The Ludhiana Improvement Trust, Ludhiana V. ITO(TDS), Ludhiana

ITA 796/CHANDI/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8445 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-03-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 11-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard; Earning of tax free income; Retrospective amendment
• Section: 143(3); 14A; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.796 /CHD/2011 (ASSESSMENT YEAR : 2007-08) OSWAL WOOLLEN MILLS LTD., VS. THE A.C.I.T., G.T. ROAD, SHERPUR, CIRCLE-7, LUDHIANA. LUDHIANA. PAN: AAACO1973F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVDEEP SHARMA RESPONDENT BY : SHRI SUSHIL KUMAR, CIT DR DATE OF HEARING : 25.01.2017 DATE OF PRONOUNCEMENT : 28.02.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 3, LUDHIANA, DATED 04.03.2016. 2. BRIEF FACTS RELATING TO THE CASE ARE THAT ORIGI NAL ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143(3) OF INCOME TAX ACT, 1961 (IN SHORT THE ACT) AT AN INC OME OF RS.24,47,44,881/- BY MAKING ADDITIONS AMOUNTING IN ALL TO RS.21,45,651/-, AND WHICH INCLUDED ADDITION OF RS.10,06,483/- ON ACCOUNT OF DISALLOWANCE MADE U/S 14A OF THE INCOME ACT. THE LD. CIT (APPEALS) UPHELD TH E 2 DISALLOWANCE AGAINST WHICH THE ASSESSEE FILED AN AP PEAL BEFORE THE I.T.A.T., WHO VIDE THEIR ORDER DATED 06. 03.2012 IN ITA NOS.16 & 53/CHD/2012, SET ASIDE THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE U/S 14A, BY MAKING THE FOLLOWING OBSERVATION AT PARA 35 0F THE ORDER:- 35. FROM THE ABOVE DECISIONS, IT IS CLEAR THAT THE SATISFACTION OF THE CLAIM MADE BY THE ASSESSING OFFICER REGARDING THE EXPENSES INCURRED IN RELATION TO THE INCOME DOES NOT FORM TOTAL INCOME UNDER THE |ACT, IS NOT CORRECT, IS TO BE ARRIVED AT BY THE ASSESSING OFFICER ON OBJECTIVE BASIS. BOTH THE AUTHORITIES BELOW HAVE NOT RECORDED ANY FINDINGS THAT HAVING REGARD TO THE ACCOUNT OF THE ASSESSEE THEY ARE NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE EXPENDITURE MADE BY THE ASSESSEE THAT NO EXPENDITURE HAD BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IN THE ABSENCE OF ANY FINDINGS, WE ARE OF THE VIEW THAT THE ORDER OF THE CIT(A) DESERVES TO BE SET ASIDE. WE ORDER ACCORDINGLY AND REMAND THE ISSUE TO THE ASSESSING OFFICER FOR FRESH DECISION IN ACCORDANCE WITH LAW AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO.1 OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 3. THE ASSESSING OFFICER THEREAFTER ISSUED NOTICE TO THE ASSESSEE AND AFTER GIVING DUE OPPORTUNITY OF HE ARING TO THE ASSESSEE PASSED A FRESH ORDER DATED 18.03.20 13 COMPUTING THE DISALLOWANCE UNDER SECTION 14A AT RS.54,65, 408/- 3 4. THE ASSESSEE FILED AN APPEAL AGAINST THE AFORESTATED ORDER BEFORE THE LD. CIT (APPEALS) AND ARGUED THAT THE ASSESSING OFFICER COULD NOT HAVE ENHANCED THE DISALLOWANCE IN THE 2 ND ROUND, CONSEQUENT TO THE DIRECTION OF THE I.T.A.T. LD. CIT (APPEALS) REJECTED THE ASS ESSEES CONTENTION AND UPHELD THE DISALLOWANCE MADE UNDER SECTION 14A. 5. AGGRIEVED BY THE SAME THE ASSESSEE HAS NOW COME UP IN APPEAL BEFORE US RAISING THE FOLLOWING G ROUNDS: 1. THAT THE WORTHY CIT(A)-II, ERRED IN LAW AND ON FA CTS IN HOLDING THAT THE LD. ASSESSING OFFICER WAS CORRECT I N ASSUMING JURISDICTION IN RE-COMPUTING DISALLOWANCE U/S 14A W.R.T. RULE 8D AT RS.54,65,408/- AS AGAINST RS.10,30,043/-; ORIGINALLY COMPUTED IN REGULAR ASSESSMENT BY APPLYING RULE 8D READ WITH SECTION 14A, WHILE GIVING APPEAL EFFECT TO THE ORDER OF HON'BL E ITAT. DIRECTIONS MAY BE GIVEN TO REDUCE THE DISALLOWANCE TO RS.23,560/- AS COMPUTED BY THE APPELLANT IN ITS RETURN. ALTERNATIVELY, WITHOUT PREJUDICE TO THE ABOV E, THE DIRECTIONS BE GIVEN TO RESTRICT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U/S 14A W.R.T. RULE 8D AT RS.10,30,043/- DURING THE ORIGINAL ASSESSMENT. 2. A) THAT THE WORTHY CIT(A)-II, HAS FURTHER ERRED IN LAW AND ON FACTS IN UPHOLDING THE RE-COMPUTATION OF DISALLOWANCE OF RS.54,65,408/- MADE U/S 14A OF THE ACT W.R.T. RULE 8D OF THE INCOME-TAX ACT, IN THE CA SE HEREIN, REMANDED TO THE ASSESSING OFFICER AND ESPECIALLY IN THE ABSENCE OF ANY GROUND ON RE- COMPUTATION .OF CALCULATION U/R 8D BEFORE HON'BLE IT AT, WHICH WOULD AMOUNT TO ENHANCEMENT. 4 DIRECTIONS BE GIVEN TO RESTRICT THE DISALLOWANCE AT RS.23,560/- AS SHOWN OR IN ALTERNATIVE AT RS.10,30,043/ - COMPUTED BY THE ASSESSING OFFICER IN ORIGINAL ASSESS MENT ORDER. B) THE WORTHY CIT(A)-II, HAS ERRED IN LAW AND ON FAC TS IN UPHOLDING THE ACTION OF THE LD. ASSESSING OFFICER, I N CONSIDERING THE AMOUNT OF INTEREST PAID ON TERM LOAN S AND ON WORKING CAPITAL LOANS AMOUNTING TO RS.7,28,93,462 /- & RS.7,71,93,862/- RESPECTIVELY, WHILE RE-COMPUTING TH E DISALLOWANCE U/S 14A READ WITH RULE 8D. DIRECTIONS BE GIVEN TO EXCLUDE THE AMOUNT OF INTERES T PAID ON TERM LOANS OF RS.7,28,93,462/- AS WELL AS INTEREST ON WORKING CAPITAL LOANS OF RS.7,71,93,862/- SPECIFICALLY RAISED AND UTILIZED FOR INCOME SUBJECT TO TAX, WHILE RE-COMPUTING THE DISALLOWANCE U/S 14A BY APPLYING RULE 8D. C) THE WORTHY CIT(A)-II, HAS FURTHER, ERRED IN LAW AND ON FACTS IN UPHOLDING THE ACT OF THE LD. ASSESSING OFFICER, IN CONSIDERING AVERAGE TOTAL INVESTMENTS OF THE APPELLANT COMPANY AT RS.13,37,25,529/- INSTEAD OF AVERAGE TOTAL INVESTMEN TS OF RS.12,50,99,353/- ON WHICH THE EXEMPT INCOME ACCRUED FOR COMPUTING DISALLOWANCE U/S 14A READ WITH RULE 8D. DIRECTIONS BE GIVEN TO CONSIDER ONLY THOSE INVESTME NTS ON WHICH EXEMPT INCOME AROSE AND NOT THE TOTAL INVESTMENTS OF THE APPELLANT COMPANY WITHOUT PREJUDICE TO THE ABOVE GROUNDS OF APPEAL AND IN ALTERNATIVE, THE DISALLOWANCE U/S 14A CANNOT EXCEED THE AMOUNT OF EXEMPTED DIVIDEND INCOME OF RS.18,93,345/- RECEIVED AND CLAIMED, DURING THE YEAR. DIRECTIONS BE GIVEN ACCORDINGLY. THE APPELLANT RELIES ON JURISDICTIONAL ' HIGH COURT DECISION DATED 02- 5 4.2014 IN THE CASE OF CIT, FARIDABAD VS. MASCOT FOOTCARE LTD. IN ITA NO.67 OF 2009 (P & H). 3. THE APPELLANT CRAVES, LEAVE TO ADD, AMEND, ALTER, MODIFY OR SUBSTITUTE ALL OR ANY OF THE ABOVE MENTIONED GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD AND DISPOSED OFF. 6. DURING COURSE OF HEARING BEFORE US THE ONLY ARGUMENT TAKEN UP BY THE LD. COUNSEL FOR THE ASSESS EE WAS THAT THE AO HAD ERRED IN ENHANCING THE DISALLOW ANCE UNDER SECTION 14A, SINCE IT WAS IN CONTRAVENTION OF THE SPECIFIC DIRECTION OF THE ITAT TO ONLY RECORD SATIS FACTION THAT THE CLAIM OF THE ASSESSEE OF HAVING INCURRED EXPENDITURE RELATING TO INCOME EXEMPT UNDER SECTION 14A, WAS INCORRECT. THE LD. COUNSEL ARGUED THAT THE AO S HOULD HAVE CONFINED HIS ORDER ONLY TO THE RECORDING OF SATISFACTION AND COULD NOT HAVE GONE BEYOND THAT AN D RECOMPUTED THE DISALLOWANCE UNDER SECTION 14A THAT TOO AT AN ENHANCED FIGURE. LD. COUNSEL FURTHER ARGUED T HAT THE ACTION OF THE ASSESSING OFFICER TANTAMOUNTED TO ENHANCEMENT, MADE IN PURSUANCE TO ORDER OF THE ITAT , WHICH WAS NOT PERMISSIBLE UNDER LAW. LD. COUNSEL RE LIED UPON A NUMBER OF DECISIONS IN THIS REGARD AS UNDER : 1. KELLOGG INDIA PVT. LTD. VS ACIT ITA NO.6005 & 5778/MUM/2010 DATED 10.8.2012 2. STATE OF KERALA VS VIJAYA STORE, 116 ITR 15 (SC ) 3. MCORP GLOBAL (P) LTD. VS CIT, 309 ITR 434 (SC) 7. LD.DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE CIT (APPEALS). 6 8. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES, PERUSED THE DOCUMENTS PLACED BEFORE US AND ALSO GONE THROUGH THE ORDERS RELIED UPON BY BOTH THE LD. REPRESENTATIVES. 9. WE FIND THAT THE ISSUE BEFORE US IS WHETHER THE ASSESSING OFFICER IN THE 2 ND ROUND OF PROCEEDINGS BEFORE IT, PURSUANT TO DIRECTIONS GIVEN BY THE ITAT COULD HAVE ENHANCED THE DISALLOWANCE UNDER SECTION 14A OF THE INCOME TAX ACT FROM RS.10,64,083/- MADE ORIGINALLY TO RS.54,65,408/-. 10. CONSIDERING THE ARGUMENTS MADE BEFORE US BY THE LD.COUNSEL FOR THE ASSESSEE WE FIND THAT THERE ARE TWO ASPECTS TO THE ISSUE: 1. WHETHER THE AO WAS DIRECTED TO RECOMPUTE THE DISALLOWANCE UNDER SECTION 14A AS PER THE DIRECTIONS OF THE ITAT. 2. IF THE ANSWER TO THE ABOVE IS YES, COULD THE AO HAVE ENHANCED THE DISALLOWANCE SO MADE IN THE 2 ND ROUND BEFORE IT. 11. COMING TO THE 1 ST ISSUE, WHETHER THE ASSESSING OFFICER WAS DIRECTED BY THE ITAT TO RECOMPUTE THE DISALLOWANCE UNDER SECTION 14A, IT IS NECESSARY TO LOOK INTO THE FACTS OF THE CASE BEFORE THE ITAT, THE ISS UE BEFORE IT AND THE DIRECTION GIVEN BY THE ITAT, TO UNDERSTA ND WHAT EXACTLY WAS THE DIRECTION GIVEN BY IT. 7 12. A PERUSAL OF THE ORDER OF THE ITAT REVEALS THA T THE DISALLOWANCE MADE UNDER SECTION 14A WAS CONTES TED BY THE ASSESSEE FOR THE REASON THAT THE ASSESSING OFFICER HAD MADE THE DISALLOWANCE WITHOUT ASSUMING PROPER JURISDICTION. THE LD. COUNSEL FOR THE ASSESSEE HAD STATED THAT THE ASSESSING OFFICER WAS REQUIRED TO APPLY HI S MIND TO THE PLEA OF THE ASSESSEE THAT IT HAD DISALLOWED EXPENSES OF RS.23,560/- IN ITS RETURN OF INCOME U/S 14A ON PROPORTIONATE BASIS AND THE ASSESSING OFFICER WA S ALSO REQUIRED TO GIVE FINDING TO THE EFFECT, THAT HE WAS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE AND ONLY THEREAFTER THE ASSESSING OFFICER COULD HAVE RESORTED THE PROVISIONS OF RULE 8D FOR THE PUR POSE OF COMPUTING DISALLOWANCE U/S 14A OF THE ACT. WE FIND THAT THIS WAS THE ONLY ARGUMENT TAKEN UP BY THE LD.COUNS EL FOR THE ASSESSEE BEFORE THE ITAT. THE ITAT THEREAFT ER DISCUSSED THE VARIOUS JUDICIAL PRONOUNCEMENTS ON TH E ISSUE OF RECORDING OF SATISFACTION BY THE ASSESSIN G OFFICER REGARDING THE EXPENSES INCURRED IN RELATION TO THE INCOME WHICH IS EXEMPT UNDER THE ACT, WHETHER IT IS CORREC T OR NOT, AND STATED THAT THAT THE SATISFACTION IS TO BE ARRIVED AT BY THE ASSESSING OFFICER ON AN OBJECTIVE BASIS. THE ITAT FURTHER WENT ON TO STATE THAT THE AUTHORITIES BELOW HAD NOT RECORDED ANY FINDING THAT HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE THEY WERE NOT SATISFIED W ITH THE CORRECTNESS OF THE CLAIM OF THE EXPENDITURE OR THAT NO EXPENDITURE HAD BEEN INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. IN THE ABSE NCE OF 8 ANY SUCH FINDINGS, THE ITAT HELD, THAT THE ORDER OF THE CIT (APPEALS) HAD TO BE SET-ASIDE. THEREAFTER IT REMAND ED THE ISSUE FOR FRESH DECISION IN ACCORDANCE WITH LAW AFT ER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS IS EVIDENT FROM PARA 35 OF THE ORDE R OF THE I.T.A.T. REPRODUCED IN THE EARLIER PART OF THE ORDE R. 13. IT IS CLEAR FROM THE ABOVE THAT THE MATTER HAD BEEN REMANDED BACK TO THE ASSESSING OFFICER ONLY TO RECORD SATISFACTION THAT THE CLAIM OF THE ASSESSEE OF EXPENSES INCURRED ON ACCOUNT OF EARNING EXEMPT INCO ME WAS INCORRECT. THE ITAT IN THE ENTIRE ORDER HAS NO T DEALT WITH THE QUANTUM OF DISALLOWANCE MADE AND THEREFORE NO QUESTION ARISES OF THE ITAT RESTORING THE MATTER BA CK TO THE ASSESSING OFFICER FOR RECALCULATING THE DISALLO WANCE UNDER SECTION 14A AT ALL. IN VIEW OF THE ABOVE IT I S CLEAR THAT THE MATTER WAS SENT BACK TO THE ASSESSING OFFI CER ONLY TO RECORD SATISFACTION THAT THE CLAIM MADE BY THE ASSESSEE OF EXPENDITURE INCURRED ON ACCOUNT OF EARN ING EXEMPT INCOME WAS INCORRECT. THEREFORE WE FIND THAT THE ASSESSING OFFICER BY ADJUDICATING THE ISSUE OF QUAN TUM OF DISALLOWANCE HAS EXCEEDED HIS JURISDICTION AND THE ENHANCEMENT THEREFORE MADE NEEDS TO BE DELETED FOR THIS REASON ALONE. 14. EVEN OTHERWISE WE AGREE WITH THE CONTENTION O F THE LD.COUNSEL FOR THE ASSESSEE THAT THE TRIBUNAL HAS NO POWER TO ENHANCE THE ASSESSMENT MADE. THE RELIANCE PLACED BY THE LD. COUNSEL FOR THE ASSESSEE ON THE D ECISION 9 OF MUMBAI BENCH OF THE ITAT IN THE CASE OF KELLOGG INDIA PVT. LTD. VS ACIT IN ITA NO. 6005/MUM/2010 DATED 10.08.2012 IS APT AND THE HONBLE TRIBUNAL IN ITS O RDER, WHILE DEALING WITH AN IDENTICAL ISSUE WHEREIN ON RE MAND BY THE TRIBUNAL TO THE ASSESSING OFFICER, THE ASSES SING OFFICER HAD ENHANCED THE DISALLOWANCE MADE IN THE 2 ND ROUND, THE TRIBUNAL AT PARA 32 HELD AS FOLLOWS: 32. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOW A SETTLED PROP OSITION OF LAW THAT THE APPELLATE TRIBUNAL UNDER SECTION 254 (1) OF THE ACT, HAD NO POWER TO TAKE BACK THE BENEFIT CONF ERRED BY THE ASSESSING OFFICER OR ENHANCE THE ASSESSMENT ONCE THE MATTER HAS BEEN RESTORED BY THE TRIBUNAL, THE I NCOME CANNOT BE ENHANCED FROM WHAT WAS DETERMINED AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS, WHICH WAS THE SUBJEC T MATTER OF DISPUTE BEFORE THE TRIBUNAL. THIS PROPOSIT ION OF LAW HAS BEEN UPHELD BY THE HON'BLE SUPREME COURT IN HUKUMCHAND MILLS LTD. V/S CIT, [1966] 62 ITR 232 (SC), AND HAD NOW BEEN REITERATED IN MCORP GLOBAL (P) LTD. (SUPRA) . THEREFORE, IN VIEW OF THIS PROPOSITION OF LAW, THE ENHA NCEMENT OF ASSESSMENT BY MAKING 100% DISALLOWANCE IN RESPECT OF FREE FOOD ALLOWANCE CANNOT BE SUSTAINED AND THE SAME IS RESTRICTED TO 50%, AS WAS MADE BY THE ASSESSING OFFI CER IN THE ORIGINAL ROUND OF PROCEEDINGS. CONSEQUENTLY, THIS GROUND IS ALLOWED TO THIS EXTENT ONLY. 15. IN THE CASE OF MCORP GLOBAL (P) LTD. VS. CIT 2 22 CTR 110 THE HONBLE APEX COURT HAS CATEGORICALLY HE LD THAT UNDER SECTION 254 (1) OF THE INCOME TAX ACT, 1 961, THE TRIBUNAL WAS NOT AUTHORISED TO TAKE BACK THE BE NEFIT GRANTED TO THE ASSESSEE BY THE ASSESSING OFFICER. T HE RELEVANT FINDINGS OF THE APEX COURT AT PARA 8 OF IT S ORDER IS AS FOLLOWS: 10 8. IN THE CASE OF HUKUMCHAND MILLS LTD. V. CIT REPORTE D IN (1967) 63 ITR 232 THIS COURT HAS HELD THAT UNDER SEC TION 33(4) OF THE INCOME-TAX ACT, 1922 (EQUIVALENT TO SECTION 254 (1) OF THE 1961 ACT), THE TRIBUNAL WAS NOT AUTHORIZED TO TAKE BAC K THE BENEFIT GRANTED TO THE ASSESSEE BY THE AO. THE TRIBUNAL HA S NO POWER TO ENHANCE THE ASSESSMENT. APPLYING THE RATIO O F THE SAID JUDGMENT TO THE PRESENT CASE, WE ARE OF THE VI EW THAT, IN THIS CASE, THE AO HAD GRANTED DEPRECIATION IN RESPECT OF 42,000 BOTTLES OUT OF THE TOTAL NUMBER OF BOTTLES (5,46,0 00), BY REASON OF THE IMPUGNED JUDGMENT. THAT BENEFIT IS SOU GHT TO BE TAKEN AWAY BY THE DEPARTMENT, WHICH IS NOT PERMISSIBLE IN LAW. THIS IS THE INFIRMITY IN THE IMPUGNED JUDGMENT O F THE HIGH COURT AND THE TRIBUNAL. 16. IN VIEW OF THE ABOVE ALSO THE ASSESSING OFFICE R COULD NOT HAVE ENHANCED THE DISALLOWANCE MADE UNDER SECTION 14A OF THE ACT IN PURSUANCE TO THE TO THE D IRECTION GIVEN BY THE ITAT WHILE REMANDING THE ISSUE TO THE ASSESSING OFFICER. 17. WE MAY FURTHER ADD THAT THE LD. CIT (APPEALS) WHILE DISMISSING THE ASSESSEES APPEAL RELIED UPON THE JUDGEMENT OF THE ITAT, MUMBAI BENCH, GIVEN IN THE C ASE OF THE CIT VS. SAKURA BANK LIMITED, 99 TTJ 689 (MUM ). THE SAID JUDGEMENT WE FIND IS DISTINGUISHABLE ON FA CTS. IN THE SAID JUDGEMENT, WHILE ANSWERING THE QUESTION PO SED BEFORE IT WHETHER THE ASSESSEE COULD BE IN A POSITI ON WORSE OFF AS A RESULT OF THE MATTER BEING CARRIED I N APPEAL BEFORE THE TRIBUNAL BY THE REVENUE, THE TRIBUNAL HE LD THAT UNDOUBTEDLY THE NORMAL PRINCIPLE IS THAT THE TRIBUN AL DOES NOT HAVE ANY POWERS OF ENHANCEMENT. BUT THE I TAT HELD THAT THIS PRINCIPLE IS NOT WITHOUT EXCEPTIONS. 11 THEREAFTER THE ITAT OUTLINED THE PECULIAR SITUATION IN THE FACTS OF THE CASE BEFORE IT, BEING RETROSPECTIVE I NSERTION OF EXPLANATION IN SECTION 90 OF THE ACT, WHICH RESULTE D IN ENHANCEMENT OF THE INCOME OF THE ASSESSEE AND STAT ED THAT THE SAID SITUATION BEING EXCEPTION TO THE RUL E, COULD HAVE RESULTED IN AN ENHANCEMENT BEING MADE TO THE INCOME OF THE ASSESSEE. THE TRIBUNAL HELD THAT THE SITUATION IN THE FACTS OF THE CASE BEFORE IT WAS MA TERIALLY DIFFERENT FROM THE CASES IN WHICH THE ASSESSEES ENHANCEMENT IS IN RESPECT OF ASSESSED INCOME AND IN WHICH THERE WERE NO RETROSPECTIVE AMENDMENTS IN LEGISLATION. THE TRIBUNAL HELD THAT THE LAW LAID DO WN BY COURTS IN THOSE CASES WOULD NOT THEREFORE HAVE ANY APPLICATION IN THE PRESENT CASE, WHICH WAS ON THESE PECULIAR FACTS INCLUDING THE FACT ABOUT RETROSPECTI VE AMENDMENT IN THE RELEVANT STATUTORY PROVISIONS. IT IS CLEAR THEREFORE THAT THE FACTS OF THE CASE IN SAKURA BANK (SUPRA) WERE MATERIALLY DIFFERENT AND THEREFORE DISTINGUISH ABLE FROM THE OTHER CASES AND THEREFORE THE GENERAL PRIN CIPLE THAT THE TRIBUNAL DID NOT HAVE THE POWERS OF ENHANC EMENT WAS SAID TO BE NOT APPLICABLE IN THAT CASE. THE DEC ISION IN THE CASE OF SAKURA BANK LIMITED (SUPRA), HAVING BEE N RENDERED AS AN EXCEPTION TO THE GENERAL RULE THAT T HE ITAT HAS NO POWERS OF ENHANCEMENT, IN THE LIGHT OF THE P ECULIAR FACTS OF THE CASE, THEREFORE DOES NOT APPLY IN THE PRESENT CASE AND THE LD. CIT (APPEALS) HAS ERRED IN RELYING UPON THE DECISION WITHOUT POINTING OUT THE PECULIARITY O F THE CIRCUMSTANCES IN THE PRESENT CASE TO WARRANT 12 ENHANCEMENT. IN VIEW OF THE ABOUT THE ENHANCEMENT M ADE BY THE ASSESSING OFFICER IS SET ASIDE. 18. FURTHER, WE MAY ADD THAT THE LD. COUNSEL FOR THE ASSESSEE RAISED NO OTHER ARGUMENTS BEFORE US A ND IN FACT AGREED TO THE RESTRICTION OF THE DISALLOWANCE MADE ORIGINALLY U/S 14A, TO RS.10,30,043/-. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE VIS-A-VIS ENHANCEMENT OF DISALLOWANCE U/S 14A FROM RS.10,30,043/- TO RS.54,65,408/- ARE THEREFORE ALLOWED WHILE THE REST OF THE GROUNDS RAISED ARE DISMISSED. 19. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (C.M. GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH FEBRUARY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH