M/S. MSP STEEL & POWER LTD., Kolkata V. DCIT, CC-XXX, KOLKATA, Kolkata

ITSSA 156/KOL/2014

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2829 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 02-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 10-12-2014
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: A K TULSIYAN
• Keywords: Search and seizure; Earning of tax free income; Reason to believe
• Section: 43B; 143(3); 142(1); 153A; 14A; 132

Judgement Text

1 IT(SS)A NOS.156-158/KOL/2014 MSP STEEL & POWER LTD., AYS 2007-08 TO 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI N. V. VASUDEVAN, JM & SHRI M. BALAGAN ESH, AM] I.T(SS).A NOS. 156 TO 158/KOL/2014 ASSESSMENT YEARS: 2007-08 TO 2009-10 M/S. MSP STEEL & POWER LTD. VS. DEPUTY COMMISSION ER OF INCOME-TAX, (PAN: AACCA2756N) CENTRAL CIRCLE-XXX, KOLKATA ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 21.11.2016 DATE OF PRONOUNCEMENT: 02.12.2016 FOR THE APPELLANT: SHRI A. K. TULSIYAN, FCA, A R FOR THE RESPONDENT: SHRI G. MALLIKARJUNA, CIT ORDER PER SHRI M. BALAGANESH, AM: ALL THESE APPEALS BY ASSESSEE ARE ARISING OUT OF SE PARATE ORDERS OF CIT(A), CENTRAL- III, KOLKATA VIDE APPEAL NOS. 148,149&150/CC-XXX/CI T(A)/C-III/2013-14/KOLKATA DATED 10.09.2014. ASSESSMENTS WERE FRAMED BY DCIT, CC-XX X, KOLKATA U/S. 153A/143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) FOR AYS 2007-08 TO 2009-10 VIDE HIS SEPARATE ORDERS DATED 30.03.2013. SINCE FA CTS ARE IDENTICAL AND GROUNDS ARE MOSTLY COMMON, WE DISPOSE OF ALL THESE APPEALS BY A CONSOL IDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE FIRST ISSUE TO BE DECIDED IN THESE APPEALS IS AS TO WHETHER THE LD AO IS JUSTIFIED IN MAKING ADDITIONS IN ASSESSMENTS FRAMED U/S 153A OF THE ACT IN THE ABSENCE OF INCRIMINATING MATERIALS FOUND IN THE COURSE OF SEARCH RELATABLE T O UNABATED ASSESSMENTS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THERE WA S A SEARCH AND SEIZURE OPERATION CONDUCTED U/S 132 OF THE ACT ON 6.10.2010 IN THE VARIOUS PREM ISES / OFFICES OF THE GROUP. THE GROUP IS PRIMARILY ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF IRON & STEEL AND GENERATION OF POWER. CONSEQUENT TO THE SEARCH, NOT ICES U/S 153A OF THE ACT WAS ISSUED AND 2 IT(SS)A NOS.156-158/KOL/2014 MSP STEEL & POWER LTD., AYS 2007-08 TO 2009-10 ASSESSMENTS WERE FRAMED U/S 153A OF THE ACT FOR THE ASST YEARS 2007-08 TO 2009-10 BY MAKING THE FOLLOWING DISALLOWANCES :- (A) DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO PF FOR TH E ASST YEARS 2007-08 (RS. 4,05,634/-) ; 2008-09 (RS. 9,31,738/-) AND 2009-10 (RS.2,13,129/-) (B) DISALLOWANCE U/S 14A OF THE ACT FOR THE ASST YEARS 2008-09 (RS.3,12,770/-) AND 2009-10 (RS. 3,25,700/-) 4. THE ASSESSEE STATED THAT THE ORIGINAL ASSESSMEN TS FOR THE ASST YEARS 2007-08 & 2008- 09 WERE COMPLETED U/S 143(1) OF THE ACT AND TIME LI MIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT HAD EXPIRED AS ON THE DATE OF SEARCH. HENC E THOSE YEARS WOULD FALL UNDER THE CATEGORY OF UNABATED ASSESSMENTS AND HENCE THE INCO ME ASSESSED ORIGINALLY THEREON COULD NOT BE DISTURBED UNLESS THERE IS ANY INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH RELATABLE TO THOSE ASSESSMENT YEARS. IT WAS ARGUED THAT ADMITTEDLY NO INCRIMINATING MATERIALS WERE FOUND FOR THOSE ASSESSMENT YEARS IN THE COURSE OF SEARCH AND ACCORDINGLY PLEADED NOT TO DISTURB THE ORIGINALLY ASSESSED INCO ME. THE LD AO HOWEVER DID NOT HEED TO THE CONTENTIONS OF THE ASSESSEE AND PROCEEDED TO FR AME THE ASSESSMENTS U/S 153A OF THE ACT BY MAKING REGULAR DISALLOWANCE OF EXPENSES ON THE P LEA THAT THE ASSESSMENTS TO BE FRAMED U/S 153A OF THE ACT CLEARS ALL THE DECKS AND WOULD ENABLE THE LD AO TO ASSESS OR REASSESS THE TOTAL INCOME AS PER THE PROVISIONS OF THE ACT IRRES PECTIVE OF INCRIMINATING MATERIALS FOUND IN THE SEARCH. THIS ACTION OF THE LD AO WAS ALSO CO NFIRMED BY THE LD CITA. AGGRIEVED, THE ASSESSEE IS IN APPEALS BEFORE US. 5. THE LD AR STATED THAT THE ASSESSMENTS FOR THE A SST YEARS 2007-08 & 2008-09 WERE ORIGINALLY COMPLETED U/S 143(1) OF THE ACT AND ARE TO BE CONSIDERED AS CONCLUDED ASSESSMENTS AS NO SCRUTINY NOTICES U/S 143(2) OF TH E ACT WERE ISSUED AND THE TIME LIMIT FOR ISSUANCE OF THE SAME HAD ALSO EXPIRED ON THE DATE O F SEARCH. IN SUPPORT OF THIS, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS:- (A) CIT VS VEERPRABHU MARKETING LTD REPORTED IN (20 16) 73 TAXMANN.COM 149 (CAL HC) 3 IT(SS)A NOS.156-158/KOL/2014 MSP STEEL & POWER LTD., AYS 2007-08 TO 2009-10 (B) DECISION OF THIS TRIBUNAL IN THE CASE OF ACIT V S KANCHAN OIL INDUSTRIES LTD IN ITA NO. 725/KOL/2011 DATED 9.12.2015 (C ) CIT VS KABUL CHAWLA REPORTED IN (2016) 380 ITR 573 ( DELHI HC) (D)CIT VS CONTINENTAL WAREHOUSING CORPORATION (NHAV A SHEVA) LTD AND ALL CARGO GLOBAL LOGISTICS LTD REPORTED IN (2015) 374 ITR 645 ( BOM) --------- AMONG OTHERS 6. IN RESPONSE TO THIS, THE LD DR ARGUED THAT THE EXPRESSION INCRIMINATING MATERIAL IS NOT FOUND IN THE PROVISIONS OF THE ACT AND IT IS ON LY THE HONBLE COURTS WHICH HAD IMPORTED THOSE WORDS WHILE RENDERING THE DECISIONS. HE STATE D THAT THE HONBLE COURTS ARE DIVIDED ON THIS ISSUE AND PLACED RELIANCE ON THE DECISION OF T HE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CANARA HOUSING DEVELOPMENT CO VS DCIT REPOR TED IN (2014) 49 TAXMANN.COM 98 (KAR HC) WHEREIN IT WAS HELD THAT SEARCH ASSESSMENTS COULD BE FRAMED EVEN WITHOUT THE EXISTENCE OF INCRIMINATING MATERIALS FOUND IN THE C OURSE OF SEARCH. HE ARGUED THAT THE BASIC FOUNDATION FOR CONDUCTING THE SEARCH IS GOVER NED BY THE PROVISIONS OF SECTION 132 OF THE ACT WHICH HAS TO BE READ HARMONIOUSLY WITH SECT ION 153A OF THE ACT. THERE ARE THREE CONDITIONS BASED ON WHICH A SEARCH ACTION COULD BE INITIATED U/S 132 OF THE ACT ON AN ASSESSEE. THEY ARE :- SECTION 132(1) - IF THE CONCERNED AUTHORITY HAS IN CONSEQUENCE OF INFORMATION IN HIS POSSESSION, HAS REASON TO BELIEVE THAT - (A) WHERE A PERSON FAILS TO PRODUCE THE BOOKS OF ACCOUN TS AND OTHER DOCUMENTS IN RESPONSE TO NOTICE U/S 142(1) OR SUMMONS ISSUED U/S 131(1) OF THE ACT ; OR (B) WHERE A PERSON FAILS TO COMPLY WITH THE REQUIREMENT S OF SUMMONS ISSUED U/S 131(1) OF THE ACT ; OR (C) WHERE A PERSON IS IN POSSESSION OF ANY MONEY, BULLI ON, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND SUCH ASSETS REPRESENTS EITHER WHOLLY OR PARTLY INCOME OR PROPERTY WHICH HAS NOT BEEN , OR WOULD NOT BE, DISCLOSED FOR THE PURPOSES OF THE ACT (HEREINAFTER REFERRED TO AS THE UNDISCLOSED INCOME OR PROPERTY) ; 4 IT(SS)A NOS.156-158/KOL/2014 MSP STEEL & POWER LTD., AYS 2007-08 TO 2009-10 THEN THE OFFICER , SO AUTHORIZED COULD CONDUCT A SE ARCH AND PROCEED AS PER THE REQUIREMENTS LAID DOWN IN THE SAID SECTION. HE ARGUED THAT THE AFORESAID THREE PRIMARY CONDITIONS FOR INVOKING SEARCH PROCEEDINGS CANNOT BE GIVEN A GO BY WHILE FRAMING SECTION 153A ASSESSMENTS AND THE INSTANT CASE FALLS UNDER SECTIO N 132(1)(C ) OF THE ACT. THE PROVISIONS OF SECTION 153A OF THE ACT USE THE E XPRESSION ASSESS OR REASSESS TOTAL INCOME AND HENCE THE SEARCH ASSESSMENT COULD BE FR AMED U/S 153A OF THE ACT IRRESPECTIVE OF ANY INCRIMINATING MATERIALS. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND I T WOULD BE NECESSARY TO ADDRESS THE PRELIMINARY ISSUE OF WHETHER THE ADDITION COULD BE FRAMED U/S 153A OF THE ACT IN RESPECT OF A CONCLUDED PROCEEDING WITHOUT THE EXISTENCE OF ANY INCRIMINATING MATERIALS FOUND IN THE COURSE OF SEARCH. THE SCHEME OF THE ACT PROVIDES FOR ABATEMENT OF PENDING PROCEEDINGS AS ON THE DATE OF SEARCH. IT IS NOT IN DISPUTE THAT T HE ASSESSMENTS FOR THE ASST YEARS 2007-08 & 2008-09 WERE ORIGINALLY COMPLETED U/S 143(1) OF THE ACT AND TIME LIMIT FOR ISSUANCE OF NOTICE U/S 143(2) OF THE ACT HAD EXPIRED ON THE DAT E OF SEARCH AND HENCE IT FALLS UNDER CONCLUDED PROCEEDING, AS ON THE DATE OF SEARCH. WE HOLD THAT THE LEGISLATURE DOES NOT DIFFERENTIATE WHETHER THE ASSESSMENTS ORIGINALLY WE RE FRAMED U/S 143(1) OR 143(3) OR 147 OF THE ACT. HENCE UNLESS THERE IS ANY INCRIMINATING M ATERIAL FOUND DURING THE COURSE OF SEARCH RELATABLE TO THOSE CONCLUDED YEARS, THE STATUTE DO ES NOT CONFER ANY POWER ON THE LD AO TO DISTURB THE FINDINGS GIVEN THEREON AND INCOME DETER MINED THEREON, AS FINALITY HAD ALREADY BEEN REACHED THEREON, AND THOSE PROCEEDINGS WERE N OT PENDING ON THE DATE OF SEARCH TO GET THEMSELVES ABATED. WE FIND THAT THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF RAHEE TRACK TECHNOLOGIES PVT LTD VS DCIT IN IT(SS)A NOS. 08 TO 13/KOL/2015 DATED 7.10.2016 HAD ELABORATELY DEALT WITH THIS ISSUE BY DULY CONSI DERING THE DECISIONS OF HONBLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA AND HO NBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SALASAR STOCK BROKING LTD , AMONG OTHER DEC ISIONS HAD HELD AS BELOW:- 2.11. WE FIND THAT THE PROVISIONS OF SECTION 132 O F THE ACT RELIED UPON BY THE LD DR WOULD BE RELEVANT ONLY FOR THE PURPOSE OF CONDUCTING THE SEARCH ACTION AND INITIATING PROCEEDINGS U/S 153A OF THE ACT. ONCE THE PROCEEDINGS U/S 153A OF THE ACT ARE INITIATED, WHICH ARE SPECIAL PROCEEDINGS, THE LEGISLATURE IN ITS WISDOM BIFURCATES DIFFERENTIAL TREATMENTS FOR 5 IT(SS)A NOS.156-158/KOL/2014 MSP STEEL & POWER LTD., AYS 2007-08 TO 2009-10 ABATED ASSESSMENTS AND UNABATED ASSESSMENTS. AT TH E COST OF REPETITION, WE STATE THAT IN RESPECT OF ABATED ASSESSMENTS (I.E PENDING PROCEEDI NGS ON THE DATE OF SEARCH) , FRESH ASSESSMENTS ARE TO BE FRAMED BY THE LD AO U/S 153A OF THE ACT WHICH WOULD HAVE A BEARING ON THE DETERMINATION OF TOTAL INCOME BY CONSIDERING ALL THE ASPECTS, WHEREIN THE EXISTENCE OF INCRIMINATING MATERIALS DOES NOT HAVE ANY RELEVANCE . HOWEVER, IN RESPECT OF UNABATED ASSESSMENTS, THE LEGISLATURE HAD CONFERRED POWERS O N THE LD AO TO JUST FOLLOW THE ASSESSMENTS ALREADY CONCLUDED UNLESS THERE IS AN IN CRIMINATING MATERIAL FOUND IN THE SEARCH TO DISTURB THE SAID CONCLUDED ASSESSMENT. IN OUR CONSIDERED OPINION, THIS WOULD BE THE CORRECT UNDERSTANDING OF THE PROVISIONS OF SECTION 153A OF THE ACT , AS OTHERWISE, THE NECESSITY OF BIFURCATION OF ABATED AND UNABATED ASS ESSMENTS IN SECTION 153A OF THE ACT WOULD BECOME REDUNDANT AND WOULD LOSE ITS RELEVANCE . HENCE THE ARGUMENTS ADVANCED BY THE LD DR IN THIS REGARD DESERVES TO BE DISMISSED. RESPECTFULLY FOLLOWING THE AFORESAID DECISION, WE H OLD THAT THE ADDITIONS MADE IN THE ASSESSMENTS FRAMED U/S 153A OF THE ACT FOR THE ASST YEARS 2007-08 AND 2008-09 IN THE ABSENCE OF INCRIMINATING MATERIALS FOUND IN THE COU RSE OF SEARCH RELATABLE TO THOSE ASSESSMENT YEARS, DESERVE TO BE DELETED. ACCORDI NGLY, THE GROUND NO. 1 FOR ASST YEARS 2007-08 AND 2008-09 RAISED BY THE ASSESSEE ARE ALLO WED. 8. IN VIEW OF OUR AFORESAID DECISION , THE ADJUDIC ATION OF OTHER GROUNDS RAISED BY THE ASSESSEE FOR THE ASST YEARS 2007-08 AND 2008-09 BEC OMES INFRUCTUOUS AND ARE ACCORDINGLY ALLOWED. IT(SS) A NO. 158/KOL/2014 ASST YEAR 2009-10 9. THE GROUND NO.1 FOR THE ASST YEAR 2009-10 HAS B EEN STATED BY THE LD AR DURING THE COURSE OF HEARING AS NOT PRESSED. ACCORDINGLY THE SAME IS DISMISSED AS NOT PRESSED. 10. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL I S AS TO WHETHER THE LD CITA IS JUSTIFIED IN UPHOLDING THE DISALLOWANCE MADE U/S 36(1)(VA) OF TH E ACT IN RESPECT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND IN THE SUM OF RS. 2, 13,129/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 10.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE LD AO OBSERVED THAT THE ASSESSEE HAD NOT REMITTED THE EMPLOYEES CONTRIBUTION TO PROV IDENT FUND FOR THE MONTH OF JULY 2008 AMOUNTING TO RS. 2,13,129/- WITHIN THE DUE DATE PRE SCRIBED UNDER THE RELEVANT PF ACT AND 6 IT(SS)A NOS.156-158/KOL/2014 MSP STEEL & POWER LTD., AYS 2007-08 TO 2009-10 HENCE DISALLOWED THE SAME U/S 36(1)(VA) READ WITH S ECTION 2(24)(X) OF THE ACT. THIS WAS CONFIRMED BY THE LD CITA IN FIRST APPEAL. AGGRIEVE D, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND NO.2:- 2. THAT THE LD. CIT(A) ERRED IN UPHOLDING THE DIS ALLOWANCE OF RS.2,13,129/- U/S. 36(1)(VA)/2(24)(X) ON ACCOUNT OF THE EMPLOYEES CONT RIBUTION TO PROVIDENT FUND PAID BEFORE THE DUE DATE OF FILING OF RETURN U/S. 139(1) OF THE ACT . THE ADDITION NEEDS TO BE DELETED. 10.2. THE LD AR ARGUED THAT THE SAID PROVIDENT FUN D DUES FOR JULY 2008 WAS REMITTED BY THE ASSESSEE ON 16.8.2008 AS AGAINST THE DUE DATE OF 15 .8.2008 AND SINCE 15 TH AUGUST HAPPENED TO BE A BANK HOLIDAY, THE SAME WAS REMITTED ON THE IMMEDIATELY SUCCEEDING WORKING DAY. HENCE THE SAME IS ALLOWABLE AS DEDUCTION. HE ALSO ARGUED THAT SINCE THE SAME WAS REMITTED BEFORE THE END OF THE PREVIOUS YEAR, THE SAME IS AL LOWABLE AS DEDUCTION IN THE LIGHT OF DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS COAL INDIA LTD IN ITA 12 OF 2015 DATED 12.8.2015 WHEREIN IT WAS HELD AS UNDER:- IT IS SUBMITTED BY MR. KHAITAN, LEARNED SENIOR ADV OCATE, APPEARING ON BEHALF OF THE RESPONDENT THAT WHETHER EMPLOYEES CONTRIBUTION TO P ROVIDENT FUND WOULD CALL FOR DEDUCTION UNDER SECTION 43B(B) OF THE INCOME TAX ACT, 1961 CA ME UP FOR CONSIDERATION IN CIT CIRCLE I KOLKATA VS VIJAY SHREE LTD ; 224 TAXMAN 12 (CAL) WH EREIN COURT HELD THAT THE AMOUNT PAID FOR EMPLOYEES CONTRIBUTION BEYOND DUE DATE WAS DEDUCTIB LE BY INVOKING THE AMENDED PROVISIONS OF SECTION 43B OF THE INCOME TAX ACT, 1961 AND THUS , THE ISSUES STAND COVERED IN FAVOUR OF THE ASSESSEE. IT IS TO BE NOTED THAT THE JURISDICTIONA L COURT WHILE PASSING THE JUDGEMENT IN CIT VS VIJAY SHREE (SUPRA) HAD FOLLOWED THE JUDGEMENT IN C IT VS ALOM EXTRUSIONS LTD : 319 ITR 306 (SC) WHEREIN IT WAS HELD THAT AMENDMENT TO THE SECO ND PROVISO TO SECTION 43B OF THE ACT AS INTRODUCED BY FINANCE ACT, 2003 WAS CURATIVE IN NAT URE AND IS REQUIRED TO BE APPLIED RETROSPECTIVELY WITH EFFECT FROM 1 ST APRIL, 1988. MR.KHAITAN SUBMITS SAVE AND EXCEPT T HE JUDGEMENT IN CIT VS GUJARAT STATE ROAD TRANSPORT CO RPORATION : 223 TAXMAN 398 (GUJ) WHEREIN A DIFFERENT VIEW HAS BEEN TAKEN, ALL OTHER HIGH COURTS HAVE TAKEN A VIEW SIMILAR TO THE JUDGMENT PASSED BY THE CALCUTTA HIGH COURT. SINCE WE FIND THAT THE ISSUES STAND COVERED BY THE JUDGMENT OF THE JURISDICTIONAL COURT IN CIT VS VIJAY SHREE (SUPRA) , THE QUESTION NO. 1 IS ANSW ERED IN THE NEGATIVE, IN FAVOUR OF THE RESPONDENT AND AGAINST THE APPELLANT. THE QUESTION NO. 2 IS ANSWERED IN THE AFFIRMATIVE, AGAINST THE APPELLANT AND IN FAVOUR OF THE RESPONDE NT. THE APPEAL IS DISMISSED. RESPECTFULLY FOLLOWING THE AFORESAID DECISION, WE A LLOW THE GROUND NO. 2 RAISED BY THE ASSESSEE. 7 IT(SS)A NOS.156-158/KOL/2014 MSP STEEL & POWER LTD., AYS 2007-08 TO 2009-10 11. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA IS JUSTIFIED IN UPHOLDING THE DISALLOWANCE MADE U/S 14A OF THE ACT IN THE SUM OF RS. 3,25,700/- READ WITH RULE 8D IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 11.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE AS SESSEE WAS IN RECEIPT OF DIVIDEND INCOME TO THE TUNE OF RS. 16,391/- WHICH WAS DISALLOWED BY TH E ASSESSEE VOLUNTARILY IN THE RETURN OF INCOME. THE ASSESSEE HAD CERTAIN INVESTMENTS IN ITS BALANCE SHEET AND THE LD AO INVOKED DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE 8D O F THE RULES FOR THE SAME AND MADE AN ADDITION OF RS. 3,25,700/- IN THE ASSESSMENT FRAMED U/S 153A OF THE ACT. THE LD CITA SIMPLY FOLLOWED THE CBDT CIRCULAR NO. 5 OF 2014 DAT ED 11.2.2014 WHEREIN IT WAS MENTIONED THAT DISALLOWANCE U/S 14A NEED TO BE MADE EVEN WHERE A TAXPAYER IN A PARTICULAR YEAR HAD NOT EARNED ANY EXEMPT INCOME. AGGRIEVED , THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND NO.3:- 3. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DI SALLOWANCE OF RS.3,25,700/- MADE BY THE AO UNDER SEC. 14A READ WITH RULE 8D IGNORING THE JUDGM ENTS OF THE JURISDICTIONAL ITAT & HIGH COURT. THE CIT(A) FURTHER FAILED TO APPRECIATE THA T NO DIVIDEND INCOME WAS EARNED DURING THE YEAR. THE DISALLOWANCE OF RS.3,25,700/- MADE BY TH E AO UNDER SEC. 14A AND CONFIRMED BY THE CIT(A) IS BAD IN LAW NEEDS TO BE DELETED. 11.2. THE LD AR ARGUED THAT OUT OF TOTAL INVESTMENT S OF RS. 6,72,79,000/-, THE DIVIDEND BEARING INVESTMENTS IS ONLY UPTO RS. 2,47,000/- AND HENCE THE DISALLOWANCE UNDER RULE 8D(2)(III) SHOULD BE RESTRICTED TO 0.5% OF RS. 2,47 ,000/- WHICH WORKS OUT TO RS. 1,235/- ONLY IN THE LIGHT OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF REI AGRO LTD. IN RESPONSE TO THIS, THE LD DR VEHEMENTLY RELIED ON TH E SPECIAL BENCH DECISION OF DELHI TRIBUNAL IN THE CASE OF CHEMINVEST LTD VS ITO REPOR TED IN (2009) 121 ITD 318 (DELHI SB) WHEREIN IT WAS HELD THAT THE ENTIRE INVESTMENTS WE RE TO BE CONSIDERED FOR THE PURPOSE OF DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE 8D O F THE RULES IRRESPECTIVE OF RECEIPT OF DIVIDEND INCOME THEREON. 11.3. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT THIS TRIBUNAL HAD ALREADY HELD IN THE CASE OF REI AGRO LTD VS DCIT IN ITA NO. 1331/KOL/2011 DATE D 19.6.2013 WHICH WAS ALSO UPHELD BY THE HONBLE JURISDICTIONAL HIGH COUR T IN ITAT NO. 220 OF 2013 DATED 8 IT(SS)A NOS.156-158/KOL/2014 MSP STEEL & POWER LTD., AYS 2007-08 TO 2009-10 9.4.2014 WHEREIN IT WAS HELD THAT ONLY DIVIDEND BEARING INV ESTMENTS ARE TO BE CONSIDERED FOR COMPUTING DISALLOWANCE U/S 14A OF THE ACT READ WITH RULE 8D OF THE RULES. WE FIND THAT THE CIRCULAR OF CBDT RELIED UPON BY THE LD DR IS BI NDING ONLY ON THE REVENUE AUTHORITIES AND NOT ON THE COURTS. WE FIND THAT THE DECISION RELIED UPON BY THE LD DR ON THE SPECIAL BENCH OF DELHI TRIBUNAL HAD BEEN REVERSED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD VS CIT REPORTED IN (2015) 378 ITR 33 (DEL) . ACCORDINGLY, WE HOLD THAT THE DISALLOWANCE SHOULD BE RESTRICTED ONLY TO RS. 1,235 /- AND WE DIRECT THE LD AO ACCORDINGLY. THE GROUND NO. 3 RAISED BY THE ASSESSEE IS PARTLY A LLOWED. 12. THE GROUND NO. 4 RAISED BY THE ASSESSEE IS GEN ERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 13. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN IT(SS) A NO. 156 & 157 /KOL/2014 FOR ASST YEARS 2007-08 AND 2008-09 ARE ALLOWED AND IT(S S) A NO. 158/KOL/2014 FOR THE ASST YEAR 2009-10 IS PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 02.12.201 6 SD/- SD/- (N. V. VASUDEVAN) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTAN T MEMBER DATED : 2 ND DECEMBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. MSP STEEL & POWER LTD., 1, CROOKED LANE, KOLKATA- 700 069. 2 RESPONDENT DCIT, CC-XXX, KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .