GULITA SECURITIES LTD, MUMBAI V. DCIT 4(1), MUMBAI

ITA 91/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4486 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 07-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Keywords: Unexplained cash credit; Earning of tax free income
• Section: 143(3); 142(1); 14A; 68; 6

Judgement Text

1 ITA 91/MUM/2016 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI MAHAVIR SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.91 /MUM/2016 (ASSESSMENT YEAR: 2011-12) GULITA SECURITIES LTD 305, VIKAS BUILDING, 3 RD FLOOR 11 BANK STREET, FORT MUMBAI 400 001 PAN : AAACG0526E VS DY.CIT, CENT.CIR.4(1), MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI VIJAY MEHTA RESPONDENT BY SHRI V VIDHYADHAR DATE OF HEARING 14 -05-2018 DATE OF PRONOUNCEMENT 03-08-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST ORDER OF THE CIT(A)-9, MUMBAI DATED 26-11-2015 AND IT PERTAINS T O AY 2011-12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- GROUND NO. 1: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A), MUMBAI, ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE AS SESSING OFFICER AMOUNTING TO RS. 2,14,27,061/- U/S 36(L)(III) OF THE ACT, TREATING T HE SAME AS NOT INCURRED FOR THE PURPOSE OF THE BUSINESS OF THE APPELLANT. THE APPELLANT PRAYS THAT THE DISALLOWANCE OF RS. 2,14,27,0617- UNDER SECTION 36(L)(III) OF THE ACT M AY KINDLY BE DELETED. ** GROUND NO.2: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN NOT ADJUDICATING ON MERIT THE A.O.'S CONTENTION THAT IN TEREST EXPENDITURE AMOUNTING TO RS.2,14,27,0617- IS HIT BY THE PROVISIONS OF SECTIO N 14A R.W.R. 8D OF T THE I.T.RULES. THE FACTS OF THE ISSUE SPEAK FOR ITSELF THAT THE APPELL ANT WAS NOT IN THE POSSESSION OF THE SHARES OF MIRC ELECTRONICS LTD AND THEREFORE NOT EL IGIBLE FOR EARNING ANY EXEMPT INCOME FROM THE SAME. IN FACT, NO INVESTMENT WAS MADE IN T HE SHARES OF MIRC ELECTRONICS LTD. THE A.O.'S CONTENTION IS THEREFORE WITHOUT ANY SUBS TANCE. THE LD. CIT(A) OUGHT TO HAVE 2 ITA 91/MUM/2016 CONSIDERED THIS ISSUE ON MERIT. THE APPELLANT PRAYS THAT THE ISSUE MAY BE CONSIDERED IN THE LIGHT OF THE FACTS AND ACCORDINGLY, IT MAY BE H ELD THAT THE INTEREST EXPENDITURE OF RS.2,14,27,6617- IS NOT HIT BY THE PROVISIONS OF SE CTION 14A R.W.RULE 8D OF THE I.T.RULES. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF STOCK AND SHARE BROKERS, FILED ITS RETURN OF INCOME FOR AY 2011-12 ON 29-09-2011 DECLARING TOTAL LOSS OF RS.1,82,32,695. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPO NSE TO NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED VARIOUS DETAILS, AS CALLED FOR. THE ASSE SSMENT HAS BEEN COMPLETED U/S 143(3) R.W.S. 90(1)(C) OF THE INCOME- TAX ACT, 1961 DETERMINING THE TOTAL INCOME AT RS.40,58,43,960 BY MAKING ADDITION TOWARDS DISALLOWANCE OF INTEREST EXPENSES U/S 36(1) (III) AND ADDITION TOWARDS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOM E-TAX ACT, 1961. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E CIT(A). THE LD.CIT(A), FOR THE DETAILED DISCUSSION IN HIS APPEL LATE ORDER DATED 26-11- 2015 PARTLY ALLOWED APPEAL FILED BY THE ASSESSEE WH EREIN HE HAS DELETED ADDITION MADE TOWARDS UNEXPLAINED CASH CREDIT U/S 6 8 OF THE ACT, AND CONFIRMED ADDITION MADE TOWARDS DISALLOWANCE OF INT EREST EXPENDITURE U/S 36(1)(III) AND U/S 14A R.W.R.8D OF I.T. RULES, 1962. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE U S. 3. THE ONLY ISSUE THAT CAME UP FOR OUR CONSIDERATIO N FROM ASSESSEES APPEAL IS DISALLOWANCE OF INTEREST U/S 36(1)(III) O F THE INCOME-TAX ACT, 3 ITA 91/MUM/2016 1961. THE FACT WITH REGARD TO THE IMPUGNED DISPUTE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS DEBITED INTEREST ON LOAN TO THE P&L ACCOUNT OF RS.2,14,27,061. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT THE ASSESSEE HAS BORR OWED LOAN OF RS.35,38,83,555 FROM M/S SHYAM EQUITY PVT LTD. THE AO FURTHER NOTICED THAT THE ASSESSEE HAS SHOWN ADVANCES AGAINS T SHARES OF RS.26,69,92,586, THEREFORE, CALLED UPON THE ASSESSE E TO EXPLAIN AS TO WHY INTEREST PAID ON LOANS SHALL NOT BE DISALLOWED U/S 36(1)(III) FOR DIVERSION OF INTEREST BEARING FUNDS FOR NON BUSINES S PURPOSES. IN RESPONSE TO SHOW CAUSE NOTICE, THE ASSESSEE SUBMITT ED THAT THE COMPANY IS IN THE BUSINESS OF PURCHASE AND SALE OF SHARES AND IN THE PROCESS, IT HAS BORROWED LOAN FROM M/S SHYAM EQUITY PVT LTD AND ADVANCED THE SAME TO THE DIRECTOR OF THE COMPANY, S HRI GULU MIRCHANDANI TO ACQUIRE SHARES OF MIRC ELECTRONICS L TD. THE ASSESSEE FURTHER SUBMITTED THAT THE DIRECTOR OF THE COMPANY HAS ACQUIRED THE SHARES OF MIRC ELECTRONICS LTD AT A PRICE OF RS.33 PER EQUITY SHARE, WHEREAS THE PREVAILING MARKET PRICE OF THE SHARE AS ON THE DATE OF ACQUISITION WAS RS.17 PER SHARE WHICH IS MUCH LESSE R THAN THE PRICE AT WHICH THE DIRECTOR HAS PURCHASED SHARES. THEREFORE , OWING TO DIFFERENCE IN PRICE OF SHARES, THE COMPANY HAS NOT ACCEPTED TH E OFFER TO BUY SHARES AND ACCORDINGLY, WHATEVER AMOUNT WAS GIVEN TO THE D IRECTOR FOR PURCHASE 4 ITA 91/MUM/2016 OF SHARES HAS BEEN SHOWN UNDER THE HEAD ADVANCE FOR SHARES IN THE BALANCE-SHEET. THE ASSESSEE FURTHER CLAIMED THAT S INCE ITS MAIN OBJECT IS TRADING IN SHARES, THE ASSESSEE HAS BORROWED FUN DS FOR ITS BUSINESS PURPOSE AND UTILISED THE SAID AMOUNT FOR THE PURPOS E OF ITS BUSINESS ACTIVITY, THEREFORE, INTEREST PAID ON SUCH LOANS CA NNOT BE DISALLOWED U/S 36(1)(III) OF THE INCOME-TAX ACT, 1961. 4. THE AO, AFTER CONSIDERING RELEVANT SUBMISSIONS O F THE ASSESSEE HELD THAT ALTHOUGH THE ASSESSEE HAS CLAIMED TO HAVE GIVEN LOANS FOR ACQUISITION OF SHARES, FAILED TO PROVE THAT THE SAI D ADVANCE HAS BEEN USED FOR GENUINE BUSINESS PURPOSE. THE AO FURTHER OBSERVED THAT THE ASSESSEE HAS BORROWED HUGE FUNDS FROM SHYAM EQUITY PVT LTD AND ADVANCED THE SAME TO THE DIRECTOR OF THE COMPANY WI THOUT ANY NEXUS BETWEEN LOAN BORROWED AND ADVANCE GIVEN TO THE DIRE CTOR. ALTHOUGH IT CLAIMS TO HAVE PAID LOANS FOR PURCHASE OF SHARES, T HE SAID TRANSACTION WAS NOT MATERIALISED, THEREFORE, OPINED THAT THE AS SESSEE HAS DIVERTED INTEREST BEARING FUNDS FOR NON BUSINESS PURPOSE AND ACCORDINGLY, DISALLOWED, INTEREST EXPENSES U/S 36(1)(III) OF THE INCOME-TAX ACT, 1961. THE AO ALSO INVOKED THE PROVISIONS OF SECTION 14A R .W.R. 8D(2)(I) TO ARGUE THAT THE ASSESSEE HAS INVESTED IN SHARES, WHI CH IS CAPABLE OF EARNING EXEMPT INCOME AND HENCE, ANY EXPENDITURE IN CURRED IN RELATION TO EXEMPT INCOME NEEDS TO BE DISALLOWED WHEREAS THE ASSESSEE HAS 5 ITA 91/MUM/2016 FAILED TO DISALLOW SUCH EXPENSES AND ACCORDINGLY OP INED THAT EVEN U/S 14A R.W.R. 8D(2)(II), THE INTEREST EXPENDITURE CLAI MED BY THE ASSESSEE IS NOT ALLOWABLE AS DEDUCTION. 5. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE AO WAS ERRED IN DISALLOWING INTEREST PAID ON LOANS BORROWED FROM SH YAM EQUITIES PVT LTD WITHOUT APPRECIATING THE FACT THAT LOAN HAS BEEN BO RROWED FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE AND THE SAME HA S BEEN ADVANCED TO DIRECTOR OF THE COMPANY FOR PURCHASE OF SHARES. THE LD.AR FURTHER SUBMITTED THAT SINCE THE ASSESSEE IS IN THE BUSINES S OF PURCHASE AND SALE OF SHARES, ANY ADVANCE GIVEN FOR PURCHASE OF S HARES IS IN THE NATURE OF NORMAL BUSINESS ADVANCE AND HENCE, ANY INTEREST PAID ON LOANS BORROWED FOR GENUINE PURPOSES CANNOT BE DISALLOWED U/S 36(1)(III) OF THE INCOME-TAX ACT, 1961. THE AO FURTHER REFERRING TO VARIOUS JUDICIAL PRECEDENTS INCLUDING THE DECISION OF HONBLE KARNAT AKA HIGH COURT IN THE CASE OF CIT VS SRIDEVENTERPRISES 192 ITR 165 (KAR) SUBMITTED THAT THE ASSESSEE HAS PAID INTEREST ON SUCH LOANS IN THE EAR LIER YEAR AND THE DEPARTMENT HAS ACCEPTED, THEREFORE, WITHOUT THERE B EING ANY CHANGE IN FACTS, THERE IS NO REASON FOR THE AO TO DISALLOW IN TEREST PAID ON LOAN DURING THE IMPUGNED ASSESSMENT YEAR. ONCE INTEREST IS ALLOWED IN PREVIOUS YEAR AND IF THERE IS NO CHANGE IN THE CIRC UMSTANCES, THEN, IT CANNOT BE DISALLOWED IN THE CURRENT ASSESSMENT YEAR S. IN THIS REGARD 6 ITA 91/MUM/2016 RELIED UPON THE FOLLOWING CASE LAWS:- 1. CIT VS SRIDEV ENTERPRISES [192 ITR 165 (KAR)] 2. CIT VS INDUSTRIAL CABLES (INDIA) LTD [209 CTR 1 67 (P&H)] 3. ESCORTS LTD VS ACIT [204 ITD 427 (DEL)] 4. MALWA COTTON SPG. MILLS VS ACIT [89 ITD 65 (TM) (CHD)] 5. ITO VS J.M.P. ENTERPRISES [101 ITD 324 (SMC)(AS R)] 6. SUSHEE HI TECH CONSTRUCTION PVT LTD VS DCIT [ 3 3 TAXMAN.COM 236(HYD)] 7. VIRENDRA R GANDHI VS ACIT (TAX APPEAL NO.20 OF 2004 WITH TAX APPEAL NO.124 OF 2005 DATED 27.11.20`14 (GUJARA T HIGH COURT). 6. THE LD.DR, ON THE OTHER HAND, STRONGLY SUPPORTIN G THE ORDER OF THE LD.CIT(A) SUBMITTED THAT THERE IS NO RES JUDICATA I N INCOME-TAX PROCEEDINGS AND HENCE, THE QUESTION OF FOLLOWING C ONSISTENCY IN ASSESSMENT PROCEEDINGS IS NOT RELEVANT AND WHAT IS RELEVANT IS WHETHER THE IMPUGNED EXPENDITURE IS ALLOWABLE AS PER THE PR OVISIONS OF THE ACT OR NOT. IN THIS CASE, THE AO HAS BROUGHT OUT CLEAR FA CTS TO THE EFFECT THAT INTEREST PAID ON LOANS IS HIT BY THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT AND HENCE, RIGHTLY DISALLOWED INTEREST PAID ON LOANS AND HIS ORDER SHOULD BE UPHELD. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE AO HAS DISALLOWED INTEREST PAID ON LOANS U/S 36(1)(III) AND U/S 14A R.W.R. 8D(2)(I) OF INCOME-TAX RULES, 19 62. ACCORDING TO THE 7 ITA 91/MUM/2016 AO, THE ASSESSEE HAS AVAILED LOANS FROM SHAYM EQUI TIES PVT LTD AND DIVERTED THE SAME FOR NON BUSINESS PURPOSES. IT IS THE CONTENTION OF THE ASSESSEE THAT LOAN BORROWED FROM SHAYM EQUITIES PVT LTD HAS BEEN GIVEN TO DIRECTOR OF THE COMPANY FOR ACQUISITION OF SHARES OF MIRC ELECTRONICS LTD. THE ASSESSEE FURTHER CONTENDED TH AT THE DIRECTOR OF THE COMPANY HAS ACQUIRED SHARES OF MIRC ELECTRONICS LTD AT A HIGHER PRICE THAN AT THE PREVAILING MARKET PRICE OF THE SHARES A ND HENCE, THE COMPANY HAS NOT ACCEPTED THE OFFER TO BUY SHARES. CONSEQUENTLY, AMOUNT GIVEN TO DIRECTOR OF THE COMPANY HAS BEEN TR EATED AS ADVANCE GIVEN FOR SHARES. SINCE, THE MAIN OBJECT OF THE AS SESSEE IS TO BUY AND SELL SHARES, WHATEVER ADVANCES GIVEN FOR ACQUISITIO N OF SHARES IS IN THE NATURE OF NORMAL BUSINESS ADVANCES AND, THEREFORE, WHATEVER INTEREST PAID ON SUCH LOANS CANNOT BE DISALLOWED U/S 36(1)(I II) OF THE INCOME-TAX ACT, 1961. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE IS INVOLVED IN THE BUSINESS OF SHARES AND STOCK BRO KING. THE BORROWED LOAN FROM SHYAM EQUITIES PVT LTD AND ADVANCED SUCH LOAN TO DIRECTOR OF THE COMPANY IS FOR THE PURPOSE OF BUSINESS AND THER E IS A DIRECT NEXUS BETWEEN LOAN BORROWED FROM SHYAM EQUITIES PVT LTD A ND ADVANCED THE SAME AGAINST PURCHASE OF SHARES. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT ONCE THERE IS A DIRECT NEXUS BETWEEN LOAN AND ADVANCE GIVEN FOR PURCHASE OF SHARES, THEN NO INTEREST CAN BE DIS ALLOWED U/S 36(1)(III) 8 ITA 91/MUM/2016 ON THE GROUND THAT THE ASSESSEE HAS DIVERTED INTERE ST BEARING FUNDS FOR NON BUSINESS PURPOSES. 8. COMING TO THE ALTERNATIVE PLEA OF THE ASSESSEE. THE ASSESSEE ALSO MADE AN ALTERNATIVE PLEA INASMUCH AS THE ASSESSEE I S CONTINUOUSLY PAYING INTEREST ON LOAN BORROWED FROM SHYAM EQUITIE S PVT LTD EVEN DURING EARLIER YEARS AND THE SAME HAS BEEN ACCEPTED BY THE DEPARTMENT. ONCE INTEREST PAID ON LOAN HAS BEEN AL LOWED IN THE PREVIOUS YEAR AND IF THERE IS NO CHANGE IN THE FACT S FOR THE IMPUGNED YEAR, THEN INTEREST PAID ON SAID LOAN CANNOT BE DIS ALLOWED FOR THE CURRENT YEAR. IN THIS REGARD, THE ASSESSEE HAS RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS VI RENDRA R GANDHI (GUJ) WHERE THE HONBLE HIGH COURT, AFTER CONSIDERI NG THE DECISION OF THE APEX COURT IN THE CASE OF CIT VS EXCEL INDUSTRIES L TD REPORTED IN 358 ITR 295 (SC) AND ALSO THE DECISION OF HONBLE KARNA TAKA HIGH COURT IN THE CASE OF CIT VS SRIDEV ENTERPRISES (SUPRA) OBSER VED THAT ONCE, THE INTEREST IS ALLOWED IN THE PREVIOUS YEAR AND IF THE RE IS NO CHANGE IN THE CONDITION, THEN IT CANNOT BE DISALLOWED IN THE CURR ENT ASSESSMENT YEAR. THE RELEVANT PART OF THE ORDER IS EXTRACTED BELOW:- 6. WE HAVE NEARD LEARNED ADVOCATES FOR THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR VIEW, THE DECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF SRIDEV ENTERPRISES(SUPRA) IS DIRECTLY ON THE ISSUE POSED IN THIS APPEAL. IT IS NECESSARY 9 ITA 91/MUM/2016 TO REPRODUCE RELEVANT PARAGRAPH OF THE ABOVE DECISION, WHICH READS AS UNDER:- 'WE ARE IN AGREEMENT WITH THE VIEW EXPRESSED BY THE APPELLATE TRIBUNAL. THE STATUS OF B THE AMOUNT OUTSTANDING FROM NALANDA ON THE FIRST DAY OF THE ACCOUNTING YEAR IS THE AMOUNT THAT STOOD OUTSTANDING ON THE LAST DAY OF THE PREVIOUS ACCOUNTING YEAR AND, THEREFORE, ITS NATURE AND STATUS CANNOT BE DIFFERENT ON THE FIRST DAY OF THE CURRENT ACCOUNTING YEAR FROM ITS NATURE AND STATUS AS ON THE LAST DAY OF THE PREVIOUS ACCOUNTING YEAR. REGARDING THE PAST YEARS, THE ASSESSEE'S CLAIMS FOR DEDUCTION WERE ALLOWED IN RESPECT OF THE SUMS ADVANCED DURING THOSE YEARS; THIS COULD BE ONLY ON THE ASSUMPTION THAT THOSE ADVANCES WERE NOT OUT OF BORROWED FUNDS OF THE ASSESSEE. THIS FINDING DURING THE PREVIOUS YEARS IS THE VERY BASIS OF THE DEDUCTIONS PERMITTED DURING THE PAST YEARS, WHETHER A SPECIFIC FINDING WAS RECORDED OR NOT. A DEPARTURE FROM THAT FINDING IN RESPECT OF THE SAID AMOUNTS ADVANCED DURING THE PREVIOUS YEAR WOULD RESULT IN A CONTRADICTORY FINDING; IT WILL NOT BE EQUITABLE TO PERMIT THE REVENUE TO TAKE A DIFFERENT STAND NOW IN RESPECT OF THE AMOUNTS WHICH WERE THE SUBJECT MATTER OF PREVIOUS YEARS' ASSESSMENTS; CONSISTENCY AND DEFINITENESS OF APPROACH BY THE REVENUE IS NECESSARY IN THE MATTER OF RECOGNISING THE NATURE OF AN ACCOUNT MAINTAINED BY THE ASSESSEE SO THAT THE BASIS OF A CONCLUDED ASSESSMENT WOULD NOT BE IGNORED WITHOUT ACTUALLY REOPENING THE ASSESSMENT. THE * PRINCIPLE IS SIMILAR TO THE CASE WHERE IT HAS BEEN HELD THAT A DEBT WHICH HAD BEEN TREATED BY THE REVENUE AS A GOOD DEBT IN A PARTICULAR YEAR CANNOT BE SUBSEQUENTLY BE HELD BY IT TO HAVE BECOME BAD PRIOR TO THAT YEAR. 7. IN VIEW OF OUR AFORESAID, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE INVOLVED IN THIS APPEAL IS ALREADY CONCLUDED BY THE ABOVE DECISION. IN THE ABOVE DECISION, IT HAS BEEN 10 ITA 91/MUM/2016 CATEGORICALLY HELD THAT IT WOULD NOT BE EQUITABLE TO PERMIT THE REVENUE TO TAKE A DIFFERENT STAND SUBSEQUENTLY IN RESPECT OF THE AMOUNTS WHICH WERE THE SUBJECT MATTER OF PREVIOUS YEARS' ASSESSMENT. IN OUR VIEW, ONCE THE INTEREST IS ALLOWED IN THE PREVIOUS YEAR AND IF THERE IS NO CHANGE IN THE CONDITION THEN IT CAN BE DISALLOWED IN THE CURRENT YEARS' ASSESSMENT. ACCORDINGLY, THE QUESTION WHICH IS POSED IN THIS APPEAL REQUIRES TO BE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. THEREFORE, THE PRESENT APPEAL DESERVES TO BE ALLOWED. 9. IN THIS VIEW OF THE MATTER AND RESPECTFULLY FOLL OWING THE DECISION OF HONBLE GUJARAT HIGH COURT AND HONBLE KARNATAKA HI GH COURT IN THE CASES OF CIT VS VIRENDRA R GANDHI AND CIT VS SRIDEV ENTERPRISES (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE AO WAS ERRED IN DISALLOWING INTEREST EXPENSES U/S 36(1)(III) OF THE ACT. THEREFORE, WE DIRECT THE AO TO DELETE ADDITION MADE TOWARDS DISAL LOWANCE OF INTEREST U/S 36(1)(III) OF THE ACT. 10. THE ASSESSEE HAS TAKEN GROUND NO.2 CHALLENGING ACTION OF THE LD.CIT(A) IN NOT ADJUDICATING DISALLOWANCE OF INTER EST U/S 14A R.W.R.8D(2)(I) OF THE I.T. RULES, 1962. THE CIT(A) HAS UPHELD ADDITION MADE BY THE AO ON BOTH SECTIONS BY HOLDING THAT THE IMPUGNED DISALLOWANCE IS HIT BY PROVISIONS OF SECTION 36(1)( III) AS WELL AS SECTION 14A OF THE INCOME-TAX ACT, 1961. SINCE, WE HAVE AL READY DELETED ADDITION MADE BY THE AO U/S 36(1)(III), THE GROUND TAKEN BY THE ASSESSEE 11 ITA 91/MUM/2016 U/S 14A R.W.R 8D(2)(I) BECOMES ACADEMIC IN NATURE A ND IT DOES NOT REQUIRE ANY ADJUDICATION. HENCE, THE SECOND GROUND RAISED BY THE ASSESSEE IS DISMISSED, AS INFRUCTUOUS. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD AUGUST, 2018. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 03 RD AUGUST, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI