DCIT, C-I, Ludhiana V. M/s Rico Auto Industries Limited, Ludhiana

ITA 800/CHANDI/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6259 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 31-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: VIPIN GUPTA
• Keywords: Earning of tax free income; Retrospective amendment; Question of law; Revised return; Rule 8D; Set aside
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH B, CHANDIGARH , . '.., # $, %& BEFORE: SH.SANJAY GARG, JUDICIAL MEMBER & DR. B.R.R . KUMAR, ACCOUNTANT MEMBER ./ ITA NO. 800/CHD/2018 ( ) / ASSESSMENT YEAR : 2013-14 THE DCIT, C-1 CIRCLE 1, LUDHIANA PUNJAB M/S RICO AUTO INDUSTRIES LTD. B-26, FOCAL POINT LUDHIANA, PUNJAB ./ PAN NO: AAACR8724R / APPELLANT / RESPONDENT / ASSESSEE BY : SHRI. VIPIN GUPTA / REVENUE BY : SMT. RENU AMITABH, CIT DR ! ' # / DATE OF HEARING: 14/02/2019 $%&'() # / DATE OF PRONOUNCEMENT : 02/05/2019 %*/ ORDER PER DR. B.R.R. KUMAR, A.M: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE LD. CIT(A)-1, LUDHIANA DT. 23/03/2018. 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPE AL: 1. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) WAS JUSTIFIED IN LAW AND ON FACTS IN DIRECTING THE AO T O RE-CALCULATE THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE U/S. 14A OF THE INCOME T AX ACT, 1961 BY APPLYING THE AMENDED PROVISIONS OF RULE 8D(2)(II) @1% OF THE ANN UAL AVERAGE OF MONTHLY AVERAGE OF THE OPENING AND CLOSING BALANCES OF THE VALUE OF INVESTMENTS, WHEREAS THE SAME AMENDMENT WAS INTRODUCED W.E.F. 02 .06.2016 AND DOES NOT HAVE RETROSPECTIVE EFFECT? 2. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) WAS JUSTIFIED IN LAW AND ON FACTS IN ALLOWING THE DISAL LOWANCE U/S. 14A OF THE INCOME TAX ACT, 1961 VOLUNTARILY MADE BY THE ASSESSEE AT T HE TIME OF FILING OF RETURN OF INCOME BASED ON OBSERVATION OF AUDITORS, WHO, THEMS ELVES ON CLOSE PERUSAL OF THE BOOKS AND INVESTMENTS OF THE ASSESSEE WERE CONV INCED THAT DISALLOWANCE U/S. 14A IS CALLED FOR THE TUNE OF RS. 3.55 CRORE? 3. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) WAS JUSTIFIED IN LAW AND ON FACTS IN ALLOWING THE VOLUN TARY DISALLOWANCE U/S. 14A OF THE INCOME TAX ACT, 1961 MADE BY THE ASSESSEE AT THE TI ME OF FILING OF RETURN OF INCOME, IGNORING THE DECISION OF THE HON'BLE SUPREM E COURT IN THE CASE OF GOETZE (INDIA) LTD., VS. CIT [2006; 284 ITR 323], W HEREIN IT WAS CATEGORICALLY HELD THAT THE AO CANNOT ENTERTAIN CLAIM OF DEDUCTION OTH ERWISE THAN BY FILING OF THE REVISED RETURN BY THE APPELLANT? 2 4. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) WAS JUSTIFIED IN LAW AND ON FACTS IN ALLOWING RELIEF ON ACCOUNT OF CAPITALIZATION OF INTEREST AS PER PROVISO TO SECTION 36(L)(III) OF TH E INCOME TAX ACT, 1961 ON INVESTMENT IN SHARES OF DOMESTIC COMPANIES AND CAPI TAL ADVANCE FOR PURCHASE OF LAND AND OTHER ADVANCES DESPITE THE FACT THAT SH ARE CAPITAL AND RESERVES AND SURPLUS WERE ALREADY EXHAUSTED BY THE ASSESSEE IN FIXED ASSETS? 5. THAT THE ORDER OF THE LD. CIT (A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE DETAILED FACTS OF THE CASE TAKEN FROM THE OR DER OF THE LD.CIT(A). 4. THE ASSESSEE COMPANY HAD MADE INVESTMENTS TO THE TUNE OF RS.74.89 CRORES IN THE EQUITY OF DOMESTIC GROUP COMPANIES, S OME OF WHICH INVESTMENTS YIELDED EXEMPT DIVIDEND INCOME OF RS.2,96,24,955/-. IT WAS ALSO NOTED BY THE AO THAT THE ASSESSEE COMPANY HAD SIGNIFICANT AMOUNT OF BORROWED FUNDS WHICH WERE ALMOST SIMILAR TO THE ASSESSEE'S OWN NON-INTER EST-BEARING FUNDS. THE ASSESSEE ITSELF COMPUTED THE DISALLOWANCE AT RS.3,3 5,66,806/- UNDER SECTION 14A READ WITH RULE 8D AND ADDED THE SAME TO ITS RETURNE D INCOME. NO FURTHER DISALLOWANCE WAS, THEREFORE, MADE BY THE AO. IN THE APPELLATE PROCEEDINGS, IT WAS FIRST CONTENDED THAT THE VOLUNTARY DISALLOWANCE OF RS.3,35,66,806/- WAS AN INADVERTENT MISTAKE ON THE PART OF THE ASSESSEE COM PANY, WHICH SHOULD NOT BE TAKEN INTO ACCOUNT AS NO AMOUNT OF DISALLOWANCE IS REQUIRED IN THE CIRCUMSTANCES OF THE ASSESSEE'S CASE WHERE INVESTME NTS WERE MADE OUT OF OWN NON-INTEREST-BEARING FUNDS AND REGULAR CASH PROFITS OF THE COMPANY WITHOUT ANY PART OF THE BORROWED FUNDS HAVING BEEN USED FOR SUC H INVESTMENTS. VARIOUS JUDICIAL PRECEDENTS WERE CITED IN SUPPORT OF THE AF ORESAID PROPOSITION OF NO DISALLOWANCE WHERE INTEREST BEARING FUNDS HAVE NOT BEEN UTILIZED FOR MAKING INVESTMENTS. THE AO WAS ALSO ALLEGED TO HAVE IGNORE D THE JUDICIALLY ORDAINED CALCULATION OF DISALLOWANCE BY CONSIDERING ALL INVE STMENTS EVEN IF SUCH INVESTMENTS HAVE NOT YIELDED EXEMPT INCOME [ITAT CH ANDIGARH BENCH IN THE CASE OF M/S RAMTECH SOFTWARE SOLUTIONS PVT. LTD. IN ITA NO. 477/2015 DATED 14/08/2015]. THE ASSESSEE HAS, ADMITTEDLY, EARNED E XEMPT INCOME DURING THE YEAR UNDER CONSIDERATION AND THE OUTLAY IN TERMS OF INTEREST ON BORROWED CAPITAL IS ALSO A FACT ON RECORD. THERE IS NO DOUBT ABOUT T HE UNITY OF CONTROL AND COMMONALITY OF FUNDS AND MANAGEMENT IN RELATION TO THE 'BUSINESS ACTIVITY' AND 'INVESTMENT ACTIVITY, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF THE TOTAL INCOME'. SINCE NO DIRECT EXPENSES ARE PURPORTED TO HAVE BEEN MADE BY THE ASSESSEE COMPANY IN ACQUIRING THE INVESTMENTS O R NOTICED BY THE AO, NO DISALLOWANCE HAS BEEN MADE UNDER RULE 8D (2) (I). T O TAKE CARE OF A SITUATION WHERE THERE IS A MIXED USE OF BORROWED FUNDS, APPOR TIONMENT OF INTEREST EXPENDITURE IS MANDATED AS PER THE PROVISIONS OF RU LE 8D, WHICH STANDS 3 SUBSTITUTED BY THE IT (14TH AMDT.) RULES, 2016, W.E .F. 02/06/2016. THE SAID RULE PROVIDES THAT THE EXPENDITURE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME SHALL BE THE AGGREGATE FOLLOWING A MOUNTS, NAMELY: (I) THE AMOUNT OF EXPENDITURE DIRECTLY RELATING TO INCOME W HICH DOES NOT FORM PART OF TOTAL INCOME; AND (II) AN AMOUNT EQUAL TO ONE PERCE NT OF THE ANNUAL AVERAGE OF THE MONTHLY AVERAGES OF THE OPENING AND CLOSING BALANCES OF THE VALUE OF INVESTMENT, INCOME FROM WHICH DOES NOT OR SHALL NOT FORM PART OF TOTAL INCOME, PROVIDED THAT THE AMOUNT REFERRED TO IN CLAUSE (I) & CLAUSE (II) SHALL NOT EXCEED THE TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE. THIS AMENDMENT TO THE MECHANISM OF CALCULATING DISALLOWANCE UNDER THE PRO VISIONS OF SECTION 14A, PARTICULARLY THE MERGER OF THE ERSTWHILE RULE 8D (2 ) (II) & (III) INTO RULE 8D (II) SPECIFYING THE PROPORTIONATE DISALLOWANCE @ 1%, IS UNDOUBTEDLY, MEANT FOR TAKING CARE OF A SITUATION WHERE THERE IS A MIXED U SE OF BORROWED FUNDS AND NON-INTEREST-BEARING FUNDS AND CONSEQUENTLY APPORTI ONMENT OF EXPENDITURE IS WELL-NIGH IMPOSSIBLE. IF THE SAID PROVISION IS INTE RPRETED IN A WAY TO MEAN THAT ONLY EXPENSES DIRECTLY RELATED TO EARNING DIVIDEND INCOME OR EXEMPT INCOME ARE TO BE DISALLOWED AND EXPENSES OF THE NATURE OF INTEREST ON BORROWINGS WHICH ARE NOT DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INC OME ON RECEIPT ARE NOT COVERED, IT WOULD ONLY MAKE THE PROVISION OF RULE 8 D (2) (II) OTIOSE AND REDUNDANT. SUCH AN INTERPRETATION CANNOT BE CONSIDE RED TO BE BASED ON PURPOSIVE CONSTRUCTION OF THE RULE. IT IS JUDICIALL Y WELL SETTLED THAT RULES ARE PROCEDURAL LAW AND ARE APPLICABLE TO THE PROCEEDING S, WHICH ARE PENDING AS ON DATE. THE AFORESAID AMENDED PROVISIONS OF RULE 8 D HAVE BEEN MADE EFFECTIVE FROM 02/06/2016 AND, THEREFORE, ITS APPLI CABILITY IN THE INSTANT CASE IS NECESSARILY IMPLIED. IT CLEARLY INDICATES THAT THE APPLICABILITY OF THE AMENDED RULES ARE NOT REFERABLE TO EITHER THE FINANCIAL YEA R OR THE ASSESSMENT YEAR. MAKING IT EFFECTIVE FROM 2 ND OF JUNE, 2016 MEANS THAT THE AMENDED PROVISIONS SHALL BE APPLICABLE TO ALL PENDING PROCEEDINGS OF A SSESSMENT OR APPEAL AS ON 2 ND OF JUNE, 2016. A DISTINCTION CAN BE DRAWN BETWEEN ENACTMENTS THAT HAVE SUBSTANTIVE EFFECT AND THOSE THAT ARE MERELY PROCED URAL. HERE SUBSTANTIVE MEANS HAVING TO DO WITH THE SUBSTANCE OF THE LAW, I N PARTICULAR THE NATURE AND EXISTENCE OF LEGAL RIGHTS, POWER OR DUTIES, WHEREAS PROCEDURE IS CONCERNED WITH FORMALITIES AND TECHNICALITIES, RATHER THAN SUBSTAN CE. A PROCEDURAL CHANGE IS EXPECTED TO IMPROVE MATTERS FOR EVERYONE CONCERNED, WITHOUT INFLICTING DETRIMENT OR IMPAIRING THE VESTED RIGHTS. AS STATED EARLIER, THE AMENDMENT TO THE RULE 8D HAS BEEN MADE ONLY TO UNCOMPLICATED AND SET TLE THE ISSUE OF APPORTIONMENT OF EXPENSES TOWARDS TAXABLE AND NON-T AXABLE INCOME, WHICH 4 WAS TURNING INTO A WIDELY CONTESTED AND LITIGIOUS I SSUE. ACCORDINGLY, IT IS HELD THAT DISALLOWANCE UNDER THE PROVISIONS OF SECTION 1 4A HAS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF RULE 8D (2) (II) @ 1% OF THE ANNUAL AVERAGE OF MONTHLY AVERAGES OF THE OPENING AND CLOSING BALANCE S OF THE VALUE OF INVESTMENTS. HOWEVER, WHILE UNDERTAKING THE AFORESA ID CALCULATION, THE AO SHALL ACCOUNT FOR ONLY THOSE INVESTMENTS WHICH HAVE YIELD ED EXEMPT INCOME DURING THE YEAR. IN TERMS OF THE AFORESAID, THE AO IS DIRE CTED TO RE-COMPUTE THE DISALLOWANCE FOR ADDITION TO THE RETURNED INCOME. I T IS SEEN THAT THE ASSESSEE HAD ITSELF ADDED BACK AN AMOUNT OF RS.3,35,66,806/- AS DISALLOWANCE UNDER THE PROVISIONS OF SECTION 14A. HOWEVER, IT WAS CLAIMED BEFORE THE AO THAT SUCH VOLUNTARY DISALLOWANCE WAS INADVERTENTLY MADE AND T HAT THERE WAS NO REQUIREMENT OF THE SAID DISALLOWANCE IN VIEW OF THE JUDICIAL PRECEDENTS WHICH ARE UNANIMOUS IN HOLDING THAT IF INVESTMENTS HAVE B EEN MADE OUT OF OWN AND NON-INTEREST-BEARING FUNDS, DISALLOWANCE WOULD NOT BE NECESSARY. THE AO REFUSED TO ENTERTAIN THE SAID PLEA OF THE ASSESSEE AT THE ASSESSMENT STAGE BY RELYING UPON THE DECISION OF THE HON'BLE SUPREME CO URT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT [2006; 284 ITR 323] WHEREIN IT WAS CATEGORICALLY HELD THAT THE AO CANNOT ENTERTAIN CLAIM OF DEDUCTION OTHERWISE TH AN BY FILING OF THE REVISED RETURN BY THE ASSESSEE. IN THE APPELLATE PROCEEDING S, THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF JUTE CORPORATION OF INDIA LIMITED [1991; 187 ITR 688] IN WHICH IT HAS BEEN HELD THAT AN ASSESSEE IS ENTITLED TO RAISE NOT MERELY ADDITIONAL LEGAL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES BUT IS ALSO ENTITLED TO RAISE ADDITIONAL CLAIMS BEFORE THEM. SUPPORT FOR THIS PROPOSITION WAS ALSO SOUGHT FROM T HE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TA X, CENTRAL-1, MUMBAI VS. PRUTHVI BROKERS AND SHAREHOLDERS [2012; 349 ITR 336 ] WHEREIN IT WAS HELD THAT THE APPELLATE AUTHORITIES ARE ENTITLED TO EXERCISE THEI R JURISDICTION TO CONSIDER THE ADDITIONAL CLAIM IN VIEW OF THE VARIOUS JUDGMENTS O N THE ISSUE INCLUDING THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF NATION AL THERMAL POWER CORPORATION LTD. [1998; 229 ITR 383]. CONSIDERED IN THIS BACKDROP, IT IS HELD THAT THE ASSESSEE CANNOT BE MADE TO SUFFER AN INADVERTEN T MISTAKE MADE AT THE TIME OF MAKING OF RETURN AND MORE SO WHEN A NEW MEC HANISM OF DISALLOWANCE UNDER THE PROVISIONS OF SECTION 14A READ WITH RULE 8D IS BEING ENFORCED, AS HAS BEEN DONE IN THE INSTANT CASE HEREIN ABOVE. NEEDLES S TO SAY THAT THE VOLUNTARY DISALLOWANCE OF RS.3,35,66,806/- PURPORTED TO HAVE BEEN MADE INADVERTENTLY BY THE ASSESSEE NEEDS TO BE NEUTRALISED BY REDUCING TH E ASSESSED INCOME BY THE 5 SAID AMOUNT BEFORE ADDING BACK THE RECOMPUTED DISAL LOWANCE AS INDICATED ABOVE. IT IS ORDERED ACCORDINGLY. 5. AGGRIEVED, THE REVENUE FILED AN APPEAL BEFORE US WHICH ARE INTERLINKED TO EACH OTHER. 1) WHETHER THE CIT(A) IS RIGHT IN GIVING BENEFIT OF TH E AMOUNT OF TAX WHICH THE ASSESSEE HAS VOLUNTARILY PAID ? 2) WHETHER THE CIT(A) IS RIGHT IN ENTERTAINING THE PLE A OF THE ASSESSEE AGAINST THE JUDGMENT OF IN THE CASE OF GOETZE (INDIA) LTD. 3) WHETHER THE CIT(A) IS RIGHT IN INTERPRETING THE AME NDMENT INTRODUCED W.E.F 02/06/2016 PROSPECTIVELY. BEFORE US, BOTH THE REPRESENTATIVES RELIED ON THE A RGUMENTS TAKEN BEFORE THE LOWER AUTHORITIES. PAPER BOOK CONTAINING 109 PA GES CONSTITUTING THE CASE LAWS HAS BEEN FILED. 6. WE HAVE GONE THROUGH THE FACTS OF THE CASE. THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. 284 ITR 323 HELD AS UNDER: 3.THIS ASSESSEE'S APPEAL BEFORE THE COMMISSIONER (A PPEALS) WAS ALLOWED. HOWEVER, THE ORDER OF THE FURTHER APPEAL OF THE DEP ARTMENT BEFORE THE INCOME TAX APPELLATE TRIBUNAL WAS ALLOWED. THE ASSESSEE HA S APPROACHED THIS COURT AND HAS SUBMITTED THAT THE TRIBUNAL WAS WRONG IN UPHOLD ING THE ASSESSING OFFICER'S ORDER. HE HAS RELIED UPON THE DECISION OF THIS COUR T IN NATIONAL THERMAL POWER COMPANY LTD. V. CIT (1998) 229 ITR 383, TO CONTEND THAT IT WAS OPEN TO THE ASSESSEE TO RAISE THE POINTS OF LAW EVEN BEFORE THE APPELLATE TRIBUNAL. 4. THE DECISION IN QUESTION IS THAT THE POWER OF TH E TRIBUNAL UNDER SECTION 254 OF THE INCOME TAX ACT, 1961, IS TO ENTERTAIN FOR THE F IRST TIME A POINT OF LAW PROVIDED THE FACT ON THE BASIS OF WHICH THE ISSUE OF LAW CAN BE RAISED BEFORE THE TRIBUNAL. THE DECISION DOES NOT IN ANY WAY RELATE TO THE POWE R OF THE ASSESSING OFFICER TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWISE THAN BY F ILING A REVISED RETURN. IN THE CIRCUMSTANCES OF THE CASE, WE DISMISS THE CIVIL APP EAL. HOWEVER, WE MAKE IT CLEAR THAT THE ISSUE IN THIS CASE IS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND DOES NOT IMPINGE ON THE POWER OF THE INCOME TAX APPELLATE TRIBUNAL UNDER SECTION 254 OF THE INCOME TAX ACT, 1961. THER E SHALL BE NO ORDER AS TO COSTS. FURTHER IN THE CASE OF PRITHVI BROKERS & SHARE HOLD ERS 349 ITR 336 THE HONBLE BOMBAY HIGH COURT HELD THAT : IT IS WELL SETTLED THAT AN ASSESSEE IS ENTITLED TO RA ISE NOT MERELY ADDITIONAL LEGAL SUBMISSIONS BEFORE THE APPELLATE AUTHORITIES, BUT I S ALSO ENTITLED TO RAISE ADDITIONAL CLAIMS BEFORE THEM. THE APPELLATE AUTHORITIES HAVE THE DISCRETION WHETHER OR NOT TO PERMIT SUCH ADDITIONAL CLAIMS TO BE RAISED. IT C ANNOT, HOWEVER, BE SAID THAT THEY HAVE NO JURISDICTION TO CONSIDER THE SAME. THA T THEY MAY CHOOSE NOT TO EXERCISE THEIR JURISDICTION IN A GIVEN CASE IS ANOT HER MATTER. THE EXERCISE OF DISCRETION IS ENTIRELY DIFFERENT FROM THE EXISTENCE OF JURISDICTION. GOETZE WAS CONFINED TO A CASE WHERE THE CLAIM WAS MADE ONLY BE FORE THE AO AND NOT BEFORE THE APPELLATE AUTHORITIES. THE COURT DID NOT LAY DOWN THAT A CLAIM NOT MADE BEFORE THE AO CANNOT BE MADE BEFORE THE APPELL ATE AUTHORITIES. THE 6 JURISDICTION OF THE APPELLATE AUTHORITIES TO ENTERT AIN SUCH A CLAIM HAS NOT BEEN NEGATED BY THE SUPREME COURT IN THIS JUDGMENT. ON F ACTS, THERE WAS NOTHING TO SHOW THAT THE CLAIM ENTERTAINED BY THE CIT (A)/ ITA T WAS IMPROPER SIMILARLY IN THE CASE OF NTPC 229 ITR 383 THE HONB LE SUPREME COURT HELD AS UNDER: 6. IN THE CASE OF JUTE CORPORATION OF INDIA LTD. V. C.I.T. . THIS COURT, WHILE DEALING WITH THE POWERS OF THE APPELLATE ASSISTANT COMMISSI ONER OBSERVED THAT AN APPELLATE AUTHORITY HAS ALL THE POWERS WHICH THE OR IGINAL AUTHORITY MAY HAVE IN DECIDING THE QUESTION BEFORE IT SUBJECT TO THE REST RICTIONS OR LIMITATIONS, IF ANY, PRESCRIBED BY THE STATUTORY PROVISIONS. IN THE ABSE NCE OF ANY STATUTORY PROVISION, THE APPELLATE AUTHORITY IS VESTED WITH ALL THE PLEN ARY POWERS WHICH THE SUBORDINATE AUTHORITY MAY HAVE IN THE MATTER. THERE IS NO GOOD REASON TO JUSTIFY CURTAILMENT OF THE POWER OF THE APPELLATE ASSISTANT COMMISSIONER IN ENTERTAINING AN ADDITIONAL GROUND RAISED BY THE ASSESSEE IN SEEK ING MODIFICATION OF THE ORDER OF ASSESSMENT PASSED BY THE INCOME-TAX OFFICER. THI S COURT FURTHER OBSERVED THAT THERE MAY BE SEVERAL FACTORS JUSTIFYING THE RAISING OF A NEW PLEA IN AN APPEAL AND EACH CASE HAS TO BE CONSIDERED ON ITS OWN FACTS. TH E APPELLATE ASSISTANT COMMISSIONER MUST BE SATISFIED THAT THE GROUND RAIS ED WAS BONA FIDE AND THAT THE SAME COULD NOT HAVE BEEN RAISED EARLIER FOR GOO D REASONS. THE APPELLATE ASSISTANT COMMISSIONER SHOULD EXERCISE HIS DISCRETI ON IN PERMITTING OR NOT PERMITTING THE ASSESSEE TO RAISE AN ADDITIONAL GROU ND IN ACCORDANCE WITH LAW AND REASON. THE SAME OBSERVATIONS WOULD APPLY TO AP PEALS BEFORE THE TRIBUNAL ALSO. 7. THE VIEW THAT THE TRIBUNAL IS CONFINED ONLY TO I SSUES ARISING OUT OF THE APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) TAK ES TOO NARROW A VIEW OF THE POWERS OF THE APPELLATE TRIBUNAL [VIDE, E.G., C.I.T , V. ANAND PRASAD (DELHI), C.I.T. V. KARAMCHAND PREMCHAND P. LTD. AND C.I.T. V. CELLU LOSE PRODUCTS OF INDIA LTD. . UNDOUBTEDLY, THE TRIBUNAL WILL HAVE THE DISCRETION TO ALLOW OR NOT ALLOW A NEW GROUND TO BE RAISED. BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER A QUESTION OF LAW ARISING FROM THE FACTS WHICH ARE ON RECORD I N THE ASSESSMENT PROCEEDINGS WE FAIL TO SEE WHY SUCH A QUESTION SHOULD NOT BE AL LOWED TO BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO COR RECTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE. THE CRUX OF THE JUDGMENTS REFERRED ABOVE IS THAT A) THE APPELLATE AUTHORITIES ARE ENTITLED TO EXERCISE THEIR JURISDICTION TO CONSIDER THE ADDITIONAL CLAIM. B) THE ASSESSEE CANNOT BE MADE TO SUFFER INADVERTENT M ISTAKE MADE AT THE TIME OF FILING OF THE RETURN I.E; IN CASE THE ASSES SEE PAYS THE TAX WHICH IS NOT REQUIRED TO PAY AS PER THE ACT, HE CAN ALWAYS RECLA IM THE AMOUNT. OWING TO THE ABOVE INTERPRETATION, WE HOLD THAT THE LD. CIT(A) ACTED IN A JUDICIOUS MANNER AND HENCE WE DECLINE TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) ON THESE ISSUES. 6. REGARDING ISSUE NO.(3)ABOVE- THE APPLICABILITY OF A MENDMENT TO SECTION 14A FROM 02/06/2016,WE ARE THE VIEW THAT DUE TO THE FACT THAT THERE IS A SPECIFIC DATE MENTIONED REGARDING THE APPLICABILITY OF TH E AMENDED PROVISIONS HENCE THE SAME CANNOT BE SAID TO BE RETROSPECTIVE. THE AS SESSING OFFICER IS DIRECTED TO COMPUTE THE DISALLOWANCE AS PER THE RULES APPLICAB LE AS ON THE DATE. 7 REGARDING THE RULING THAT THE ASSESSING OFFICER SH ALL ACCOUNT ON THE THOSE INVESTMENTS WHICH HAVE YIELDED EXEMPT INCOME, WE FI ND STRENGTH BY THE ORDERS OF THE SPECIAL BENCH OF ITAT IN THE CASE OF VREET I NVESTMENT PVT. LTD. 188 TTJ 001 (DEL-TRIB.) AND ALSO THE ORDER IN THE CASE OF PRIME PROPERTY DEVELOPMENT CORP PVT. LTD. IN ITA NO. 7402/MUM/2016 DT. 16.11.2017. WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE DISALLOWANCE ACCORDINGLY . 7. REGARDING THE GROUND RAISED PERTAINING TO CAPITALIZ ATION OF INTEREST UNDER SECTION 36(1)(III) WE FIND THAT THE ASSESSEES OWN RESOURCES ARE TO THE TUNE OF 321.17 CRORES WHICH SHOWS THE SUFFICIENCY OF INTERE ST FREE FUNDS TO MEET THE EXPENSES. WE RELY ON THE JUDGMENTS IN THE ASSESSEE S OWN CASE IN ITA NO. 1093/CHD/2014 AND ITA NO. 3 2015 DT. 22/11/2016, WH EREIN THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF AB HISHEK INDUSTRIES 268 ITR 1 WHICH WAS REFERRED BY THE ASSESSING OFFICER IN HIS ORDER HAS BEEN DISTINGUISHED. FURTHER IN THE CASE OF BRIGHT ENTERPRISES IN ITA NO . 224 OF 2013 DT. 24/07/2015 THE HONBLE HIGH COURT OF PUNJAB & HARYANA CLEARLY HELD THAT IF INTEREST FREE FUNDS ARE AVAILABLE THE A PRESUMPTION WOULD ARISE THAT TH E INVESTMENTS WOULD BE OUT OF INTEREST FREE FUND GENERATED OR AVAILABLE WITH T HE COMPANY. HENCE NO DISALLOWANCE UNDER SECTION 36(1)(III) IS CALLED FOR . THE ORDER OF THE LD. CIT(A) ON THIS GROUND IS CONFIRMED. 9. AS A RESULT, THE APPEAL OF THE REVENUE IS TREATE D AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. SD/- SD/- / (SANJAY GARG ) . '.., # $ / ( DR. B.R.R. KUMAR) / JUDICIAL MEMBER %& / ACCOUNTANT MEMBER DATE: 02/05/2019 AG COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT 3. CIT, 4. DR, ITAT, CHANDIGARH, 5. GUARD FILE