ACIT, Ludhiana V. M/s Kapsons Associates Investments (P) Ltd., Ludhiana

ITA 850/CHANDI/2014

• Counselvise Citation: 85021514 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 21-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 09-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUBHASH AGGARWAL
• Keywords: Earning of tax free income; Proportionate interest; Commercial expediency
• Section: 14A; 115JB; 11

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE VICE PRESIDENT & MS. RANO JAIN, ACCOUNTANT MEMBER ITA NOS. 850 & 851/CHD/2014 ASSESSMENT YEARS: 2010-11& 2011-12 THE ACIT, VS. M/S KAPSONS ASSOCIATES INVESTMENT ( P) CIRCLE-1, (P) LTD., LUDHIANA LUDHIANA PAN NO. AAACK7234A (APPELLANT) (RESPONDENT) APPELLANT BY : SH. MANOJ MISHRA RESPONDENT BY : SH. SUBHASH AGGARWAL DATE OF HEARING : 27.10.2015 DATE OF PRONOUNCEMENT : 26.11.2015 ORDER PER H.L.KARWA, VP THESE TWO APPEALS FILED BY THE REVENUE INVOLVING CO MMON ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS C OMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRSTLY, WE WILL TAKE UP APPEAL IN ITA NO. 850/C HD/2014 RELATING TO ASSESSMENT YEAR 2010-11. GROUND NOS. (I) TO (IV) O F THE APPEAL READS AS UNDER:- I) THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 3,13,973/- MADE BY THE ASSESSING OF FICER U/S 36(L)(III) IGNORING THE FACTS THAT NO PROOF OF COMM ERCIAL EXPEDIENCY AND BUSINESS PURPOSE WAS PROVIDED.' 2 II) THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS I N DELETING THE DISALLOWANCE, ACCEPTING THE ARGUMENTS OF THE AS SESSEE THAT IT HAD ENOUGH INTEREST FREE FUNDS IN THE FORM OF CAPITAL AND RESERVES AND OTHER INTEREST-FREE FUNDS IGNORING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF ABHISHEK INDUSTRIES, 286 ITR THAT HELD THAT THE MONEYS RECEIVED AS SHARE CAPITAL, OR TERM LOAN, OR WORKING CAPITAL LOAN, OR SALES PROCEEDS DO NOT HAVE ANY DIF FERENT COLOUR AND THAT THE ONLY REQUIREMENT TO DISALLOW TH E INTEREST PAID ON THE BORROWING TO THE EXTENT THE IN TEREST- FREE AMOUNT IS LENT TO SISTER CONCERN FOR NON-BUSIN ESS PURPOSES WOULD BE THAT THE ASSESSEE HAS SOME LOANS OR OTHER INTEREST BEARING DEBTS TO BE REPAID. III) THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,03,74,077/- MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF INVESTMENTS IN SHOP S AND PENT-HOUSES ON THE GROUND THAT THE ASSESSEE COULD N OT GIVE ANY PROOF THAT SUCH IMMOVABLE ASSETS WOULD BE USED FOR BUSINESS PURPOSE, THUS MAKING ITS INVESTMENTS NON E LIGIBLE FOR DEDUCTION. IV) THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS. 1,59,799/- MADE BY THE ASSESSING OFFICER U/S 36(L)(III) IGNORING THE FACTS THAT NO PROOF OF COMMERCIAL EXPEDIENCY AND BUSINESS PURPOSE WAS PROVIDED. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF INVESTMENT. WHILE FRAMING THE ASSESSMEN T, THE ASSESSING OFFICER MADE DISALLOWANCE OUT OF INTEREST AMOUNTING TO RS. 3,13,973/- U/S 36(I) (III) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). ACC ORDING TO ASSESSING OFFICER, 3 THE ASSESSEE COMPANY HAD GIVEN INTEREST FREE ADVANC ES TO INDIVIDUALS WHO WERE EITHER DIRECTORS OR RELATED TO THE DIRECTORS AND SA ID ADVANCES WERE OF PERSONAL NATURE AND HAVING NO BUSINESS PURPOSE. THE CONTENTI ON OF THE ASSESSEE WAS THAT THE COMPANY IS ENJOYING INTEREST FREE FUNDS AND HEN CE NO QUESTION OF DISALLOWANCE OF INTEREST ON ACCOUNT OF INTEREST FRE E FUNDS GIVEN ARISES. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES EXPLANATION AND MADE THE DISALLOWANCE OF RS. 3,13,973/-. U/S 36 (I) (III) O F THE ACT. 4. ON APPEAL, THE CIT(A) DELETED THE ADDITION STATI NG THAT THE ASSESSEE COMPANY IS IN RECEIPT OF LOAN AND ADVANCES TO THE T UNE OF RS. 553.55 LAKHS FREE OF INTEREST FROM DIRECTORS / RELATIVES WHEREAS THE AMOUNT FREE OF INTEREST TO OTHER DIRECTORS / RELATIVES ARE ONLY TO THE TUNE OF RS. 5 0 LAKHS. ACCORDINGLY, THE CIT(A) DELETED THE DISALLOWANCE OF RS. 3,13,973/-. THE ASSESSING OFFICER FURTHER DISALLOWED INTEREST OF RS. 1,03,74,077/- U/S 36(I)( IIII) ON ACCOUNT OF ADVANCES FOR PURCHASE OF IMMOVABLE PROPERTY BY TREATING THE SAME AS FOR NON BUSINESS PURPOSES. ON APPEAL, THE CIT(A) DELETED THE ADDITIO N FOLLOWING HIS OWN ORDER PASSED IN ASSESSEES CASE FOR ASSESSMENT YEARS 200 8-09 AND 2009-10 AND THOSE ORDERS OF THE CIT(A) WERE CONFIRMED BY TRIBUNAL VID E ITS ORDER DATED 17.6.2013 IN ITA NO. 13/CHD/2012 AND ITA NO. 687/CHD/2012. THE ASSESSING OFFICER MADE ADDITION OF RS. 1,59,799/- U/S 36(I)(III) OF T HE ACT. THE ASSESSING OFFICER MADE THE ADDITION ON THE ADVANCE SHOWN AS DEBIT BA LANCE IN THE CASE OF ARUN KAPUR AND SHRI RAKESH KAPUR BUT HAS NOT GIVEN ANY E FFECT TO THE CREDIT BALANCES IN THEIR ACCOUNTS. THE LD. CIT(A) DELETED THE ADDIT ION STATING THAT THE DISALLOWANCE IS TOTALLY UNJUSTIFIED AND WITHOUT ANY VALID REASON. THE LD. CIT(A) HAS ALSO STATED THAT EVEN OTHERWISE THE ASSESSEE CO MPANY IS IN RECEIPT OF LOAN AND ADVANCE TO THE TUNE OF RS. 553.55 LAKHS FREE OF INTEREST FROM DIRECTORS / RELATIVES WHEREAS THE AMOUNT ADVANCED FREE FROM INT EREST OF OTHER DIRECTORS RELATIVES ARE ONLY TO THE TUNE OF RS. 50 LAKHS. 4 5. AFTER HEARING THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, WE FIND THAT ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF ITAT CHANDIGARH BENCH IN ASSESSEES CASE IN ITA NO. 13/CHD/2012 AND ITA NO. 687/CHD/2012 RELATING TO A SSESSMENT YEARS 2008-09 AND 2009-10 RESPECTIVELY. WHILE DECIDING A SIMILAR ISSUE, THE TRIBUNAL HELD AS UNDER:- 4. WE HAVE HEARD BOTH SIDE AND HAVE CIRCUMSPECTED THE ENTIRE RECORD. BOTH PARTIES HAVE REITERATED THEIR EARLIER STAND ON THE ISSUE. WE HAVE FOUND THAT THE COMPANY HAS INTEREST- FREE ADVANCES FROM THE DIRECTORS/ SHAREHOLDERS AND THEIR RELATIVE S AMOUNTING TO RS. 315.11 LAKHS AS AGAINST WHICH INTEREST FREE ADV ANCES GIVEN ARE RS. 219.72 LAKHS AS ON 31.03.2008. WHEN THE ASS ESSEE HAS ENOUGH INTEREST FREE FUNDS IN THE FORM OF CAPITAL A ND RESERVES AND OTHER FUNDS WITHOUT INTEREST WOULD COVER THE FUNDS GIVEN INTEREST FREE FOR OTHER THAN BUSINESS PURPOSES. IN SUCH CIRC UMSTANCES, NO DISALLOWANCE IS WARRANTED. 4.1 FOR THE ABOVE CONCLUSION, WE DERIVE SUPPORT FR OM THE FOLLOWING DECISIONS:- 1. CIT VS. TIN BOX CO. 260 ITR 637 [DELHI] 2. CIT VS. RADICO KHAITAN LTD 274 ITR 354 [AU] 3. CIT VS. RELIANCE UTILITIES A POWER LTD 3'! 3 ITR 340 [BOM] 4.2 THE COMMON RATIO DECIDENDI OF THE ABOVE JUDGME NTS IS THAT IF THE ASSESSEE IS HAVING ADEQUATE INTEREST FREE FUNDS , NO DISALLOWANCE CAN BE MADE ON ACCOUNT OF FREE ADVANCE S MADE TO SISTER CONCERN/ DIRECTORS/ RELATIVES OF THE DIRECTO RS. 4.3 REGARDING CONCEPT OF THE 'COMMON KITTY' DEVELO PED IN THE CASE OF ABHISHEK INDUSTRIES IS CONCERNED, THE SUBSE QUENT DECISION OF THE JURISDICTIONAL HIGH COURT RENDERED IN THE CA SE OF CIT VS. WINSONS TEXTILES INDUSTRIES LTD 319 ITR 204 IN WHIC H THE JUDGMENT OF ABHISHEK INDUSTRIES HAS BEEN DISCUSSED AND ANALYZED IN DETAIL. THEIR LORDSHIPS HAVE TAKEN A DECISION IN LINE WITH OTHER DECISIONS NARRATED ABOVE. THEREFORE, BY FOLLOWING T HE DECISION IN 5 WHICH THE DECISION OF ABHISHEK INDUSTRIES HAS BEEN DISCUSSED AND DISTINGUISHED, WE DON'T FIND ANY REASON TO DEVIATE FROM THE FINDING OF THE ID. CIT(A). HENCE, WE CONFIRM THIS DELETION AND DISMISS GROUND NO.(1) OF THIS APPEAL. 5. THE GROUND NO. 2 OF THIS APPEAL IS REGAR DING DELETION OF ADDITION AS A PROPORTIONATE INTEREST OF RS. 1,18,27,779/-- ADDED ON ACCOUNT OF INVESTMENT IN SH OPS AND PENT- HOUSES AMOUNTING TO RS. 9,85,64,8197- IN THE ABSENCE OF PROOF THAT THESE IMMOVABLE ASSETS WOULD BE USED FOR BUSINESS PURPOSES. THE FACTS OF THIS GROUND HAVE BE EN ALREADY DISCUSSED ELSEWHERE IN THIS ORDER AND THERE IS NO N EED TO REPEAT THEM. BOTH PARTIES HAVE REITERATED THEIR EARLIER AR GUMENTS ON THIS ISSUE ALSO. 5.1 AFTER CONSIDERING RIVAL SUBMISSIONS WE HAVE FO UND THAT THERE IS NO INFIRMITY IN THE IMPUGNED DELETION. IT IS CRYSTAL CLEAR FROM THE FACTS OF THE CASE THAT THE A.O. ACTUALLY M ISCONCEIVED THE FACTUAL MATRIX OF THIS ISSUE. THE OBJECTIVE OF THE ASSESSEE COMPANY IS NOT ONLY INVESTMENT IN SHARES BUT ALSO I NVESTMENT IN PROPERTIES. THE ASSESSEE COMPANY HAD GIVEN A PR OPERTY ON RENT TO M/S RICO AUTO INDUSTRIES LTD. AND I NTEREST HAS BEEN SHOWN IN RESPECT OF ADVANCE GIVEN TO AERENS SO UK. THE A.O. HAS MISDIRECTED HIMSELF FROM THE OBSERVATIONS THAT THE PROPERTY ON WHICH RENT HAS BEEN SHOWN IS A PART OF ASSETS OF THE'' COMPANY AND HAS BEEN RECONSIDERED UNDER THE HEAD 'I NVESTMENT' AND THIS FACTUAL ERROR HAS MISLED HIM. THE ASSESSEE HAS RECEIVED INTEREST ON ADVANCES GIVEN TO AERENS SOUK AS PER AG REEMENT WITH THE SELLER WHO HAS AGREED AS SUCH, BUT, THE ADVANCE S FOR PURCHASE OF PROPERTY FROM 'OTHER SELLERS' OR EVEN FROM THE S AME SELLER IS GOVERNED BY THE AGREEMENT BETWEEN THE BUYERS & SELL ERS ON THE BASIS OF A DIFFERENT AGREEMENT WHICH DOES NOT HAVE A DIRECT BEARING WITH THE AFFAIRS OF THE ASSESSEE COMPANY. T HEREFORE, IT BECOMES EVIDENT THAT ADVANCES GIVEN BY THE ASSESSEE FOR THE PURCHASE OF FLATS/PENT HOUSES ARE FOR THE BUSINESS OF MAKING PROFIT FROM THE SAME BY EVENTUALLY SELLING THE SAME SUBSEQUENTLY SOMETIME OR THE OTHER. THUS, THESE INVESTMENTS ARE TOWARDS THE OBJECTS AND PURPOSE OF THE ASSESSEE COMPANY. THE ID . CIT(A) HAS 6 CORRECTLY DELETED THE ADDITION OF RS. 1,18,27,779/- . WE CONFIRM THE SAME AND CANNOT ALLOW GROUND NO. (2) OF THE APP EAL. 6. THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO THA T OF ASSESSMENT YEARS 2008- 09 AND 2009-10. RESPECTFULLY FOLLOWING THE ORDER O F THE TRIBUNAL PASSED IN ASSESSEES CASE FOR ASSESSMENT YEARS 2008-09 AND 20 09-10 (SUPRA), WE DO NOT SEE ANY MERIT IN THE GROUND NOS. (I) TO (IV) OF THE APP EAL AND, HENCE, THESE ARE DISMISSED. 7. GROUND NO. (V) OF THE APPEAL, READS AS UNDER;- V) THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION OF RS. 58,42,247/- MADE BY THE ASSESSI NG OFFICER U/S 14A RWR 8D TO RS. 38,79,053/- IGNORING THE FACT THAT THE ASSESSING OFFICER HAD RIGHTLY TAKEN THE INTEREST EX PENDITURE WHILE CALCULATING THE DISALLOWANCE U/S 14A AS PROVI DED BY THE STATUTE IN THE FORM OF RULE 8E WHEREIN NO NETTING O F INTEREST HAS BEEN PROVIDED. 8. THE ASSESSING OFFICER MADE DISALLOWANCE OF INTER EST OF RS. 58,42,247/- U/S 14A READ WITH RULE 8-D OF I.T. RULES, 1962. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE HAD EARNED DIVIDEND INCO ME OF RS. 49,86,375/-. THE ASSESSING OFFICER DISALLOWED THE EXPENSES AS PER RU LE 8-D TO THE TUNE OF RS. 58,42,247/-. 9. ON APPEAL, THE CIT(A) HELD AS UNDER:- 10 I HAVE CONSIDERED THE FACTS OF THE CASE AND TH E BASIS OF DISALLOWANCE MADE BY THE AO AND THE ARGUMENTS OF TH E AR ON THE ISSUE. IT IS SEEN THAT THE ASSESSING OFFICER HAS SI MPLY PLACED RELIANCE ON THE DECISION OF M/S SUNDER FORGINGS FOR THE A.Y.2008-09 BUT HAS NOT BROUGHT ON RECORD THE FACTU AL SIMILARITY BETWEEN THE CASE UNDER CONSIDERATION AND THAT OF M/ S SUNDER FORGINGS. THE APPLICABILITY OF RULE 8D IN THE CASE OF M/S SUNDER FORGINGS WAS ON ACCOUNT OF INABILITY ON THE PART OF THE APPELLANT 7 TO SHOW AS TO HOW THE FUNDS USAGE AS RECORDED IN TH E CURRENT ACCOUNT OF THE APPELLANT COULD BE ATTRIBUTABLE TO E ARNING OF EXEMPT INCOME AND EARNING OF TAXABLE INCOME. IN THE CURRENT CASE IT IS IMPORTANT TO APPRECIATE THAT THE ASSESSE E APART FROM DEBITING INTEREST IN THE PROFIT & LOSS ACCOUNT HAS ALSO RECEIVED INTEREST ON ITS ADVANCES TO THE TUNE OF RS. 80,18,2 23/-. IT HAS BEEN HELD BY THE HON'BLE ITAT CHANDIGARH BENCH IN T HE CASE OF SH. SHIV PARSHAD AGGARWAL ITA N0. 927/2012 DATED 27 .03.2014 THAT THE DISALLOWANCE UNDER SECTION 14A SHOULD BE C ALCULATED ON NET INTEREST BASIS. THE DISALLOWANCE IN VIEW OF THE ABOVE CLEAR CUT DECISION OF HON'BLE JURISDICTIONAL BENCH OF ITA T WORKS OUT AS UNDER:- COMPUTATION OF DEDUCTION UNDER SECTION 14A ON THE B ASIS OF NET INTEREST :- A) TOTAL INTEREST EXPENDITURE AS PER ASSESSME NT ORDER RS. 3,09,11,596 LESS: INTEREST RECEIVED RS. 80,18,223 NET INTEREST EXPENDITURE RS. 2,28,93,373 B) AVERAGE VALUE OF INVESTMENTS AS PER ASSTT. ORDER RS.20,76,05,478 AVERAGE VALUE OF ASSETS AS PER ASSESSMENT ORDER RS.81,07,44,430 CALCULATION OF INTEREST (DISALLOWED) = 22893373 X 207605478 / 810744430 = RS. 58,62,254 ADLL 0.5% OF THE AVERAGE VALUE OF INVESTMENTS AS PER ASSESSMENT ORDER RS. 10,38,027 TOTAL DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D RS. 69,00,281 THE DISALLOWANCE IS THEREFORE RESTRICTED TO RS. 37, 89,053/-. THE REST OF THE DISALLOWANCE MADE IS DIRECTED TO BE DEL ETED. 10. AFTER HEARING THE LD. REPRESENTATIVES OF BOTH T HE PARTIES, WE FIND THAT ISSUE IS SQUARELY COVERED BY THE DECISION OF THE IT AT CHANDIGARH BENCH IN THE CASE OF SH. SHIV PARSHAD AGGARWAL IN ITA NO. 927/CH D/2012 DATED. 27.3.2014 WHEREIN IT HAS BEEN HELD THAT THE DISALLOWANCE U/S 14A SHOULD BE CALCULATED ON NET INTEREST BASIS. IN VIEW OF THE DECISION OF TH E TRIBUNAL PASSED IN THE CASE OF 8 SHRI SHIV PRASAD AGGARWAL (SUPRA), WE DECLINE TO I NTERFERE WITH THE ORDER OF CIT(A) ON THIS ISSUE. ACCORDINGLY, THE APPEAL OF T HE REVENUE IS DISMISSED. 11. IN THE RESULT, THE APPEAL IS DISMISSED. ITA NO. 851/CHD./2014. 12. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLL OWING GROUNDS:- I) THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 6,00,000/- MADE BY THE ASSESSING OF FICER U/S 36(L)(III) IGNORING THE FACTS THAT NO PROOF OF COMM ERCIAL EXPEDIENCY AND BUSINESS PURPOSE WAS PROVIDED.' II) THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS I N DELETING THE DISALLOWANCE, ACCEPTING THE ARGUMENTS OF THE ASSESS EE THAT IT HAD ENOUGH INTEREST FREE FUNDS IN THE FORM OF CAPITAL A ND RESERVES AND OTHER INTEREST-FREE FUNDS IGNORING THE DECISION OF THE HON'BLE JURISDICITONAL HIGH COURT IN THE CASE OF ABHISHEK I NDUSTRIES, 286 ITR THAT HELD THAT THE MONEYS RECEIVED AS SHARE CAP ITAL, OR TERM LOAN, OR WORKING CAPITAL LOAN, OR SALES PROCEEDS DO NOT HAVE ANY DIFFERENT COLOUR AND THAT THE ONLY REQUIREMENT TO D ISALLOW THE INTEREST PAID ON THE BORROWING TO THE EXTENT THE IN TEREST-FREE AMOUNT IS LENT TO SISTER CONCERN FOR NON-BUSINESS P URPOSES WOULD BE THAT THE ASSESSEE HAS SOME LOANS OR OTHER INTERE ST BEARING DEBTS TO BE REPAID. III) THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.4,33,368/- MADE BY THE ASSESSING OFF ICER ON ACCOUNT OF INVESTMENTS IN SHOPS AND PENT-HOUSES ON THE GROUND THAT THE ASSESSEE COULD NOT GIVE ANY PROOF THAT SUC H IMMOVABLE ASSETS WOULD BE USED FOR BUSINESS PURPOSE, THUS MAK ING ITS INVESTMENTS NON ELIGIBLE FOR DEDUCTION IV) THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS. 4,69,866/- MADE BY THE ASSESSING OF FICER U/S 9 36(L)(III) IGNORING THE FACTS THAT NO PROOF OF COMM ERCIAL EXPEDIENCY AND BUSINESS PURPOSE WAS PROVIDED. 13. GROUND NOS. (I) TO (IV) RAISED IN THIS APPEAL A RE SIMILAR TO THE GROUNDS RAISED IN ITA NO. 850/CHD/2014. THE DECISION GIVEN IN RESPECT OF GROUND NOS. (I) TO (IV) SHALL ALSO APPLY TO THESE GROUNDS OF AP PEAL WITH EQUAL FORCE. FOR THE DETAILED REASONS GIVEN THEREIN, WE REJECT GROUND NO S. (I) TO (IV) OF THE APPEAL. 14. GROUND NO.(V) RAISED IN THIS APPEAL IS SIMILAR TO GROUND NO. (V) RAISED BY THE REVENUE IN ITA NO. 850/CHD/2014. THE FACTS ARE SIMILAR AND, THEREFORE, DECISION GIVEN IN RESPECT OF GROUND NO. (V) IN ITA NO. 850/CHD/2014 SHALL ALSO APPLY TO THIS GROUND OF APPEAL WITH EQUAL FORCE. FO R THE DETAILED REASONS GIVEN THEREIN WE REJECT THIS GROUND OF APPEAL. 15. GROUND NO. (VI) OF THE APPEAL IS AS UNDER:- VI) THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS I N DIRECTING THE ASSESSING OFFICER TO EXCLUDE DISALLOW ANCE UNDER SECTION 14A FOR WORKING OUT MAT UNDER SECTION 115JB WHILE THE ASSESSING OFFICER HAS RIGHTLY ADDED THE DISALLOWANCE FOR WORKING OUT MAT AS PER PROVISIONS OF SECTION 115B OF THE INCOME TAX ACT, 1961. AS REGARDS GROUND NO. (VI) OF THE APPEAL, IT IS CL AIMED THAT ASSESSING OFFICER HAS WRONGLY MADE AN ADDITION OF RS. 70,07,645/- U/S 115JB OF THE ACT. 16. ON APPEAL, THE CIT(A) HELD AS UNDER:- 13 . I HAVE CONSIDERED THE FACTS OF THE CASE AND THE CLA IM OF THE APPELLANT ON THIS ISSUE. THE PERUSAL OF THE PRO VISIONS OF SECTION 115JB MAKE IT AMPLY CLEAR THAT ONLY SPECIFI C 10 ADJUSTMENTS AS PERMITTED UNDER THE SAID PROVISION C AN BE MADE TO THE BOOK PROFITS. THE ADJUSTMENTS MADE BY T HE ASSESSING OFFICER BY ADDING BACK DISALLOWANCE UNDER SECTION 14A IS NOT PERMITTED AS PER SECTION 115JB. THE DEC ISION OF HON'BLE ITAT CHANDIGARH BENCH IN THE CASE OF ACIT V NAHAR CAPITAL SERVICES LIMITED IN ITA NO. 1353/CHD/2012 D ATED 16.4.2013 IS SQUARELY ON THE ISSUE UNDER CONSIDERAT ION. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO ACC EPT THE CLAIM OF THE ASSESSEE ON THE ISSUE BY EXCLUDING DIS ALLOWANCE UNDER SECTION 14A FOR WORKING OUT MAT UNDER SECTION 115JB. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS OBSE RVED THAT WHILE DECIDING THE ISSUE, THE CIT(A) HAS FOLLOWED THE DECISION OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF ACIT V NAHAR CAPITAL & FINANCIAL SERVIC E LTD IN ITA NO. 1353/CHD/2012 DATED 16.4.2013 RELATING TO ASSESSMEN T YEAR 2009-10. IN OUR OPINION, THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE ABOVE DECISION, WHEREIN THE TRIBUNA L DECIDED A SIMILAR ISSUE AND HELD AS UNDER:- 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED ON MERITS IN THE PRESENT APPEAL IS IN RELATION TO COMPUTATION OF BOOK PROFITS UNDER SECTION 115JB OF THE ACT. THE ASSESSING OFFICER WHILE COMPUTING THE SAID BOOK PRO FIT IN THE HANDS OF THE ASSESSEE HAD ADDED BACK THE DISALLOWAN CE WORKED OUT UNDER SECTION 14A OF THE ACT TO THE NET PROFITS OF THE BUSINESS AND THEREAFTER COMPUTED THE TAX LIABILITY. THE ASSESSE E WAS AGGRIEVED BY SUCH RECOMPUTATION OF BOOK PROFITS AND THE CIT ( APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWING THE RAT IO LAID DOWN BY THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASS ESSMENT YEAR 2008-09. WE FIND THAT IDENTICAL ISSUE OF COMPUTATI ON OF BOOK PROFITS UNDER SECTION 115JB OF THE ACT AND THE EFFE CT OF DISALLOWANCE UNDER SECTION 14A ON THE PROFITS OF BU SINESS AROSE BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2008-09 IN ITA NO.1120/CHD/2011. THE TRIBUNAL VIDE ORDER DATED 27.7.2012 IN TURN RELYING ON AN EARLIER DECIS ION OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN DCIT VS. IND SW IFT LTD. IN 11 ITA NO.729/CHD/2009 RELATING TO ASSESSMENT YEAR 200 6-07 DATE OF ORDER 30.11.2009 HELD AS UNDER: 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ONLY ISSUE ARISING IN THE PRESENT APPEAL IS IN RESPECT OF COMPUTATION OF BOOK PROFITS UNDER SECTION 115JB OF THE ACT. THE ASSESSING OFFICER WH ILE COMPUTING THE SAID BOOK PROFITS HAD ADDED BACK THE DISALLOWANCE WORKED OUT UNDER SECTION 14A OF THE AC T OF THE NET PROFITS OF THE BUSINESS AND COMPUTED THE TA X LIABILITY OF THE ASSESSEE COMPANY THEREAFTER. WE F IND THAT THE ISSUE IN THE PRESENT CASE IS COVERED BY TH E ORDER OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN DCIT VS. IND-SWIFT LTD. (SUPRA) WHERE VIDE ORDER DATED 30.11 .2009 VIDE PARA 8 IT WAS HELD AS UNDER: 8. THE GROUND 1(IV) RAISED BY THE REVENUE IS AGAINST THE COMPUTATION OF BOOK PROFITS U/S 115 JB OF THE ACT. THE ASSESSING OFFICER WHILE COMPUTING THE BOOK PROFIT U/S 115 JB OF THE ACT HAD ADDED BACK THE DISALLOWANCE WORKED U/S 14A OF THE I.T. ACT TO THE NET PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT AND COMPUTED THE PROFITS FOR THE YEAR. THE CIT (A) REWORKED THE BOOK PROFITS BY EXCLUDING THE SAID NOTIONAL DISALLOWANCE U/S 115 JB OF THE ACT, IN TURN FOLLOWING THE RATIO LAID DOWN BY THE APEX COURT IN APOLLO TYRES LTD. 255 ITR 273 (SC). WE ARE IN CONFORMITY WITH THE ORDER OF CIT(A). THE ADJUSTMENTS, IF ANY, TO BE MADE TO THE PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT, ARE PROVIDED IN THE SECTION 115 JB OF THE ACT ITSELF. THERE IS NO PROVISION IN THE ACT TO MAKE ADJUSTMENT ON ACCOUNT OF NOTIONAL DISALLOWANCE WORKED OUT UNDER SECTION 14A OF THE ACT. THE HON'BLE SUPREME COURT IN APOLLO TYRES LTD. (SUPRA) HELD THAT THE PROFITS OF THE BUSINESS ARE NOT TO BE DISTURBED FOR COMPUTING THE BOOK PROFITS EXCEPT IN THE CIRCUMSTANCES PROVIDED UNDER THE SAID ACT. WE CONFIRM THE ORDER 12 OF CIT IN THIS REGARD AND DISMISS THE GROUND NO.1(IV) RAISED BY THE REVENUE. 6. THE ISSUE ARISING IN THE PRESENT APPEAL IS IDENT ICAL TO THE ISSUE BEFORE THE CHANDIGARH BENCH OF THE TRI BUNAL IN DCIT VS. IND-SWIFT LTD. (SUPRA) AND FOLLOWING TH E SAME WE DIRECT THE ASSESSING OFFICER TO ADOPT THE B OOK PROFITS AS PER THE PROFIT & LOSS ACCOUNT AND DO NOT MAKE ADDITION ON ACCOUNT OF DISALLOWANCE WORKED OUT UNDE R SECTION 14A OF THE ACT, AS SUCH DISALLOWANCE IS COM PUTED UNDER THE NORMAL PROVISION OF THE ACT, WHICH ARE NO T APPLICABLE FOR DETERMINING BOOK PROFITS UNDER SECTI ON 115JB OF THE ACT. 6. THE ISSUE ARISING IN THE PRESENT APPEAL IS IDENT ICAL TO THE ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2008-09 IN ASSESSEES OWN CASE AND FOLLOWING THE SAID DECISION WE UPHOLD THE ORDER OF THE CIT (APPEALS) IN THIS REGARD AND DISMI SS THE GROUND NO.1 RAISED BY THE REVENUE. 7. WE FIND NO MERIT IN GROUND NOS.2 TO 4 RAISED BY THE REVENUE THAT WHERE THE ISSUE IS COVERED BY THE MUMBAI BENCH OF THE TRIBUNAL, THE CIT (APPEALS) SHOULD HAVE FOLLOWED TH E SAME. THE ISSUE BEING COVERED IN ASSESSEES OWN CASE BY THE O RDER OF THE TRIBUNAL (SUPRA) THE JUDICIAL PROPRIETARY DEMANDS T HAT THE SAID ORDER IN ASSESSEES OWN CASE ON IDENTICAL FACTS IS TO BE APPLIED WHILE ADJUDICATING THE ISSUE IN THE HANDS OF THE AS SESSEE IN THE SUCCEEDING YEARS. FURTHER THERE IS NO MERIT IN THE PLEA OF THE REVENUE FOR REFERRING THE ISSUE TO THE SPECIAL BENC H WHERE A REFERENCE IS MADE IN CASE THERE IS A DIFFERENCE IN THE OPINION OF DIFFERENT BENCHES ON SAME ISSUE IN DIFFERENT CASES. HOWEVER, IN THE FACTS OF THE PRESENT CASE THE ISSUE HAS BEEN DE CIDED BY THE CHANDIGARH BENCH OF THE TRIBUNAL ITSELF IN ASSESSEE S OWN CASE AND THE SAME HAS A BINDING FORCE IRRESPECTIVE OF TH E FACT THAT CONTRARY VIEW HAS BEEN TAKEN BY ANOTHER BENCH OF TH E TRIBUNAL. THUS GROUND NOS.2 TO 4 RAISED BY THE REVENUE ARE DI SMISSED. 18. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO TH E FACTS OF THE CASE OF NAHAR CAPITAL & FINANCIAL SERVICE LTD (SUPRA). NO CONTRA RY DECISION WAS BROUGHT TO 13 OUR NOTICE BY THE REVENUE. RESPECTFULLY, FOLLOWING THE ORDER OF THE TRIBUNAL REFERRED TO ABOVE, WE DISMISS GROUND NO.(VI) OF TH E REVENUES APPEAL. 19. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.11.2015 SD/- SD/- (RANO JAIN) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED 26 TH NOVEMBER, 2015 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR