PRIME GOLD INFRA STEEL LTD., Jaipur V. ACIT, Alwar

ITA 831/JPR/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2173 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 09-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P P MEENA
• Assessee Lawyers: S L PODAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business expenditure; Earning of tax free income
• Section: 50C; 2(14); 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 831/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2010-11 M/S PRIME GOLD INFRA STEEL LTD. 5/2, PUNJAB BAGH EXTN., CLUB ROAD, DELHI CUKE VS. THE ACIT, CENTRAL CIRCLE, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCK3370P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI S.L. PODAR (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI. P.P. MEENA (J.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 15/01/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 25/01/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 14.11.2014 OF LD. CIT(APPEALS) FOR THE ASSESSMENT Y EAR 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 7,10,681/- ON ACCOUNT OF LONG TERM CAPITAL GAIN BY INVOKING THE P ROVISION OF SECTION 50C OF THE IT ACT, 1961. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE DISALLOW ING FOR RS. 20,06,902/- U/S 14A OF THE IT ACT, 1961 WITHOUT GOI NG INTO THE DETAILED CALCULATION AND ACTUAL FACTS. ITA NO.831/JP/2014 M/S PRIME GOLD INFRA STEEL LTD. VS. ACIT 2 3. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE LEARNED ASSESSING OFFICER IN DISALLOWING OF PRELIMINARY EXP ENSES WRITTEN OFF FOR RS. 48,286/- 4. THE ASSESSEE CRAVES YOUR INDULGENCE TO ADD AMEND OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT THE TIME OF H EARING. 2. GROUND NO. 1 IS REGARDING THE ADDITION MADE BY T HE AO AND CONFIRMED BY THE LD. CIT(A) BY INVOKING THE PROVISI ONS OF SECTION 50C OF THE ACT IN RESPECT OF THE CAPITAL GAIN ARISING FROM SALE OF AGRICULTURAL LAND HELD BY THE ASSESSEE AS BUSINESS ASSET. THE AS SESSEE SOLD THE LAND FOR RS. 5,50,000/- WHICH WAS ACQUIRED FOR A SUM OF RS. 4,48,420/-. THE ASSESSEE DECLARED BUSINESS LOSS OF RS. 40,419/- FRO M THE SALE OF LAND. THE AO NOTED THAT THE ASSESSEE CLAIMED THE LAND AS BUSINESS ASSET BUT APPLIED INDEX COST FOR COMPUTING GAIN ARISING FROM THE SALE OF THE SAID LAND. ACCORDINGLY, THE AO HELD THAT THE LAND WAS A CAPITAL ASSET AND PROFIT ON SALE OF LAND WAS CALCULATED UNDER THE HEA D LONG TERM CAPITAL GAIN BY APPLYING THE PROVISIONS OF SECTION 50C OF T HE ACT. ACCORDINGLY, THE AO MADE AN ADDITION OF CAPITAL GAIN OF RS. 7,10 ,681/-. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A) A ND CONTENDED THAT THE LAND IN QUESTION WAS SHOWN AS BUSINESS ASSET IN THE BALANCE SHEET AND THEREFORE, THE PROFIT ARISES ON SALE OF THE SAI D LAND IS BUSINESS PROFIT ITA NO.831/JP/2014 M/S PRIME GOLD INFRA STEEL LTD. VS. ACIT 3 AND NOT CAPITAL GAIN. THE LD. CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ACTION OF THE AO. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT THE DEPARTMENT HAS NOT DISPUTED THAT THIS LAND IN QUEST ION WAS HELD BY THE ASSESSEE AS BUSINESS ASSET AND THEREFORE, THE SAME BEING AN AGRICULTURAL LAND OUTSIDE THE LIMIT OF THE MUNICIPA L CORPORATION CANNOT BE HELD AS CAPITAL ASSESSEE U/S 2(14) OF THE IT ACT . THUS, THE LD. AR HAS CONTENDED THAT THE GAIN/ PROFIT ON SALE OF THE BUSI NESS ASSET IS BUSINESS PROFIT AND NOT CAPITAL GAIN. HE HAS FURTHER CONTEND ED THAT THE LAND IN QUESTION IS SITUATED BEYOND 12 KM FROM MUNICIPAL LI MITS AND THEREFORE, THE SAME CANNOT BE HELD AS CAPITAL ASSET. 4. ON THE OTHER HAND, LD DR HAS SUBMITTED THAT THE ASSESSEE ITSELF HAS COMPUTED THE PROFIT ON SALE OF LAND BY APPLYING INDEX COST WHICH SHOWS THAT THE ASSESSEE ACCEPTED THE LAND IN QUESTI ON AS A CAPITAL ASSET. THE DELETION OF CAPITAL ASSET INCLUDES ANY P ROPERTY HELD BY THE ASSESSEE WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION. WHEN THE PROPERTY IN QUESTION DOES NOT FALL IN THE EXCLUSION CLAUSE OF SECTION 2(14) OF THE ACT THEN, THE SAME IS CAPITAL ASSET FOR THE PURPOSE OF SECTION 48 AND SECTION 50C OF THE ACT. HE HAS R ELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.831/JP/2014 M/S PRIME GOLD INFRA STEEL LTD. VS. ACIT 4 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. THE EXEMPTION FROM INCOME TAX P ROVIDED ON SALE OF AGRICULTURAL LAND IS AN INCENTIVE TO PROMOTE THE AG RICULTURAL OPERATIONS AND TO KEEP THE LAND USE FOR AGRICULTURAL PURPOSE. THEREFORE, THE SCHEME AND OBJECTS OF EXCLUDING THE AGRICULTURAL LA ND FROM THE DEFINITION OF THE CAPITAL ASSET IS TO PROVIDE AN IN CENTIVE FOR PRESERVE THE LAND FOR AGRICULTURE USE AND CHARACTER OF AGRICULTU RAL LAND UNCHANGED. IT IS UNDISPUTED FACT THAT AFTER ACQUISITION OF THIS L AND IN QUESTION THE ASSESSEE NEVER CARRIED OUT ANY AGRICULTURAL OPERATI ONS ON THE SAME AND IT WAS HELD AS BUSINESS ASSET. THEREFORE, THE TRUE CHARACTER AND NATURE OF THE LAND MUST BE SEEN WHETHER THE LAND HAS BEEN OR INTENDED TO BE USED FOR AGRICULTURAL PURPOSE FOR A REASONABLE SPAN OF TIME PERIOD THE RELEVANT DATE AND THE LAND WAS INTENDED PUT TO BE U SE FOR AGRICULTURAL PURPOSE IN FUTURE ALSO. THEREFORE, WHEN THE LAND WA S NEITHER USED FOR AGRICULTURAL PURPOSE NOR IT WAS INTENDED TO BE USED FOR AGRICULTURAL PURPOSE AFTER IT WAS SOLD BY THE ASSESSEE THEN IN T HE ABSENCE OF CULTIVATION AND AGRICULTURAL OPERATIONS ARE THE LAN D IN QUESTION THE SAME CANNOT BE HELD AS AGRICULTURAL LAND FOR THE PURPOSE OF SECTION 2(14) OF THE ACT. ITA NO.831/JP/2014 M/S PRIME GOLD INFRA STEEL LTD. VS. ACIT 5 6. THE NEXT OBJECTION OF LD. AR OF THE ASSESSEE IS THAT SINCE THE ASSESSEE HAS HELD THIS LAND AS BUSINESS ASSET, THER EFORE, THE PROVISIONS OF SECTION 50C CANNOT BE APPLIED. WE FIND THAT AS P ER THE DEFINITION U/S 2(14) OF THE ACT THE CAPITAL ASSET MEANS PROPERTY O F ANY KIND HELD BY THE ASSESSEE WHETHER OR NOT CONNECTED WITH HIS BUSI NESS OR PROFESSION. THE SECTION ITSELF HAS PROVIDED EXCLUSION OF CERTAI N ASSETS FROM THE DEFINITION OF CAPITAL ASSET. SINCE, THE LAND IN QUE STION DOES NOT FALL EXCLUSION PROVIDED U/S 2(14) OF THE ACT, THEREFORE, THEN THE SAME IS NOTHING BUT A CAPITAL ASSET AS PER THE DEFINITION P ROVIDED U/S 2(14) OF THE ACT. AS REGARDS THE APPLICABILITY OF SECTION 50 C OF THE ACT THE CAPITAL ASSET IN THE NATURE OF LAND AND BUILDING FALLS UNDE R THE SCOPE OF SECTION 50C OF THE ACT AND THEREFORE, THE FULL VALUE CONSID ERATION OF SUCH CAPITAL ASSET HAS TO BE ADOPTED AS PER THE VALUATION ADOPTE D BY THE STAMP DUTY VALUATION AUTHORITY. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDERS OF THE AUTHORITIES BELOW QUA THIS ISSUE. 7. GROUND NO. 2 IS REGARDING DISALLOWANCE MADE UNDE R 14A OF THE INCOME TAX ACT. THE AO NOTED THAT THE ASSESSEE HAS MADE INVESTMENT IN THE SHARES OF SISTER CONCERNS OF RS. 3,62,74,40 0/- AND INVESTMENT IN MUTUAL FUNDS OF RS. 1 LACS. THE DIVIDEND INCOME EAR NED ON THEIR ITA NO.831/JP/2014 M/S PRIME GOLD INFRA STEEL LTD. VS. ACIT 6 INVESTMENTS WAS EXEMPT FROM TAX. ACCORDINGLY THE AO INVOKED THE PROVISIONS OF SECTION 14A R.W.R. 8D AND MADE A DIS ALLOWANCE OF RS. 20,06,902/-. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A) BUT COULD NOT SUCCEED. 8. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT THE INVESTMENT IN SHARES OF SISTER CONCERN WAS MADE IN THE EARLIER YEARS AND NO FRESH INVESTMENT WAS MADE BY THE ASSESSEE DU RING THE YEAR UDER CONSIDERATION. THEREFORE, NO DISALLOWANCE IS C ALLED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WHEN NO SUCH DI SALLOWANCES WERE MADE BY THE AO IN THE EARLIER YEARS. HE HAS FURTHER CONTENDED THAT THE ASSESSEE HAS NOT RECEIVED ANY DIVIDEND INCOME ON TH E SHARES OF THE SISTER CONCERN. THE DIVIDEND INCOME EARNED BY THE A SSESSEE OF RS. 3,669/- IS ONLY ON THE MUTUAL FUNDS INVESTMENT. THU S, THE LD. AR AS CONTENDED THAT WHEN NO DIVIDEND INCOME WAS EARNED T HEN NO DISALLOWANCE IS CALLED FOR U/S 14A OF THE ACT SO FA R AS THE INVESTMENT MADE IN THE SHARES OF SISTER CONCERNS. HE HAS FURTH ER SUBMITTED THAT THE ENTIRE INVESTMENT WAS MADE IN THE EARLIER YEARS DUR ING THE ASSESSMENT YEARS 2002-03 TO 2007-08. THEREFORE, IN THE ABSENCE OF ANY FRESH INVESTMENT NO DISALLOWANCE U/S 14A OF THE ACT CAN B E MADE. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON THE DECISIONS OF HONBLE DELHI HIGH ITA NO.831/JP/2014 M/S PRIME GOLD INFRA STEEL LTD. VS. ACIT 7 COURT IN CASE OF CHEMINVEST LTD. VS/ CIT 378 ITR 33 AS WELL AS DECISION OFMUMBAI BENCH OF TRIBUNAL IN CASE OF GARWARE WALL ROPES LTD. VS. ACIT 65 SOT 86. 9. ON THE OTHER HAND, LD. DR HAS SUBMITTED THAT TH E ASSESSEE HAS MADE HUGE INVESTMENT OF RS. 3,62,74,400/- IN THE SH ARES OF THE SISTER CONCERN. THE ASSESSEE HAS ALSO PAID INTEREST ON BOR ROWED FUNDS, THEREFORE, THE PROPORTIONATE DISALLOWANCE U/S 14A O F THE ACT IS JUSTIFIED. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BE LOW AND SUBMITTED THAT THE AO HAS COMPUTED THE DISALLOWANCE AS PER TH E FORMULA PROVIDED UNDER RULE 8D. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. WE FIND FROM THE DETAILS OF INV ESTMENT THAT THE ASSESSEE MADE THE ENTIRE INVESTMENT IN THE SHARES O F THE SISTER CONCERN FROM THE ASSESSMENT YEARS 2002-03 TO 2007-08 AND NO FRESH INVESTMENT WAS MADE DURING THE YEAR UNDER CONSIDERA TION. THE ASSESSEE HAS EARNED THE DIVIDEND INCOME OF RS. 3.66 9/- ON THE INVESTMENT IN THE MUTUAL FUNDS AND NO DIVIDEND INCO ME WAS OCCURRED OR EARENED ON THE SHARE OF SISTER CONCERN. THE HON BLE DELHI HIGH COURT IN CASE OF CHEMINVEST LTD. VS. CIT(SUPRA) WHILE DEA LING WITH AN ISSUE OF ITA NO.831/JP/2014 M/S PRIME GOLD INFRA STEEL LTD. VS. ACIT 8 DISALLOWANCE U/S 14A WHEN NO EXEMPT INCOME WAS EARN ED OR RECEIVED BY THE ASSESSEE HAS HELD IN PARA 17 TO 24 AS UNDER: - 17. ON FACTS, IT WAS NOTICED IN HOLCIM INDIA (P.) LTD' S. CASE (SUPRA) THAT THE REVENUE HAD ACCEPTED THE GENUINENE SS OF THE EXPENDITURE INCURRED BY THE ASSESSEE IN THAT CASE A ND THAT EXPENDITURE HAD BEEN INCURRED TO PROTECT INVESTMENT MADE. 18. IN THE PRESENT CASE, THE FACTUAL POSITION THAT HAS NOT BEEN DISPUTED IS THAT THE INVESTMENT BY THE ASSESSEE IN THE SHARES OF MAX INDIA LTD. IS IN THE FORM OF A STRATEGIC INVEST MENT. SINCE THE BUSINESS OF THE ASSESSEE IS OF HOLDING INVESTMENTS, THE INTEREST EXPENDITURE MUST BE HELD TO HAVE BEEN INCURRED FOR HOLDING AND MAINTAINING SUCH INVESTMENT. THE INTEREST EXPENDITU RE INCURRED BY THE ASSESSEE IS IN RELATION TO SUCH INVESTMENTS WHICH GIVES RISE TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME. 19. IN LIGHT OF THE CLEAR EXPOSITION OF THE LAW IN HOL CIM INDIA (P.) LTD'S. CASE (SUPRA) AND IN VIEW OF THE ADMITTED FAC TUAL POSITION IN THIS CASE THAT THE ASSESSEE HAS MADE STRATEGIC INVE STMENT IN SHARES OF MAX INDIA LTD.; THAT NO EXEMPTED INCOME W AS EARNED BY THE ASSESSEE IN THE RELEVANT AY AND SINCE THE GE NUINENESS OF THE EXPENDITURE INCURRED BY THE ASSESSEE IS NOT IN DOUBT, THE QUESTION FRAMED IS REQUIRED TO BE ANSWERED IN FAVOU R OF THE ASSESSEE AND AGAINST THE REVENUE. 20. SINCE THE SPECIAL BENCH HAS RELIED UPON THE DECISI ON OF THE SUPREME COURT IN RAJENDRA PRASAD MOODY'S CASE (SUPR A), IT IS CONSIDERED NECESSARY TO DISCUSS THE TRUE PURPORT OF THE SAID DECISION. IT IS NOTICED TO BEGIN WITH THAT THE ISSU E BEFORE THE SUPREME COURT IN THE SAID CASE WAS WHETHER THE EXPE NDITURE UNDER SECTION 57(III) OF THE ACT COULD BE ALLOWED AS A DE DUCTION AGAINST DIVIDEND INCOME ASSESSABLE UNDER THE HEAD 'INCOME F ROM OTHER SOURCES'. UNDER SECTION 57(III) OF THE ACT DEDUCTIO N IS ALLOWED IN RESPECT OF ANY EXPENDITURE LAID OUT OR EXPENDED WHO LLY OR EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING SU CH INCOME. THE SUPREME COURT EXPLAINED THAT THE EXPRESSION 'INCURR ED FOR MAKING OR EARNING SUCH INCOME', DID NOT MEAN THAT ANY INCO ME SHOULD IN FACT HAVE BEEN EARNED AS A CONDITION PRECEDENT FOR CLAIMING THE EXPENDITURE. THE COURT EXPLAINED: ITA NO.831/JP/2014 M/S PRIME GOLD INFRA STEEL LTD. VS. ACIT 9 'WHAT S. 57(III) REQUIRES IS THAT THE EXPENDITURE M UST BE LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF MAKING OR EARNING INCOME. IT IS THE PURPOSE OF THE EXPENDITUR E THAT IS RELEVANT IN DETERMINING THE APPLICABILITY OF S. 57(III) AND THAT PURPOSE MUST BE MAKING OR EARNING OF INCOME. S. 57(III) DOES NOT REQUIRE THAT THIS PURPOSE MUST BE FULFILLED IN ORDER TO QUALIFY THE E XPENDITURE FOR DEDUCTION. IT DOES NOT SAY THAT THE EXPENDITURE SHA LL BE DEDUCTIBLE ONLY IF ANY INCOME IS MADE OR EARNED. THERE IS IN F ACT NOTHING IN THE LANGUAGE OF S. 57(III) TO SUGGEST THAT THE PURPOSE FOR WHICH THE EXPENDITURE IS MADE SHOULD FRUCTIFY INTO ANY BENEFI T BY WAY OF RETURN IN THE SHAPE OF INCOME. THE PLAIN NATURAL CO NSTRUCTION OF THE LANGUAGE OF S. 57(III) IRRESISTIBLY LEADS TO THE CO NCLUSION THAT TO BRING A CASE WITHIN THE SECTION, IT IS NOT NECESSARY THAT ANY INCOME SHOULD IN FACT HAVE BEEN EARNED AS A RESULT OF THE EXPENDI TURE.' 21. THERE IS MERIT IN THE CONTENTION OF MR. VOHRA THAT THE DECISION OF THE SUPREME COURT IN RAJENDRA PRASAD MOODY'S CAS E (SUPRA) WAS RENDERED IN THE CONTEXT OF ALLOWABILITY OF DEDUCTIO N UNDER SECTION 57(III) OF THE ACT, WHERE THE EXPRESSION USED IS 'F OR THE PURPOSE OF MAKING OR EARNING SUCH INCOME'. SECTION 14A OF THE ACT ON THE OTHER HAND CONTAINS THE EXPRESSION 'IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME.' THE DECISI ON IN RAJENDRA PRASAD MOODY'S CASE (SUPRA) CANNOT BE USED IN THE R EVERSE TO CONTEND THAT EVEN IF NO INCOME HAS BEEN RECEIVED, T HE EXPENDITURE INCURRED CAN BE DISALLOWED UNDER SECTION 14A OF THE ACT. 22. IN THE IMPUGNED ORDER, THE ITAT HAS REFERRED TO TH E DECISION IN MAXOPP INVESTMENT LTD'S. CASE (SUPRA) AND REMAND ED THE MATTER TO THE AO FOR RECONSIDERATION OF THE ISSUE AFRESH. THE ISSUE IN MAXOPP INVESTMENT LTD'S. CASE (SUPRA) WAS WHETHE R THE EXPENDITURE (INCLUDING INTEREST ON BORROWED FUNDS) IN RESPECT OF INVESTMENT IN SHARES OF OPERATING COMPANIES FOR ACQ UIRING AND RETAINING A CONTROLLING INTEREST THEREIN WAS DISALL OWABLE UNDER SECTION 14A OF THE ACT. IN THE SAID CASE ADMITTEDLY THERE WAS DIVIDEND EARNED ON SUCH INVESTMENT. IN OTHER WORDS, IT WAS NOT A CASE, AS THE PRESENT, WHERE NO EXEMPT INCOME WAS EA RNED IN THE YEAR IN QUESTION. CONSEQUENTLY, THE SAID DECISION W AS NOT RELEVANT AND DID NOT APPLY IN THE CONTEXT OF THE ISSUE PROJE CTED IN THE PRESENT CASE. ITA NO.831/JP/2014 M/S PRIME GOLD INFRA STEEL LTD. VS. ACIT 10 23. IN THE CONTEXT OF THE FACTS ENUMERATED HEREINBEFOR E THE COURT ANSWERS THE QUESTION FRAMED BY HOLDING THAT THE EXP RESSION 'DOES NOT FORM PART OF THE TOTAL INCOME' IN SECTION 14A O F THE ENVISAGES THAT THERE SHOULD BE AN ACTUAL RECEIPT OF INCOME, W HICH IS NOT INCLUDIBLE IN THE TOTAL INCOME, DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME. IN OTHER WORDS, SECTION 14A WILL N OT APPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEAR. 24. CONSEQUENTLY, THE IMPUGNED ORDER OF THE ITAT IS SE T ASIDE AND THE APPEAL IS ALLOWED IN THE ABOVE TERMS. THIS COUR T SHOULD NOT BE UNDERSTOOD TO HAVE EXPRESSED ANY OPINION ON THE ISS UE OF WHETHER FOR THE AY IN QUESTION THE INTEREST EXPENDITURE INC URRED BY THE ASSESSEE WOULD BE ALLOWABLE AS BUSINESS EXPENDITURE UNDER SECTION 36 (1)(III) OF THE ACT. THEREFORE, IN VIEW OF THE DECISION OF HONBLE DELHI HIGH COURT NO DISALLOWANCE IS CALLED FOR SO FAR AS THE INVESTMENT MADE BY THE ASSESSEE IN THE SHARES OF THE SISTER CONCERNS ON WHICH NO DI VIDEND INCOME WAS EARNED OR RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORI TIES BELOW AND DIRECT THE AO TO RECONSIDER THIS ISSUE FOR DISALLOWANCE U/ S 14A, IF ANY, TO BE RESTRICTED ONLY IN RESPECT OF THE INVESTMENT IN MUT UAL FUNDS. 11. GROUND NO. 3 IS REGARDING DISALLOWANCE OF CLAIM OF PRELIMINARY EXPENSES. AT THE TIME HEARING, THE LD. AR OF THE A SSESSEE HAS STATED AT BAR THAT THE ASSESSEE DOES NOT PRESS GROUND NO. 3 AND THE SAME MAY BE DISMISSED AS NOT PRESSED. THE LD. DR HAS RAISED NO OBJECTION IT THIS GROUND OF THE ASSESSEES APPEAL IS DISMISSED AS NOT PRESSED. ITA NO.831/JP/2014 M/S PRIME GOLD INFRA STEEL LTD. VS. ACIT 11 ACCORDINGLY THE GROUNDS NO. 3 OF THE ASSESSEES APP EAL IS DISMISSED BEING NOT PRESSED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25/01/2018 SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 25/01/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S PRIME GOLD INFRA STEEL LTD., DEL HI. 2. IZR;FKHZ@ THE RESPONDENT- ACIT. CENTRAL CIRCLE, ALWAR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 831/JP/2014} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR