARE OF PROFIT FROM PARTNERSHIP FIR M AMOUNTING TO 21,95,216/- WAS CLAIMED AS EXEMPT AND LD. CIT(A) H AS ALSO RESTRICTED THE DISALLOWANCE TO THIS AMOUNT. RESPECT FULLY, FOLLOWING THE DECISION OF THE HONBLE DELHI HIGH COURT AS CIT ED BY THE LEARNED COUNSEL OF THE ASSESSEE, WE DIRECT THE ASSE SSING OFFICER TO RESTRICT THE DISALLOWANCE UNDER SECTION 14A OF T HE ACT TO THE QUANTUM OF EXEMPTED INCOME EARNED BY THE ASSESSEE D URING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE GROUND O F THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2021. SD/- SD/- (KUL BHARAT) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH JULY, 2021. RK/- (DTDC) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI