DCIT, Bangalore V. M./s Gem Laboratories Pvt. Ltd., Bangalore

ITA 951/BANG/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5109 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-10-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 15-06-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: H R SURESH
• Keywords: Earning of tax free income; Question of law
• Section: 14A; 10

Judgement Text

ITA.951/B/2015 & CO.8/B/2016 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'A', BENGALURU BEFORE SHRI. JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER I.T.A NO.951/BANG/2015 (ASSESSMENT YEAR : 2010-11) DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 3(1)(2), BENGALURU .. APPELLANT V. M/S. GEM LABORATORIES P. LTD, NO.22, 2 ND MAIN ROAD, PAMADI TOWERS, 1 ST MAIN ROAD, GANDHINAGAR, BENGALURU 560 009 .. RESPONDENT PAN : AAACG6041Q CROSS OBJECTION NO.8/BANG/2016 (IN I.T.A NO.951/BANG/2015) (ASSESSMENT YEAR : 2010-11) ASSESSEE BY : SHRI. H. R. SURESH, CA REVENUE BY : SHRI. SIDDAPPAJI R. N, ADDL. CIT HEARD ON : 04.10.2018 PRONOUNCED ON : 22 .10.2018 O R D E R PER LALIET KUMAR, JUDICIAL MEMBER : THE PRESENT APPEAL AND CROSS OBJECTION ARE FILED B Y THE REVENUE AND THE ASSESSEE RESPECTIVELY, AGAINST THE ORDER OF THE CIT (A) 3, BENGALURU, DT.17.03.2015, FOR THE ASSESSME NT YEAR 2010-11, ON THE FOLLOWING GROUND NOS.2 & 3 : ITA.951/B/2015 & CO.8/B/2016 PAGE - 2 02. IN RESPECT OF GROUND NO.2, THE LD. DR HAS SUBMI TTED THAT THE CIT (A) HAS ALLOWED THE CLAIM OF THE ASSESSEE IGNOR ING THE CIRCULAR BY THE CBDT NO.5/2014, WHEREIN IT WAS DECIDED BY TH E BOARD THAT EVEN IF THE ASSESSEE DOES NOT HAVE THE EXEMPT INCOM E, YET RULE 8D ALONG WITH 14A WOULD BE APPLICABLE. 03. ON THE CONTRARY, THE LD. AR HAS DRAWN OUR ATTEN TION TO PARA 5.2 OF THE ORDER OF THE CIT (A), WHEREIN THE CIT (A ) HAS RELIED UPON THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN TH E MATTER OF CIT V. HOLCIM INDIA P. LTD [111 DTR 0158], WHEREIN THE HIGH COURT IN PARA 14 OF THE ORDER HAS HELD AS UNDER : ITA.951/B/2015 & CO.8/B/2016 PAGE - 3 FOLLOWING THE ABOVE JUDGMENT OF THE HONBLE DELHI H IGH COURT, THE CIT (A) DIRECTED THE AO TO DELETE THE DISALLOWANCE OF RS.19,11,917/- U/S.14A R.W. RULE 8D. AGGRIEVED BY THE SAME REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 04. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. IT IS AN ADMITTED CASE BY THE PARTIES BEFORE US THA T THE ASSESSEE HAS NOT EARNED ANY EXEMPT INCOME DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. HONBLE DELHI HIGH COURT IN CHEM IN VESTMENT [2015] 61 TAXMANN.COM 118 (DELHI) WHEREIN IT WAS HELD AS UNDER : 15. TURNING TO THE CENTRAL QUESTION THAT ARISES FOR CO NSIDERATION, THE COURT FINDS THAT THE COMPLETE ANSWER IS PROVIDED BY THE DECISIO N OF THIS COURT IN CIT V. HOLCIM INDIA (P.) LTD. [2015] 57 TAXMANN.COM 28 . IN THAT CASE A SIMILAR QUESTION AROSE, VIZ., WHETHER THE ITAT WAS JUSTIFIE D IN DELETING THE DISALLOWANCE UNDER SECTION 14A OF THE ACT WHEN NO DIVIDEND INCOM E HAD BEEN EARNED BY THE ASSESSEE IN THE RELEVANT AY? THE COURT REFERRED TO THE DECISION OF THIS COURT IN MAXOPP INVESTMENT LTD'S. CASE ( SUPRA ) AND TO THE DECISION OF THE SPECIAL BENCH OF THE ITAT IN THIS VERY CASE I.E. CHEMINVEST LTD . V. ITO [2009] 121 ITD 318 . THE COURT ALSO REFERRED TO THREE DECISIONS OF DIFFERENT HIGH COURTS WHICH HAVE DECIDED THE ISSUE AGAINST REVENUE. THE FIRST WAS THE DECISI ON IN CIT V. LAKHANI MARKETING INC . [2014] 226 TAXMAN 45/49 TAXMANN.COM 257 OF THE HIGH COURT OF PUNJAB AND HARYANA WHICH IN TURN REFERRED TO TWO EARLIER DECIS IONS OF THE SAME COURT IN CIT V. HERO CYCLES LTD. [2010] 323 ITR 518/189 TAXMAN ITA.951/B/2015 & CO.8/B/2016 PAGE - 4 50 AND CIT V. WINSOME TEXTILE INDUSTRIES LTD . [2009] 319 ITR 204 . THE SECOND WAS OF THE GUJARAT HIGH COURT IN CIT V. CORRTECH ENERGY (P.) LTD. [2014] 223 TAXMAN 130/45 TAXMANN.COM 116 AND THE THIRD OF THE ALLAHABAD HIGH COURT IN CIT V . SHIVAM MOTORS (P.) LTD . [2015] 230 TAXMAN 63/55 TAXMANN.COM 262 . THESE THREE DECISIONS REITERATED THE POSITION THAT WHEN AN ASSESSEE HAD NOT EARNED ANY TAXABLE INCOME IN THE RELEVANT AY IN QUESTION ' CORRESPONDING EXPENDITURE COULD NOT BE WORKED OUT FOR DISALLOWANCE.' 16. IN HOLCIM INDIA (P.) LTD'S. CASE ( SUPRA ), THE COURT FURTHER EXPLAINED AS UNDER: '15. INCOME EXEMPT UNDER SECTION 10 IN A PARTICULAR ASSESSMENT YEAR, MAY NOT HAVE BEEN EXEMPT EARLIER AND CAN BECOME TAXABLE IN FUTURE YEARS. FURTHER, WHETHER INCOME EARNED IN A SUBSEQUENT YEAR WOULD OR WOULD NOT BE TAXABLE, MAY DEPEND UPON THE NATURE OF TRANSACTION ENTERED I NTO IN THE SUBSEQUENT ASSESSMENT YEAR. FOR EXAMPLE, LONG TERM CAPITAL GAI N ON SALE OF SHARES IS PRESENTLY NOT TAXABLE WHERE SECURITY TRANSACTION TA X HAS BEEN PAID, BUT A PRIVATE SALE OF SHARES IN AN OFF MARKET TRANSACTION ATTRACT S CAPITAL GAINS TAX. IT IS AN UNDISPUTED POSITION THAT RESPONDENT ASSESSEE IS AN INVESTMENT COMPANY AND HAD INVESTED BY PURCHASING A SUBSTANTIAL NUMBER OF SHAR ES AND THEREBY SECURING RIGHT TO MANAGEMENT. POSSIBILITY OF SALE OF SHARES BY PRI VATE PLACEMENT ETC. CANNOT BE RULED OUT AND IS NOT AN IMPROBABILITY. DIVIDEND MAY OR MAY NOT BE DECLARED. DIVIDEND IS DECLARED BY THE COMPANY AND STRICTLY IN LEGAL SENSE, A SHAREHOLDER HAS NO CONTROL AND CANNOT INSIST ON PAYMENT OF DIVI DEND. WHEN DECLARED, IT IS SUBJECTED TO DIVIDEND DISTRIBUTION TAX.' 17. ON FACTS, IT WAS NOTICED IN HOLCIM INDIA (P.) LTD'S. CASE ( SUPRA ) THAT THE REVENUE HAD ACCEPTED THE GENUINENESS OF THE EXPENDI TURE INCURRED BY THE ASSESSEE IN THAT CASE AND 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 IND IA LTD. IS IN THE FORM OF A STRATEGIC INVESTMENT. SINCE THE BUSINESS OF THE ASS ESSEE IS OF HOLDING INVESTMENTS, THE INTEREST EXPENDITURE MUST BE HELD TO HAVE BEEN INCURRED FOR HOLDING AND MAINTAINING SUCH INVESTMENT. THE INTERE ST EXPENDITURE INCURRED BY THE ASSESSEE IS IN RELATION TO SUCH INVESTMENTS WHI CH GIVES RISE TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME. 19. IN LIGHT OF THE CLEAR EXPOSITION OF THE LAW IN HOLCIM INDIA (P.) LTD'S. CASE ( SUPRA ) AND IN VIEW OF THE ADMITTED FACTUAL POSITION IN T HIS CASE THAT THE ASSESSEE HAS MADE STRATEGIC INVESTMENT IN SHARES OF MAX INDI A LTD.; THAT NO EXEMPTED INCOME WAS EARNED BY THE ASSESSEE IN TH E RELEVANT AY AND SINCE THE GENUINENESS 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 ( SUPRA ), IT IS CONSIDERED NECESSARY TO DISCUSS THE TRUE PURPORT OF THE SAID DECISION. IT IS NOTICE D TO BEGIN WITH THAT THE ISSUE BEFORE THE SUPREME COURT IN THE SAID CASE WAS WHETH ER THE EXPENDITURE UNDER SECTION 57(III) OF THE ACT COULD BE ALLOWED AS A DE DUCTION AGAINST DIVIDEND INCOMEASSESSABLE UNDER THE HEAD 'INCOME FR OM OTHER SOURCES'. UNDER SECTION 57(III) OF THE ACT DEDUCTION IS ALLOWED IN RESPECT OF ANY EXPENDITURE LAID ITA.951/B/2015 & CO.8/B/2016 PAGE - 5 OUT OR EXPENDED WHOLLY OR EXCLUSIVELY FOR THE PURPO SE OF MAKING OR EARNING SUCH INCOME. THE SUPREME COURT EXPLAINED THAT THE E XPRESSION 'INCURRED FOR MAKING OR EARNING SUCH INCOME', DID NOT MEAN THAT A NY INCOME SHOULD IN FACT HAVE BEEN EARNED AS A CONDITION PRECEDENT FOR CLAIM ING THE EXPENDITURE. THE COURT EXPLAINED: '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 EXPENDITURE THAT IS RELEVANT IN DETE RMINING 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 ORDE R TO QUALIFY THE EXPENDITURE FOR DEDUCTION. IT DOES NOT SAY THAT THE EXPENDITURE SHA LL BE DEDUCTIBLE ONLY IF ANY INCOME IS MADE OR EARNED. THERE IS IN FACT NOTH ING IN THE LANGUAGE OF S. 57(III) TO SUGGEST THAT THE PURPOSE FOR WHICH THE E XPENDITURE IS MADE SHOULD FRUCTIFY INTO ANY BENEFIT BY WAY OF RETURN IN THE S HAPE OF INCOME. THE PLAIN NATURAL CONSTRUCTION OF THE LANGUAGE OF S. 57(III) IRRESISTIBLY LEADS TO THE CONCLUSION THAT TO BRING A CASE WITHIN THE SECTION, IT IS NOT NECESSARY THAT ANY INCOME SHOULD IN FACT HAVE BEEN EARNED AS A RES ULT OF THE EXPENDITURE.' 21. THERE IS MERIT IN THE CONTENTION OF MR. VOHRA THAT THE DECISION OF THE SUPREME COURT IN RAJENDRA PRASAD MOODY'S CASE ( SUPRA ) WAS RENDERED IN THE CONTEXT OF ALLOWABILITY OF DEDUCTION UNDER SECTION 57(III) OF THE ACT, WHERE THE EXPRESSION USED IS 'FOR THE PURPOSE OF MAKING OR EA RNING SUCH INCOME'. SECTION 14A OF THE ACT ON THE OTHER HAND CONTAINS THE EXPRE SSION 'IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INC OME.' THE DECISION IN RAJENDRA PRASAD MOODY'S CASE ( SUPRA ) CANNOT BE USED IN THE REVERSE 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 REMANDED THE MATTER TO THE AO FOR RECONSIDERATION OF THE ISSUE AFRESH. THE ISSUE IN MAXOPP INVESTMENT LTD'S . CASE ( SUPRA ) WAS WHETHER THE EXPENDITURE (INCLUDING INTEREST O N BORROWED FUNDS) IN RESPECT OF INVESTMENT IN SHARES OF OPERATING COMPAN IES FOR ACQUIRING AND RETAINING A CONTROLLING INTEREST THEREIN WAS DISALL OWABLE UNDER SECTION 14A OF THE ACT. IN THE SAID CASE ADMITTEDLY THERE WAS DIVI DEND EARNED ON SUCH INVESTMENT. IN OTHER WORDS, IT WAS NOT A CASE, AS T HE PRESENT, WHERE NO EXEMPT INCOME WAS EARNED IN THE YEAR IN QUESTION . CONSEQUENTLY, THE SAID DECISION WAS NOT RELEVANT AND DID NOT APPLY IN THE CONTEXT OF THE ISSUE PROJECTED IN THE PRESENT CASE. 23. IN THE CONTEXT OF THE FACTS ENUMERATED HEREINBEFOR E THE COURT ANSWERS THE QUESTION FRAMED BY HOLDING THAT THE EXPRESSION 'DOE S NOT FORM PART OF THE TOTAL INCOME' IN SECTION 14A OF THE ENVISAGES THAT THERE SHOULD BE AN ACTUAL RECEIPT OF INCOME, WHICH IS NOT INCLUDIBLE IN THE T OTAL INCOME, DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE OF DISALLOWING ANY EX PENDITURE INCURRED IN RELATION TO THE SAID INCOME. IN OTHER WORDS, SECTION 14A WIL L NOT APPLY IF NO EXEMPT INCOME IS RECEIVED OR RECEIVABLE DURING T HE RELEVANT PREVIOUS YEAR. ITA.951/B/2015 & CO.8/B/2016 PAGE - 6 RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE DELHI HIGH COURT, WE DECIDE THIS GROUND AGAINST THE REVENUE AN D IN FAVOUR OF THE ASSESSEE. 05. THE GROUND NO.3 IS WITH RESPECT TO DISALLOWANCE OF INTEREST ON LOANS ADVANCED BY THE ASSESSEE. 06. IN THIS REGARD THE LD. DR HAS SUBMITTED THAT TH E ASSESSEE HAD AVAILED LOAN OF RS.10 CRORES FROM STATE BANK OF IND IA FOR IRON-ORE EXPORT AND HE HAS ALSO DRAWN OUR ATTENTION TO THE A SSESSMENT ORDER WHERE THE AO HAS MENTIONED THAT THE INVESTMENT IN S HARES WAS AS UNDER : ITA.951/B/2015 & CO.8/B/2016 PAGE - 7 ON THE BASIS OF THE ABOVE, IT WAS SUBMITTED THAT DU RING THE YEAR UNDER CONSIDERATION THERE IS A SUBSTANTIAL INCREASE IN INVESTMENT IN SHARES, ADVANCES FOR ALLOTMENT OF SHARES AND LOANS AND ADVANCES. THEREFORE THE ASSESSEE HAS TO SUBMIT ONE TO ONE VER IFICATION OF UTILISATION OF THE LOAN, PACKING CREDIT LIMIT AS WE LL AS INVESTMENT MADE IN SHARES, ADVANCES FOR ALLOTMENT OF SHARES AN D LOANS AND ADVANCES. 07. PER CONTRA, THE LD. AR HAS SUBMITTED THAT THE A SSESSEE WAS HAVING ITS OWN SURPLUS FUNDS AS IS CLEAR FROM THE T ABLE BELOW, WHICH IS FORMING PART OF THE ASSESSMENT ORDER : THE LD. AR SUBMITTED THAT FROM A PERUSAL OF THE ABO VE, IT IS CLEAR THAT THE ASSESSEE HAS UTILISED THE ENTIRE LOAN AMOU NT FOR BUSINESS PURPOSE AND NO PART OF THE SAME WAS NEVER UTILISED FOR INVESTMENT OR GIVEN AS LOAN AND ADVANCES TO GROUP COMPANIES. HE RELIED UPON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE MATTER OF S. A BUILDERS [288 ITR 1- SC] AND ALSO IN THE MATTER OF RAGHUVIR SYNTHETICS [345 ITR 222]. ITA.951/B/2015 & CO.8/B/2016 PAGE - 8 08. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE HONBLE SUPREME COURT IN THE MATTER OF MAXOPP I NVESTMENTS LTD V. CIT [91 TAXMANN.COM 123] WHEREIN THE HONBLE APEX COURT HAS THE OCCASION TO EXAMINE THIS ISSUE IN THE LIGHT OF VARIOUS ISSUES PENDING BEFORE IT. IN PARA 42, IT WAS HELD AS UNDE R : 42. CIVIL APPEAL NO. 1423 OF 2015 IS FILED BY M/S. AVO N CYCLES LIMITED, LUDHIANA, WHEREIN THE AO HAD INVOKED SECTI ON 14A OF THE ACT READ WITH RULE 8D OF THE RULES AND APPORTIONED THE EXPENDITURE. THE CIT(A) HAD SET ASIDE THE DISALLOWA NCE, WHICH VIEW WAS UPTURNED BY THE ITAT IN THE FOLLOWING WORDS: '...ADMITTEDLY THE ASSESSEE HAD PAID TOTAL INTEREST OF RS.2.92 CRORES OUT OF WHICH INTEREST PAID ON TERM LOAN RAISED FOR SPECIFIC PURPOSE TOTALS TO RS.1.70 CRORES AND BALANCE INTEREST PAID BY THE ASSESSEE IS RS.1.21 CRORES. THE FUNDS UTILIZED BY THE ASSESSEE BEING MIXED FUNDS AND IN VIEW OF THE PROVISIONS OF RULE 8D(2)(II) OF THE INCOME TAX RULES THE DISALLOWANCE IS CONFIRMED AT RS.10,49,851 /-, WE FIND NO MERIT IN THE AD HOC DISALLOWANCE MADE BY THE CIT (A PPEALS) AT RS.5,00,000/-. CONSEQUENTLY, GROUND OF APPEAL RAISE D BY THE REVENUE IS PARTLY ALLOWED AND GROUND RAISED BY THE ASSESSEE IN CROSS-OBJECTION IS ALLOWED...' TAKING NOTE OF THE AFORESAID FINDING OF FACT, THE H IGH COURT HAS DISMISSED THE APPEAL OF THE ASSESSEE OBSERVING AS U NDER: 'IN THE PRESENT CASE, AFTER EXAMINING THE BALANCE-S HEET OF THE ASSESSEE, A FINDING OF FACT HAS BEEN RECORDED THAT THE FUNDS UTILIZED BY THE ASSESSEE BEING MIXED FUNDS, THEREFORE, THE I NTEREST PAID BY THE ASSESSEE IS ALSO AN INTEREST ON THE INVESTMENTS MADE. SUCH BEING A FINDING OF FACT, WE DO NOT FIND THAT ANY SUBSTANT IAL QUESTION OF LAW ARISES FOR CONSIDERATION OF THIS COURT.' AFTER GOING THROUGH THE RECORDS AND APPLYING THE PR INCIPLE OF APPORTIONMENT, WHICH IS HELD TO BE APPLICABLE IN SU CH CASES, WE DO NOT FIND ANY MERIT IN CIVIL APPEAL NO. 1423 OF 2015 , WHICH IS ACCORDINGLY DISMISSED. ITA.951/B/2015 & CO.8/B/2016 PAGE - 9 09. ON A PERUSAL OF THE ABOVE JUDGMENT OF THE HONB LE SUPREME COURT, IT IS CLEAR THAT FOR THE PURPOSES OF TAKING THE BENEFIT, IT IS INCUMBENT UPON THE ASSESSEE TO PROVE THE EXACT CASH -FLOW WHICH RESULTED INTO INVESTMENT IN SHARES, ADVANCES FOR AL LOTMENT OF SHARES AND LOANS AND ADVANCES. IN THE PRESENT CASE, NEEDF UL HAS NOT BEEN DONE. THEREFORE IN OUR VIEW IT WILL BE IN THE INTE REST OF JUSTICE TO REMAND THE MATTER TO THE FILE OF THE AO TO DECIDE T HE ISSUE IN THE LIGHT OF THE DIRECTIONS OF THE HONBLE SUPREME COUR T (SUPRA). IN THE RESULT, GROUND NO.3 IS ALLOWED FOR STATISTICAL PURP OSE. CROSS OBJECTION NO.8/BANG/2016 BY THE ASSESSEE : 10. THE CROSS OBJECTION IS FILED BY THE ASSESSEE IN SUPPORT OF THE ORDER OF THE CIT (A). IN THE CROSS OBJECTION, THE ASSESSEE HAS CONTENDED THAT THE INVOCATION OF SECTION 14A IS BAD AS THE AO HAS NOT RECORDED THE REASONS FOR THE SAME. WE MAY REPR ODUCE HERE THE OBSERVATIONS OF THE AO IN THE ASSESSMENT ORDER, AS UNDER : THE ASSESSEE COMPANY HAS NOT GIVEN ANY AMOUNT OF DISALLOWANCE ATTRACTED U/S.14A OF THE INCOME TAX AC T. THE DISALLOWANCE U/S.14A NEEDS TO BE WORKED OUT WITH RE SPECT TO THE TAX EXEMPT INVESTMENTS AND INVESTMENTS IN THE NATUR E OF EQUITY SHARE CAPITAL IN SUBSIDIARY COMPANIES AND OTHER SIS TER CONCERNS. TO THIS EXTENT, THE REVENUE IS COMPELLED TO INVOKE AND WORK OUT THE DISALLOWANCE ATTRACTED U/S.14A REA D WITH RULE 8D OF THE ACT..... IN THIS REGARD, IT IS SUFFICE TO MENTION HERE THAT AS WE HAVE ADJUDICATED THIS ISSUE IN GROUND NO.2 OF THE ASSESS EE, BY HOLDING IN FAVOUR OF THE ASSESSEE, THE CROSS OBJECTION OF THE ASSESSEE BECOMES IN FRUCTUOUS AND IS DISMISSED. ITA.951/B/2015 & CO.8/B/2016 PAGE - 10 12. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22ND DAY OF O CTOBER, 2018. SD/- SD/- (JASON P. BOAZ) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER BENGALURU DATED : 22.10.2018 MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.