Deputy Commissioner of Income-tax, V. Tapi Prestressed Products Ltd., Jalgaon

ITA 830/PUN/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0601 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-09-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 03-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Recovery proceedings; Earning of tax free income
• Section: 194C; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . , , ! , ' # BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NOS. 830 & 1195/PUN/2015 '% & '& / ASSESSMENT YEARS : 2010-11 & 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, JALGAON. .... / APPELLANT (% / V/S. M/S. TAPI PRESTRESSED PRODUCTS LTD. ANJALE SHIVAR, TAL : YAWAL, DIST. : JALGAON. PAN : AAACT6669D / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI RAJEEV KUMAR / DATE OF HEARING : 11.09.2018 / DATE OF PRONOUNCEMENT : 30.11.2018 ) / ORDER PER VIKAS AWASTHY, JM THESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE. IN I TA NO.830/PUN/2015, THE REVENUE HAS ASSAILED THE ORDER OF C OMMISSIONER OF INCOME TAX (APPEAL)-2, NASHIK DATED 17.03.2015 FOR THE ASS ESSMENT YEAR 2010-11. ITA NO.1195/PUN/2015, BY THE REVENUE IS AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-2, NASHIK DATED 10.06.20 15 FOR THE ASSESSMENT YEAR 2011-12. 2 ITA NOS.830 & 1195/PUN/2015 A.YS.2010-11 & 2011-12 ITA NO.830/PUN/2015 A.Y. 2010-11 2. IN ASSESSMENT YEAR 2010-11, THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.47,86,4 12/- MADE U/S.40(A)(IA) OF THE INCOME TAX ACT, 1961 WITHOUT APPRECIATING TH E FACT THAT ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE ON THE PAYMENTS MADE TO SUBCONTRACTORS BUT PAID TDS FROM ITS OWN POCKET, THE GENUINENESS O F SUCH EXPENSES ARE QUESTIONABLE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF INTERE ST OF RS.1,67,88,000/- MADE ON INTEREST FREE ADVANCES GIVEN TO ITS SUBSIDI ARY COMPANY, JNP ROAD INFRASTRUCTURE PROJECTS (P) LTD. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF INTERE ST OF RS.84,00,000/- MADE ON THE INTEREST FREE ADVANCES GIVEN TO PARTIES . 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF DEDUCT ION U/S.80-IA(4) OF RS.6,92,63,702/- WITHOUT APPRECIATING THE FACT THA T THE ASSESSEE IS MERE CONTRACTOR AND NOT A DEVELOPER. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION OF RS.14,0 2,681/- TO RS.1,40,268/- MADE ON ACCOUNT OF CLOSING STOCK WITHOUT APPRECIATI NG THE FACT THE ASSESSEE DID NOT DISCLOSE THE ACTUAL CLOSING STOCK IN ITS BOOKS OF ACCOUNT. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ORDER OF THE LD. CIT(A)-II,, NASHIK BE CANCELLED ON THE ABOVE ISSUES AND THAT OF THE AO BE RESTORED. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY , DELETE AMEND ANY OF THE GROUNDS WITH PRIOR PERMISSION OF THE HON'BLE CI T, AS PER THE CIRCUMSTANCES OF THE CASE. 8. THE APPELLANT PRAYS TO FILE ANY OF THE ADDITIONA L EVIDENCE APPROPRIATE TO THE GROUNDS TAKEN IN APPEAL. 3. SHRI RAJEEV KUMAR REPRESENTING THE DEPARTMENT SUB MITTED THAT THE ASSESSEE HAS MADE PAYMENTS TO SUBCONTRACTORS WITHOUT DEDUCTING TAX AT SOURCE UNDER THE PROVISIONS OF SECTION 194C OF THE INCOM E TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). HENCE, THE ASSESS ING OFFICER MADE DISALLOWANCE OF SUCH PAYMENTS U/S.40(A)(IA) OF THE ACT. THE CO MMISSIONER OF 3 ITA NOS.830 & 1195/PUN/2015 A.YS.2010-11 & 2011-12 INCOME TAX (APPEAL) DELETED THE DISALLOWANCE ON THE GROUND THAT THE ASSESSEE HAS DEPOSITED TDS AMOUNT BEFORE THE DUE DATE OF FILING RET URN. THE SAID AMOUNT HAS BEEN DEPOSITED BY ASSESSEE FROM ITS OWN ACC OUNT. THE REQUIREMENT OF LAW IS THAT THE AMOUNT SHOULD HAVE BEEN D EBITED FROM PAYMENTS MADE TO SUBCONTRACTORS. 3.1 IN RESPECT OF GROUND NO.2 OF THE APPEAL, THE LD. DR S UBMITTED THAT THE ASSESSING OFFICER HAD MADE ADDITION OF RS.1,67,88,000/- U/S.36 (1)(III) OF THE ACT IN RESPECT OF IRRECOVERABLE DEBIT BALANCE OF SUBSIDIAR Y COMPANY. THE ASSESSEE HAS GIVEN INTEREST FREE ADVANCES TO ITS SUBSID IARY, M/S.JNP ROAD INFRASTRUCTURE PROJECTS (P) LTD. ON ONE HAND AND ON T HE OTHER, HAD TAKEN LOAN TO THE TUNE OF RS.21.82 CRORES DURING THE PERIOD 01.04.20 09 TO 31.03.2010. THE ASSESSEE HAS DIVERTED BORROWED INTEREST BEARING FU NDS FOR NON BUSINESS PURPOSES TO ITS SUBSIDIARIES, THEREFORE, THE ASSESSING OFFICER HAD RIGHTLY MADE DISALLOWANCE OF INTEREST. THE LD. DR VEHEMENTLY DEFENDED THE ORDER OF ASSESSING OFFICER AND PRAYED FOR REVERSING THE FINDINGS OF C OMMISSIONER OF INCOME TAX (APPEAL) IN RESPECT OF ABOVE ADDITION. 3.2 IN RESPECT OF GROUND NO. 3 OF THE APPEAL, THE LD. DR SUBMITTED THAT DISALLOWANCE OF RS.84,00,000/- WAS MADE BY THE ASSESSING OFFIC ER U/S.36(1)(III) OF THE ACT IN RESPECT OF INTEREST FREE FUNDS ADVA NCED TO VARIOUS PARTIES WITHOUT CHARGING INTEREST. HOWEVER, THE COMMISSIONE R OF INCOME TAX (APPEAL) DELETED THE SAME BY FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWE R LTD. REPORTED AS 313 ITR 340. 4 ITA NOS.830 & 1195/PUN/2015 A.YS.2010-11 & 2011-12 3.3 IN RESPECT OF GROUND NO. 4 OF THE APPEAL, THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED DEDUCTION OF RS.6,92,63,702/- U/S.80 -IA(4) OF THE ACT AS THE ASSESSEE IS A JOB CONTRACTOR AND NOT AN IN FRASTRUCTURE DEVELOPER. THE ASSESSING OFFICER IN THE ORDER HAS CATEGORICALLY OBSER VED THAT THE ASSESSEE HAS NOT UTILIZED ITS OWN FUNDS INTO THE PROJECT AND THE A CTUAL OWNERSHIP IS WITH THE GOVERNMENT ORGANIZATIONS. THE ASSESSING OFFICER HA S FURTHER NOTED THAT THE ASSESSEE HAS RAISED R.A BILLS TO THE GOVT. DEPAR TMENT FROM TIME TO TIME AGAINST WHICH THE PAYMENTS WERE RECEIVED. THUS, THE ASSESSEE IS NOT AN INFRASTRUCTURE DEVELOPER BUT ONLY A CONTRACTOR. THE LD. DR PRAYED FOR UPHOLDING THE ORDER OF ASSESSING OFFICER AND REVERSING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEAL) ON THIS ISSUE. 4. ON THE OTHER HAND, SHRI NIKHIL PATHAK APPEARING ON BEH ALF OF THE ASSESSEE VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL) AND PRAYED FOR DISMISSING THE APPEAL OF THE REVENUE . THE LD. AR SUBMITTED THAT THE ASSESSEE HAS DULY COMPLIED WITH THE PROVISIONS OF SECTION 194C OF THE ACT AND HAS DEDUCTED TDS IN RESPECT OF THE PAYMENT MADE TO THE SUBCONTRACTORS. HOWEVER, THE ASSESSEE INITIALLY DEPOSITED TDS FROM HIS ACCOUNT AND THEREAFTER DEBITED THE AMOUNT TO SUBCONT RACTORS ACCOUNT. THUS, THERE IS DUE COMPLIANCE TO THE PROVISIONS OF SECTION 194C OF THE ACT. 4.1 IN RESPECT OF DISALLOWANCE OF INTEREST, LD. AR SUBMITTED THAT THE ASSESSEE IS HAVING OWN INTEREST FREE FUNDS MUCH MORE THAN THE ADV ANCES MADE TO THE SUBSIDIARY AND OTHER PARTIES. THEREFORE, NO DISALLOWANCE U/ S.36(1)(III) OF THE ACT IS CALLED FOR. TO SUPPORT HIS SUBMISSIONS, LD. AR PLACED RE LIANCE ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V S. RELIANCE UTILITIES AND POWER LTD. (SUPRA.). 5 ITA NOS.830 & 1195/PUN/2015 A.YS.2010-11 & 2011-12 4.2 IN RESPECT OF DISALLOWANCE OF DEDUCTION U/S.80-IA (4) OF T HE ACT, LD. AR SUBMITTED THAT THIS ISSUE HAS BEEN DEALT BY THE TRIBUNA L IN ASSESSEES CASE FOR ASSESSMENT YEAR 2007-08. NOW, THE ORDER OF TRIBUNAL HAS BEEN UPHELD BY THE HON'BLE BOMBAY HIGH COURT. THE LD. AR POINTED THAT THE T RIBUNAL IN DEPARTMENTS APPEAL IN ITA NO.1109/PN/2012 FOR THE ASSE SSMENT YEAR 2007- 08 DECIDED ON 30.10.2013 HAD DECIDED THE ISSUE IN FAVOUR O F THE ASSESSEE. THE DEPARTMENT CARRIED THE MATTER IN APPEAL BEFORE THE HON' BLE BOMBAY HIGH COURT IN INCOME TAX APPEAL NO.106 OF 2014. THE HON'BLE BO MBAY HIGH COURT VIDE ORDER DATED 2 ND JULY, 2015 CONFIRMED THE ORDER OF TRIBUNAL AND DISMISSED THE APPEAL OF THE REVENUE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIV ES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. WE HAV E ALSO CONSIDERED THE DECISIONS ON WHICH THE LD. AR HAS PLACED RELIANCE. THE FIRST GROUND OF APP EAL IS WITH RESPECT TO DELETING OF ADDITION RS.47,86,412/- U/S.40(A )(IA) OF THE ACT. THE CONTENTION OF THE LD. DR IS THAT THE ASSESSEE HAS MADE P AYMENTS TO THE SUBCONTRACTORS IN VIOLATION TO THE PROVISIONS OF SECTION 1 94C OF THE ACT. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE COMMISSIONE R OF INCOME TAX (APPEAL) HAS GIVEN FINDING OF FACT THAT THOUGH THE ASSESSEE DID NOT DEDUCT TDS AT THE TIME OF MAKING PAYMENTS, HOWEVER, THE ASSESSEE HAS DEPOSITED TDS AMOUNT TO THE GOVERNMENT EXCHEQUER BEFORE DUE DATE O F FILING RETURN OF INCOME AND THE SAID TDS AMOUNT HAS BEEN DEBITED TO THE PAYEES ACCOUNT. THUS, THE PROVISIONS OF SECTION 194C OF THE ACT HAVE BEEN DULY COMPLIED WITH. THE PURPOSE OF DEDUCTING TAX AT SOURCE IS TO ENSURE EA RLIER RECOVERY OF TAX ON THE INCOME RECEIVED BY THE PAYEES AND ALSO THAT THE A MOUNT HAS BEEN DEBITED AND PAID BEFORE THE DUE DATE OF FILING RETURN. BOTH THESE C ONDITIONS HAVE BEEN 6 ITA NOS.830 & 1195/PUN/2015 A.YS.2010-11 & 2011-12 SATISFIED IN THE PRESENT CASE. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL) IN DELETING THE DISALLOWANCE U/S.40 (A)(IA) OF THE ACT. ACCORDINGLY, GROUND NO.1 RAISED IN APPEAL BY THE DEPARTMENT IS DISMISSED BEING DEVOID OF ANY MERIT . 6. GROUND NOS. 2 AND 3 OF THE APPEAL IS WITH RESPECT TO DISALLOWANCE OF INTEREST. THE CONTENTION OF THE LD. DR IS THAT THE ASSESS EE HAS DIVERTED BORROWED FUNDS TO ITS SUBSIDIARY FOR NON BUSINESS PURPOSE . THE COMMISSIONER OF INCOME TAX (APPEAL) DELETED THE DISALLOWANCE MADE U/S.3 6(1)(III) OF THE ACT BY FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. (SUPRA.) THE FIRST APPELLATE AUTHORITY HAS OBSERVED THAT OWN FUNDS OF THE ASSESSEE ARE MUCH MORE THAN THE ADVANCES MADE TO SUBSIDIARIES/ OTHER PARTIES. THE FACTUAL FINDING OF FACT HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT. WE FIND THAT THE ISSUE RAISED BY REVENUE IN GROUND NOS. 2 AND 3 IS SQUARELY COVERED BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RELIANCE U TILITIES AND POWER LTD. (SUPRA.). THE GROUND NO. 2 AND 3 SANS MERIT AND ACCORDINGLY, THE SAME ARE DISMISSED . 7. IN GROUND NO.4 OF THE APPEAL, THE REVENUE HAS ASSAILE D DELETING OF THE DISALLOWANCE OF DEDUCTION U/S.80-IA(4) OF THE ACT. THE LD. AR H AS POINTED THAT THIS ISSUE HAS ALREADY BEEN CONSIDERED BY THE TRIBUNAL IN APPEAL BY THE DEPARTMENT IN ITA NO.1109/PN/2012 (SUPRA.) AND AGAIN IN IT A NO.2139/PN/2013 FOR THE ASSESSMENT YEAR 2009-10 DECIDED ON 31 .07.2015. THE TRIBUNAL HAS HELD THAT THE ASSESSEE IS ELIGIBLE FOR CLAIM ING DEDUCTION U/S.80-IA(4) OF THE ACT. THE DECISION OF THE TRIBUNAL IN ITA N O. 1109/PN/2012 (SUPRA.) HAS BEEN UPHELD BY THE HON'BLE BOMBAY HIGH COUR T IN INCOME TAX 7 ITA NOS.830 & 1195/PUN/2015 A.YS.2010-11 & 2011-12 APPEAL NO. 106 OF 2014 DECIDED ON 2 ND JULY, 2015. THUS, THE ISSUE OF ASSESSEES ELIGIBILITY TO CLAIM DEDUCTION U/S.80IB(4) HAS BEE N LAID TO REST BY THE HON'BLE BOMBAY HIGH COURT IN FAVOUR OF THE ASSESSEE. THE GROUND NO.4 OF THE APPEAL BY REVENUE IS DISMISSED . 8. IN GROUND NO.5 OF THE APPEAL, THE REVENUE HAS ASSAILED RESTRICTING OF ADDITION OF RS.14,02,681/- TO RS.1,40,268/- ON ACCOUNT OF C LOSING STOCK. WE FIND THAT THE GROUND NO. 5 IS CONSEQUENTIAL TO GROUND NO. 4. SINCE WE HAVE DISMISSED GROUND NO. 4 OF THE APPEAL, THE GROUND NO. 5 IS A LSO LIABLE TO BE DISMISSED. WE HOLD AND DIRECT ACCORDINGLY. HENCE, GROUND NO. 5 RAISED IN APPEAL BY REVENUE IS DISMISSED . 9. GROUND NOS. 6 TO 8 ARE GENERAL IN NATURE AND HENCE, R EQUIRES NO ADJUDICATION. ACCORDINGLY, THE SAME ARE DISMISSED. 10. IN THE RESULT, APPEAL OF THE DEPARTMENT FOR ASSESSM ENT YEAR 2010-11 IS DISMISSED BEING DEVOID OF ANY MERIT. ITA NO.1195/PUN/2015 A.Y.2011-12 11. IN ASSESSMENT YEAR 2011-12, THE REVENUE HAS ASSAILE D THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL) BY RAISING FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE DISALLOWANCE OF INT EREST OF RS.35,09,090/- MADE ON THE INTEREST FREE ADVANCES GIVEN TO PARTIES AND THEREBY FAILED TO APPRECIATE THE FACT THAT THE ADVANCES HAVE NOT BEEN UTILIZED FOR THE PURPOSE OF BUSINESS AND THEREFORE, THE ADDITION MAD E BY THE ASSESSING OFFICER IS JUSTIFIED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD .CIT(A) ERRED IN DELETING THE DISALLOWANCE OF INTER EST OF RS.1,54,76,151/- MADE ON THE INTEREST FREE ADVANCES GIVEN TO ITS SUB SIDIARY COMPANY, JNP ROAD INFRASTRUCTURE PROJECTS (P) LTD AND THEREBY FA ILED TO APPRECIATE THE 8 ITA NOS.830 & 1195/PUN/2015 A.YS.2010-11 & 2011-12 FACT THAT THE ADVANCES HAVE NOT BEEN UTILIZED FOR T HE PURPOSE OF BUSINESS AND THEREFORE, THE ADDITION ASSESSING OFFICER IS JU STIFIED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.44,96,3 77/- MADE ON ACCOUNT OF DISALLOWANCE U/S.14A OF THE INCOME TAX ACT, 1961 R. W.RLE 8D OF THE INCOME TAX RULES, 1962. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING ADDITION OF RS.6,92,73,438 /- MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S.80IA (4) OF THE INCOM E TAX ACT, 1961. 5. THE ORDER OF THE LD. CIT(A)-II, NASHIK BE CANCEL LED ON THE ABOVE ISSUES AND THAT OF THE AO BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY , DELETE, AMEND ANY OF THE GROUNDS OF APPEAL. 7. THE APPELLANT PRAYS TO FILE ANY OF THE ADDITIONA L EVIDENCE APPROPRIATE TO THE GROUNDS TAKEN IN APPEAL. 12. THE LD. DR FOR THE REVENUE SUBMITTED THAT GROUND NO. 1 RAISED IN APP EAL IS IDENTICAL TO GROUND NO. 3 RAISED IN ASSESSMENT YEAR 201 0-11 AND GROUND NO.2 OF THE INSTANT APPEAL IS IDENTICAL TO GROUND NO. 2 RAISE D IN ASSESSMENT YEAR 2010-11. THE LD. DR FURTHER SUBMITTED THAT THE GRO UND NO. 3 IS FRESH GROUND RELATING TO DISALLOWANCE MADE U/S.14A R.W. RULE 8D. T HE LD. DR FURTHER CONTENDED THAT THE ASSESSEE HAS MADE INVESTME NT TO THE TUNE OF RS.10.88 CRORES IN THE SUBSIDIARY. APART FROM SUBSIDIARY, INV ESTMENTS HAVE ALSO BEEN MADE IN OTHER COMPANIES. THE TOTAL INVESTMENT PORTFOLIO OF THE ASSESSEE IS TO THE TUNE OF RS.11.01 CRORES. NO SUO-MOTU DISALLOWANCE WAS MADE BY ASSESSEE IN RESPECT OF INVESTMENT MADE. HENCE, T HE ASSESSING OFFICER MADE DISALLOWANCE OF RS.44,96,377/- INVOKING THE PROVISIONS OF RULE 8D. THE COMMISSIONER OF INCOME TAX(APPEAL) DELETED THE ABOVE SAID DISALLOWANCE. THE LD. DR PRAYED FOR REVERSING THE FINDINGS OF COMMISSIONER OF IN COME TAX (APPEAL). 13. ON THE OTHER HAND, LD. AR OF THE ASSESSEE SUBMITTED THAT DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEAL, THE AS SESSEE HAS EARNED 9 ITA NOS.830 & 1195/PUN/2015 A.YS.2010-11 & 2011-12 EXEMPT INCOME ONLY TO THE TUNE OF RS.6,600/-. THE COMMISS IONER OF INCOME TAX (APPEAL) FOLLOWING VARIOUS DECISIONS OF THE HON'BLE HIGH C OURTS AND TRIBUNAL HELD THAT WHERE NO EXEMPT INCOME IS EARNED, NO D ISALLOWANCE U/S.14A OF THE ACT IS TO BE MADE. 14. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW PER USED. THE GROUND NOS. 1 AND 2 RAISED IN THE PRESENT APPEAL IS WITH RESPECT TO DISALLOWANCE OF INTEREST U/S.36(1)(III) OF THE ACT. THE COMMISSIONER OF INCOME TA X (APPEAL) WHILE GRANTING RELIEF TO THE ASSESSEE HAS OBSERVED THAT OWN FUNDS OF THE ASSESSEE ARE MUCH MORE THAN THE ADVANCES MADE BY AS SESSEE TO VARIOUS PARTIES INCLUDING ITS SUBSIDIARIES. THIS FACT HAS NOT BEEN DIS PUTED BY THE REVENUE. THE COMMISSIONER OF INCOME TAX (APPEAL) HAS GRAN TED RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION OF HON'BLE BOMBAY HIGH CO URT IN THE CASE OF CIT VS. RELIANCE UTILITIES AND POWER LTD. (SUPRA.). WE DO NOT FIND ANY ERROR IN THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEAL) IN DE LETING THE DISALLOWANCE MADE U/S.36(1)(III) OF THE ACT. ACCORDINGLY, GROUND NOS. 1 AND 2 RAISED IN APPEAL BY REVENUE IS DISMISSED . 15. IN GROUND NO. 3 OF THE APPEAL, REVENUE HAS ASSAILED DELETING OF THE DISALLOWANCE U/S.14A R.W.RULE 8D. UNDISPUTEDLY, THE ASSESSEE HAS MADE INVESTMENT OF MORE THAN RS.11 CRORES. THE ASSESSEE HAS EARNED MEAGER EXEMPT INCOME OF RS.6600/-. THE ASSESSEE HAS NOT MADE A NY SUO-MOTU DISALLOWANCE IN RESPECT OF INVESTMENTS MADE. THE TRIBUNAL HA S BEEN CONSISTENTLY TAKEN A VIEW THAT DISALLOWANCE U/S.14A R.W.R ULE 8D IS TO BE RESTRICTED TO THE EXTENT OF EXEMPT INCOME EARNED AND W HERE NO EXEMPT INCOME HAS BEEN EARNED BY ASSESSEE, NO DISALLOWANCE U/S.14A R.W . RULE 8D IS TO BE MADE THE AFORESAID PROPOSITIONS ARE SUPPORTED BY THE DE CISION OF HON'BLE 10 ITA NOS.830 & 1195/PUN/2015 A.YS.2010-11 & 2011-12 PUNJAB & HARYANA HIGH COURT IN THE CASE OF PR. CIT VS. S TATE BANK OF PATIALA REPORTED AS 393 ITR 476 AND THE DECISION OF HON'BLE DE LHI HIGH COURT IN THE CASE OF CHEMINVEST LTD REPORTED AS 378 ITR 33, RESPECT IVELY. SINCE THE ASSESSEE IN PRESENT CASE HAS EARNED EXEMPT INCOME OF R S.6,600/-, WE RESTRICT THE DISALLOWANCE TO THE EXTENT OF EXEMPT INCOME EARNED . THE GROUND NO. 3 RAISED IN APPEAL IS PARTLY ALLOWED, ACCORDINGLY. 16. IN GROUND NO. 4 OF THE APPEAL, REVENUE HAS ASSAILED DE LETING OF DISALLOWANCE OF DEDUCTION U/S. 80IA(4) OF THE ACT. WHILE DECIDING THE APPEAL IN ITA NO.830/PUN/2015 FOR THE ASSESSMENT YEAR 2010-11, T HIS ISSUE HAS BEEN DEALT IN DETAILED AND FOR THE REASONS GIVEN IN ASSESSMENT YEAR 2010-11, THE GROUND NO. 4 RAISED IN PRESENT APPEAL IS DISMISSED. 17. GROUND NOS. 5 TO 7 ARE GENERAL IN NATURE AND HENCE , REQUIRES NO ADJUDICATION. ACCORDINGLY, THE SAME ARE DISMISSED. 18. IN THE RESULT, APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2010-11 IS DISMISSED AND APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2011-12 IS PARTLY ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 30 TH DAY OF NOVEMBER, 2018. SD/- SD/- ( . / D. KARUNAKARA RAO ) ( ! /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; !' / DATED : 30 TH NOVEMBER, 2018. SB 11 ITA NOS.830 & 1195/PUN/2015 A.YS.2010-11 & 2011-12 ) * +',- . ', / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEAL)-2, NASHIK. 4. THE PR. CIT-2, NASHIK. 5. %&' () , * () , +,- , / DR, ITAT, A BENCH, PUNE. 6. './ 01 / GUARD FILE. // TRUE COPY // *2 / BY ORDER, 3 (- / PRIVATE SECRETARY * () , / ITAT, PUNE.