M/s. Davar Holdings Pvt. Ltd., Baroda V. The Dy. CIT, Circle -2(1)(2), Baroda

ITA 974/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5785 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 18-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE, SHRI N. K. BILLAIYA , ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER ITA NO. 974/AHD/2016 (ASSESSMENT YEAR : 2012-13) M/S. M. C. DAVAR HOLDINGS PVT. LTD., B-1, CHANDAN METAL COMPOUND, BIDC, GORWA ROAD, GORWA, BARODA 390 015 A PPELLANT VS. DY.CIT, CIRCLE 2(1)(2), BARODA RESPONDENT PAN: AABCM4238Q / BY ASSESSEE : SHRI PARIN SHAH, A.R. / BY REVENUE : SHRI PRASOON KABRA, SR. D.R. /DATE OF HEARING : 21.03.2018 /DATE OF PRONOUNCEMENT : 28.03.2018 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 A RISES FROM THE CIT(A)-2, VADODARAS ORDER DATED 01.01.2016, IN CASE NO. CAB/(A)-2/384/14- 15, IN PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES SOLE SUBSTANTIVE GROUND IN THE INS TANT APPEAL PLEADS THE CIT(A)S ORDER REVERSING ASSESSING OFFICERS ACTION MAKING SECTION 14A R.W. RULE 8D DISALLOWANCE WITH THE FOLLOWING DETAILED DI SCUSSIONS: ITA NO. 974/AHD/16 [M/S. M.C.DAVAR HOLDINGS PVT. LT D. VS. DCIT ] A.Y. 2012-13 - 2 - 4. I HAVE CAREFULLY CONSIDERED THE FACTS ON RECORD AND SUBMISSION OF THE LD. AR. GROUND NO.1 PERTAINS TO DISALLOWANCE OF RS.3,80 ,764/- U/S 14A R.W. RULE 8D. IN ADDITION TO THE DISALLOWANCE OF RS.13,22,660/- A LREADY MADE BY THE APPELLANT. SINCE THE APPELLANT HAS MADE THE DISALLOWANCE OUT O F INTEREST EXPENDITURE AS PER THE PROVISIONS OF SECTION 14A R.W. RULE 8D, THE APP LICABILITY OF THIS RULE HAS BEEN CONCLUSIVELY ESTABLISHED. UNDISPUTEDLY, THE APPELLA NT HAS NOT MAINTAINED SEPARATE SET OF ACCOUNTS FOR INVESTMENTS AND EARNING OF EXEM PTED INCOME. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD.AR HAS RAISED MAIN LY TWO CONTENTIONS THAT THE INVESTMENTS MADE IN CERTAIN COMPANIES BEING A STRAT EGIC INVESTMENT AMOUNTING TO RS. 1,08,24,270/- SHOULD BE EXCLUDED FROM THE AVERA GE VALUE OF INVESTMENTS WHILE COMPUTING THE DISALLOWANCE AND SUCH INVESTMENTS WER E MADE OUT OF OWN FUNDS. ON PERUSAL OF THE DETAILS FURNISHED, 1 FIND THAT THERE IS NO DIRECT NEXUS BETWEEN THE INVESTMENTS AND NON-INTEREST BEARING FUNDS AND HENC E THIS ARGUMENT OF THE APPELLANT IS NOT ACCEPTABLE. FURTHER, UNDER THE PRO VISIONS OF SECTION 14A R.W. RULE 8D, THERE IS NO EXCEPTION PROVIDED FOR EXCLUSION OF THE STRATEGIC INVESTMENTS. IN FACT, ALL THE INVESTMENTS MADE BY THE APPELLANT COM PANY ARE RESULTING INTO DIVIDEND INCOME WHICH IS EXEMPTED FROM THE INCOME TAX AND HE NCE IN MY CONSIDERED VIEW ALL THE INVESTMENTS RESULTING INTO EXEMPTED INCOME TO B E CONSIDERED FOR DISALLOWANCE AS PER RULE 8D. IT MAY ALSO BE NOTED THAT CIT(A)-II I, BARODA VIDE HIS ORDER DATED 28.01.2014 CONTAINED IN APPEAL NO. CAB/III-2S4/2012 -13 (2010-11) HAS CONFIRMED THE DISALLOWANCE OF INTEREST ON ALL THE INVESTMENTS FOR DETAILED REASONS MENTIONED IN PARAS 4.3 TO 4.3.5 OF THE ORDER. THEREFORE, IN V IEW OF THE ABOVE FACTS, THE DISALLOWANCE MADE BY THE AO AT RS.3,80,764/- IN ADD ITION TO THE DISALLOWANCE ALREADY MADE BY THE APPELLANT, IS CONFIRMED. THUS, APPELLANT FAILS IN RESPECT OF GROUND NO.1. 3. LEARNED AUTHORIZED REPRESENTATIVE VEHEMENTLY CONT ENDS DURING THE COURSE OF HEARING THAT THE LOWER APPELLATE AUTHORIT Y HAS ERRED IN LAW AS WELL AS ON FACTS IN AFFIRMING THE IMPUGNED DISALLOWANCE. THE ASSESSEE FILES BEFORE US A CO- ORDINATE BENCHS ORDER IN ITA NO.968/AHD/2014 IN IT S OWN CASE FOR PRECEDING ASSESSMENT YEAR 2010-11 DECIDED ON 28.04.2017 AS FO LLOWS: 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL ON RECORD, AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF T HE APPLICABLE LEGAL POSITION. WE FIND THAT THERE IS NO DISPUTE THAT RULE 8D COMES IN TO PLAY IN THIS CASE BUT ESSENTIALLY DISPUTE REVOLVES AROUND AS TO HOW MUCH PORTION OF I NTEREST EXPENSES ARE TO BE DISALLOWED UNDER THAT RULE. IT IS ON THIS POINT THA T THERE ARE VARYING PERCEPTIONS. WHILE THE ASSESSEE HAS OFFERED DISALLOWANCE OF RS 7 ,70,830 (IN ADDITION TO 0.5% OF AVERAGE INVESTMENTS YIELDING TAX EXEMPT INCOME, WHI CH WORKS OUT TO RS. 2,20,714) BY TAKING INTO ACCOUNT ONLY SUCH INVESTMENTS ON WHI CH TAX EXEMPT INCOME WAS ACTUALLY EARNED, THE ASSESSING OFFICER HAS COMPUTED THIS PORTION OF DISALLOWANCE AT RS 13,86,103 BY TAKING INTO ACCOUNT ENTIRE INVESTME NTS YIELDING TAX EXEMPT INCOME- IRRESPECTIVE OF WHETHER OR NOT THERE WAS ANY TAX EX EMPT INCOME IN THE RELEVANT PREVIOUS YEAR OR NOT. LEARNED COUNSEL HAS, HOWEVER, GIVES A NEW TWIST TO THE CASE NOW. SHE SUBMITS THAT THE INTEREST FREE FUNDS AVAIL ABLE TO THE ASSESSEE ARE FAR IN EXCESS OF THE INVESTMENTS YIELDING TAX EXEMPT INCOM E AND THESE INVESTMENTS ARE CARRIED FORWARD FROM AN EARLIER POINT OF TIME MUCH BEFORE THE RELATED BORROWINGS ITA NO. 974/AHD/16 [M/S. M.C.DAVAR HOLDINGS PVT. LT D. VS. DCIT ] A.Y. 2012-13 - 3 - WERE RESORTED TO. HE CONTENTION IS THAT, IN VIEW OF THIS FACTUAL POSITION, AS A MATTER OF NO PART OF INTEREST EXPENDITURE CANNOT BE DISALL OWED UNDER SECTION, AND, ACCORDINGLY, THE DISALLOWANCE OFFERED BY THE ASSESS EE ON ITS OWN WAS FAR MORE THAN ADEQUATE. WHILE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT DISPUTED THE FACTUAL ELEMENTS EMBEDDED IN HER ARGUMENTS, HE NONETHELESS RELIES UPON THE STAND OF THE AUTHORITIES BELOW. 5. THE PLEA OF THE LEARNED COUNSEL IS INDEED WELL T AKEN, PARTICULARLY AS IT IS BEYOND ANY DOUBT OR CONTROVERSY THAT THE INTEREST F REE FUNDS AVAILABLE TO THE ASSESSEE WERE FAR IN EXCESS OF THE INVESTMENTS YIEL DING TAX EXEMPT INCOME. WE FIND THAT FIRSTLY, IN VIEW OF THE FACT THAT THE ASSESSEE HAS INTEREST FREE FUNDS FAR IN EXCESS OF THE INVESTMENTS YIELDING TAX EXEMPT INCOME, A PR ESUMPTION IS NECESSARILY TO BE TAKEN THAT THE INVESTMENTS WERE MADE OUT OF INTERES T FREE FUNDS. THAT POSITION IS SUPPORTED BY HON'BLE BOMBAY HIGH COURT'S DECISION I N THE CASE OF CIT VS RELIANCE UTILITIES & POWER LTD [ (2009) 313 ITR 340 (BOM)], AND A SERIES OF THE ORDERS PASSED BY VARIOUS COORDINATE BENCHES OF THIS TRIBUN AL HAVE APPLIED THE SAME IN THE PRESENT CONTEXT AS WELL. AS A COROLLARY TO THIS PRE SUMPTION, NO PART OF INTEREST PAYMENT CAN BE SAID TO BE ATTRIBUTABLE TO THE INVES TMENTS YIELDING TAX EXEMPT INCOME. IN SUCH A POSITION, SO FAR AS INTEREST DISA LLOWANCE UNDER RULE 8D IS CONCERNED, NO PART OF INTEREST EXPENSES CAN BE DISA LLOWED UNDER SECTION 8 D AT ALL. THIS PROPOSITION FINDS SUPPORT FROM A DECISION OF C OORDINATE BENCH IN THE CASE OF ACIT VS CHAMPION COMMERCIAL CO LTD [(2012) 139 ITD 108 (KOL)], WHICH NOW STANDS SPECIFICALLY APPROVED BY HON'BLE DELHI HIGH COURT IN THE CASE OF PCIT VS BHARTI OVERSEAS LIMITED [(2015) 64 TAXMANN.COM 340 (DEL)]. IN THE SAID CASE, THE COORDINATE BENCH, SPEAKING THROUGH ONE OF US, HAD O BSERVED AS FOLLOWS: 11. THERE IS NO DISPUTE ABOUT WORKING OF THIS METHO D SO FAR AS RULE 8D(2)(I) AND (III) IS CONCERNED. IT IS ONLY WITH RE GARD TO THE COMPUTATION UNDER RULE 8D(2)(II) THAT THE ASSESSING OFFICER AND THE CIT(A) HAVE DIFFERENT APPROACHES. THIS PROVISION ADMITTEDLY DEA LS WITH A SITUATION IN WHICH 'THE ASSESSEE HAS INCURRED EXPENDITURE BY WAY OF INTEREST DURING THE PREVIOUS YEAR WHICH IS NOT DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT'. CLEARLY, THEREFORE, THIS SUB CLAUSE SEEKS TO ALLOCATE 'COMMON INTEREST EXPENSES' TO TAXABLE INCOME AND TAX EXEMPT INCOME. IN OTHER WORDS, GOING BY THE PLAIN WORDINGS OF RULE 8D(2)(II) WHAT IS SOUGHT TO BE ALLOCATED IS 'EXPENDITURE BY WAY OF INTEREST..WHICH IS NOT DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT' A ND THE ONLY CATEGORIES OF INCOME AND RECEIPT, SO FAR AS SCHEME OF RULE 8D IS CONCERNED, ARE MUTUALLY EXCLUSIVE CATEGORIES OF 'TAX EXEMPT INCOME AND RECE IPT' AND 'TAXABLE INCOME AND RECEIPT'. NO OTHER CLASSIFICATION IS GERMANE TO THE CONTEXT IN WHICH RULE 8D IS SET OUT, NOR DOES THE SCHEME OF SECTION 14 A LEAVE ANY AMBIGUITY ABOUT IT. 12. IRONICALLY, HOWEVER, THE DEFINITION OF VARIABLE 'A' EMBEDDED IN FORMULA UNDER RULE 8D(2)(II) IS CLEARLY INCONGRUOUS INASMUCH WHILE IT SPECIFICALLY EXCLUDES INTEREST EXPENDITURE DIRECTLY RELATED TO TAX EXEMPT INCOME, IT DOES NOT EXCLUDE INTEREST EXPENDITURE DI RECTLY RELATED TO TAXABLE INCOME. RESULTANTLY, WHILE RULE 8D(2)(II) ADMITTEDL Y SEEKS TO ALLOCATE 'EXPENDITURE BY WAY OF INTEREST, WHICH IS NOT DIREC TLY ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT' IT ENDS UP ALLOCATING 'EXPENDITURE BY WAY OF INTEREST, WHICH IS NOT DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME OR ITA NO. 974/AHD/16 [M/S. M.C.DAVAR HOLDINGS PVT. LT D. VS. DCIT ] A.Y. 2012-13 - 4 - RECEIPT, PLUS INTEREST WHICH IS DIRECTLY ATTRIBUTAB LE TO TAXABLE INCOME' [EMPHASIS SUPPLIED]. THIS INCONGRUITY WILL BE MORE GLARING WITH THE HELP OF FOLLOWING SIMPLE EXAMPLE: IN THE CASE OF A & CO LTD, TOTAL INTEREST EXPENDITU RE IS RS. 1,00,000, OUT OF WHICH INTEREST EXPENDITURE IN RESPECT OF ACQ UIRING SHARES FROM WHICH TAX FREE DIVIDEND EARNED IS RS. 10,000. OUT O F THE BALANCE RS. 90,000, THE ASSESSEE HAS PAID INTEREST OF RS. 80,00 0 FOR FACTORY BUILDING CONSTRUCTION WHICH CLEARLY RELATES TO THE TAXABLE INCOME. THE INTEREST EXPENDITURE WHICH IS 'NOT DIRECTLY ATT RIBUTABLE TO ANY PARTICULAR RECEIPT OR INCOME' IS THUS ONLY RS. 10,0 00. HOWEVER, IN TERMS OF THE FORMULA IN RULE 8D(2)(II), ALLOCATION OF INTEREST WHICH IS NOT DIRECTLY ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT WILL BE FOR RS. 90,000 BECAUSE, AS PER F ORMULA THE VALUE OF A (I.E. SUCH INTEREST EXPENSES TO BE ALLOCATED BETW EEN TAX EXEMPT AND TAXABLE INCOME) WILL BE 'A = AMOUNT OF EXPENDITURE BY WAY OF INTEREST OTHER THAN THE AMOUNT OF INTEREST INCLUDED IN CLAUSE (I) [I.E. DIRECT INTEREST EXPENSES FOR TAX EXEMPT INCOME] INC URRED DURING THE PREVIOUS YEAR'. LET US SAY THE ASSETS RELATING TO TAXABLE INCOME AN D TAX EXEMPT INCOME ARE IN THE RATIO OF 4:1. IN SUCH A CASE, THE INTEREST DISALLOWABLE UNDER RULE 8D(2)(II) WILL BE RS. 18,00 0 WHEREAS ENTIRE COMMON INTEREST EXPENDITURE WILL ONLY BE RS. 10,000 . 13. THE INCONGRUITY ARISES BECAUSE, AS THE WORDINGS OF RULE 8D(2)(II) EXIST, OUT OF TOTAL INTEREST EXPENSES, INTEREST EXP ENSES DIRECTLY RELATABLE TO TAX EXEMPT INCOME ARE EXCLUDED, INTEREST EXPENSES D IRECTLY RELATABLE TO TAXABLE INCOME, EVEN IF ANY, ARE NOT EXCLUDED. 14. THE QUESTION THEN ARISES WHETHER WE CAN TINKER WITH THE FORMULA PRESCRIBED UNDER RULE 8D(2)(II) OF THE INCOME TAX R ULES, OR CONSTRUE IT ANY OTHER MANNER OTHER THAN WHAT IS SUPPORTED BY PLAIN WORDS OF THE RULE 8D(2)(II). 15. WE FIND THAT NOTWITHSTANDING THE RIGID WORDS OF RULE 8D(2)(II), THE STAND TAKEN BY THE REVENUE AUTHORITIES ABOUT ITS APPLICAT ION, AS WAS BEFORE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. V. DY. CIT [2010] 328 ITR 81 / 194 TAXMAN 203 WHEN CONSTITUTI ONAL VALIDITY OF RULE 8D WAS IN CHALLENGE, IS THAT 'IT IS ONLY TH E INTEREST ON BORROWED FUNDS THAT WOULD BE APPORTIONED AND THE AMOUNT OF E XPENDITURE BY WAY OF INTEREST THAT WILL BE TAKEN (AS 'A' IN THE FORMULA) WILL EXCLUDE ANY EXPENDITURE BY WAY OF INTEREST WHICH IS DIRECTLY AT TRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT (FOR EXAMPLE-ANY ASPEC T OF THE ASSESSEE'S BUSINESS SUCH AS PLANT/MACHINERY ETC.)'. THEREFORE, IT IS NOT ONLY THE INTEREST DIRECTLY ATTRIBUTABLE TO TAX EXEMPT INCOME, I.E. UN DER RULE 8D(2)(I), BUT ALSO INTEREST DIRECTLY RELATABLE TO TAXABLE INCOME, WHIC H IS TO BE EXCLUDED FROM THE DEFINITION OF VARIABLE 'A' IN FORMULA AS PER RU LE 8D(2)(II), AND RIGHTLY SO, BECAUSE IT IS ONLY THEN THAT COMMON INTEREST EXPENS ES, WHICH ARE TO BE ALLOCATED AS INDIRECTLY RELATABLE TO TAXABLE INCOME AND TAX EXEMPT INCOME, ITA NO. 974/AHD/16 [M/S. M.C.DAVAR HOLDINGS PVT. LT D. VS. DCIT ] A.Y. 2012-13 - 5 - CAN BE COMPUTED. THIS IS CLEAR FROM THE FOLLOWING O BSERVATIONS MADE BY THEIR LORDSHIPS OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. (SUPRA): 60. IN THE AFFIDAVIT-IN-REPLY THAT HAS BEEN FILED O N BEHALF OF THE REVENUE AN EXPLANATION HAS BEEN PROVIDED OF THE RAT IONALE UNDERLYING R. 8D. IN THE WRITTEN SUBMISSIONS WHICH HAVE BEEN FILED BY THE ADDL. SOLICITOR GENERAL IT HAS BEEN STATED, WITH REFERENCE TO R. 8D(2)(II) THAT SINCE FUNDS ARE FUNGIBLE, IT WOULD B E DIFFICULT TO ALLOCATE THE ACTUAL QUANTUM OF BORROWED FUNDS THAT HAVE BEEN USED FOR MAKING TAX-FREE INVESTMENTS. IT IS ONLY THE INT EREST ON BORROWED FUNDS THAT WOULD BE APPORTIONED AND THE AMOUNT OF E XPENDITURE BY WAY OF INTEREST THAT WILL BE TAKEN (AS 'A' IN THE F ORMULA) WILL EXCLUDE ANY EXPENDITURE BY WAY OF INTEREST WHICH IS DIRECTL Y ATTRIBUTABLE TO ANY PARTICULAR INCOME OR RECEIPT (FOR EXAMPLE-ANY A SPECT OF THE ASSESSEE'S BUSINESS SUCH AS PLANT/MACHINERY ETC.) THE JUSTIFICATION THAT HAS BEEN OFFERED IN SUPPORT OF THE RATIONALE FOR R. 8D CANNOT BE REGARDED AS BEING CAPRICIOUS, PERVE RSE OR ARBITRARY. APPLYING THE TESTS FORMULATED BY THE SUPREME COURT IT IS NOT POSSIBLE FOR THIS COURT TO HOLD THAT THERE IS WRIT ON THE ST ATUTE OR ON THE SUBORDINATE LEGISLATION PERVERSITY, CAPRICE OR IRRA TIONALITY. THERE IS CERTAINLY NO 'MADNESS IN THE METHOD'. 16. ONCE THE REVENUE AUTHORITIES HAVE TAKEN A PARTI CULAR STAND ABOUT THE APPLICABILITY OF FORMULA SET OUT IN RULE 8D(2)(II), AND BASED ON SUCH A STAND CONSTITUTIONAL VALIDITY IS UPHELD BY HON'BLE HIGH C OURT, IT CANNOT BE OPEN TO REVENUE AUTHORITIES TO TAKE ANY OTHER STAND ON THE ISSUE WITH REGARD TO THE ACTUAL IMPLEMENTATION OF THE FORMULA IN THE CASE OF ANY ASSESSEE. VIEWED THUS, THE CORRECT APPLICATION OF THE FORMULA SET OU T IN RULE 8D(2)(II) IS THAT, AS HAS BEEN NOTED BY HON'BLE BOMBAY HIGH COURT IN T HE CASE OF GODREJ & BOYCE MFG. CO. LTD. (SUPRA), 'AMOUNT OF EXPENDITURE BY WAY OF INTEREST THAT WILL BE TAKEN (AS 'A' IN THE FORMULA) WILL EXCLUDE ANY EXPENDITURE BY WAY OF INTEREST WHICH IS DIRECTLY ATTRIBUTABLE TO ANY PART ICULAR INCOME OR RECEIPT (FOR EXAMPLE- ANY ASPECT OF THE ASSESSEE'S BUSINESS SUCH AS PLANT/MACHINERY ETC.)'. ACCORDINGLY, EVEN BY REVENUE'S OWN ADMISSIO N, INTEREST EXPENSES DIRECTLY ATTRIBUTABLE TO TAX EXEMPT INCOME AS ALSO DIRECTLY ATTRIBUTABLE TO TAXABLE INCOME, ARE REQUIRED TO BE EXCLUDED FROM CO MPUTATION OF COMMON INTEREST EXPENSES TO BE ALLOCATED UNDER RULE 8D(2)( II). 17. TO THE ABOVE EXTENT, THEREFORE, WE HAVE TO PROC EED ON THE BASIS THAT RIGOUR OF RULE 8D(2)(II) IS RELAXED IN ACTUAL IMPLE MENTATION, AND REVENUE AUTHORITIES, HAVING TAKEN THAT STAND WHEN CONSTITUT IONAL VALIDITY OF RULE 8D WAS IN CHALLENGE BEFORE HON'BLE HIGH COURT, CANNOT NOW DECLINE THE SAME. IDEALLY, IT IS FOR THE CENTRAL BOARD OF DIRECT TAXE S TO MAKE THE POSITION CLEAR ONE WAY OR THE OTHER EITHER BY INITIATING SUI TABLE AMENDMENT TO RULE 8D(2)(II) OR BY ADOPTING AN INTERPRETATION AS PER P LAIN WORDS OF THE SAID RULE, BUT EVEN ON THE FACE OF THINGS AS THEY ARE AT PRESENT, IN OUR HUMBLE UNDERSTANDING, REVENUE AUTHORITIES CANNOT TAKE ONE STAND WHEN DEMONSTRATING LACK OF 'PERVERSITY, CAPRICE OR IRRAT IONALITY' IN RULE 8D BEFORE HON'BLE HIGH COURT, AND TAKE ANOTHER STAND WHEN IT COMES TO ACTUAL IMPLEMENTATION OF THE RULE IN REAL LIFE SITUATIONS. THEREFORE, EVEN AS WE ARE ITA NO. 974/AHD/16 [M/S. M.C.DAVAR HOLDINGS PVT. LT D. VS. DCIT ] A.Y. 2012-13 - 6 - ALIVE TO THE FACT THAT THE STAND OF THE LEARNED DEP ARTMENTAL REPRESENTATIVE IS IN ACCORDANCE WITH THE STRICT WORDING OF RULE 8D(2) (II), WE HAVE TO HOLD THAT, FOR THE REASONS SET OUT ABOVE, THIS RIGID STA ND CANNOT BE APPLIED IN PRACTICE. 6. CLEARLY, THEREFORE, NO INTEREST WAS WARRANTED ON ACCOUNT OF INTEREST COMPONENT. THE DISALLOWANCE OFFERED BY THE ASSESSEE WAS CERTAI NLY MUCH MORE THAN ADEQUATE- PARTICULARLY AS THE FACTUAL ELEMENTS EMBEDDED IN LE ARNED COUNSEL'S CONTENTIONS ARE NOT EVEN DISPUTED BEFORE US. WE, THEREFORE, VACATE THE IMPUGNED DISALLOWANCE OF RS 7,23,166. THE ASSESSEE GETS THE RELIEF TO THIS EXTE NT. 4. IT HAS THEREFORE COME ON RECORD THAT THE ABOVE C O-ORDINATE BENCH HAS ALREADY ADJUDICATED THE VERY ISSUE IN ASSESSEES FA VOUR. THIS FACTUAL POSITION HAS GONE UNREBUTTED FROM THE REVENUE SIDE. WE THEREFOR E ADOPT JUDICIAL CONSISTENCY IN THE IMPUGNED ASSESSMENT YEAR AS WELL TO AFFIRM C IT(A)S FINDINGS UNDER CHALLENGE. 5. THIS ASSESSEES APPEAL IS ALLOWED ACCORDINGLY. [PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF MARCH, 2018.] SD/- SD/- ( N. K. BILLAIYA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIA L MEMBER AHMEDABAD: DATED 28/03/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )* + ,--. . /0 / DR, ITAT, AHMEDABAD 1 + 23 4 5 / GUARD FILE. BY ORDER / . // . /0