DCIT 10(1), MUMBAI v. RELIANCE INFRASTRUCTURE LTD, MUMBAI

ITA 5285/MUM/2011 | 2008-2009
Pronouncement Date: 19-07-2013 | Result: Dismissed

Appeal Details

RSA Number 528519914 RSA 2011
Assessee PAN AACCR7446Q
Bench Mumbai
Appeal Number ITA 5285/MUM/2011
Duration Of Justice 2 year(s) 8 day(s)
Appellant DCIT 10(1), MUMBAI
Respondent RELIANCE INFRASTRUCTURE LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-07-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 19-07-2013
Date Of Final Hearing 04-07-2013
Next Hearing Date 04-07-2013
Assessment Year 2008-2009
Appeal Filed On 11-07-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH MUMBAI . . ! '# ! '# ! '# ! '# $ $ $ $ % % % % BEFORE SHRI R.S. SYAL ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA JUDICIAL MEMBER . / ITA NO. 5039/MUM./2011 ( $' ( )( / ASSESSMENT YEAR : 200809 ) RELIANCE INFRASTRUCTURE LTD. RELIANCE ENERGY CENTRE SANTA CRUZ (EAST) MUMBAI 400 055 .. *+ / APPELLANT ' V/S DY. COMMISSIONER OF INCOME TAX CIRCLE10(1) AAYAKAR BHAVAN 101 M.K. ROAD MUMBAI 400 020 .... -*+ / RESPONDENT * . / PERMANENT ACCOUNT NUMBER AACCR7446Q . / ITA NO. 4419/MUM./2011 ( $' ( )( / ASSESSMENT YEAR : 200809 ) RELIANCE INFRASTRUCTURE LTD. RELIANCE ENERGY CENTRE SANTA CRUZ (EAST) MUMBAI 400 055 .. *+ / APPELLANT ' V/S DY. COMMISSIONER OF INCOME TAX CIRCLE10(1) AAYAKAR BHAVAN 101 M.K. ROAD MUMBAI 400 020 .... -*+ / RESPONDENT * . / PERMANENT ACCOUNT NUMBER AACCR7446Q RELIANCE INFRASTRUCTURE LTD. 2 . / ITA NO. 5285/MUM./2011 ( $' ( )( / ASSESSMENT YEAR : 200809 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE10(1) AAYAKAR BHAVAN 101 M.K. ROAD MUMBAI 400 020 .. *+ / APPELLANT ' V/S RELIANCE INFRASTRUCTURE LTD. RELIANCE ENERGY CENTRE SANTA CRUZ (EAST) MUMBAI 400 055 .... -*+ / RESPONDENT * . / PERMANENT ACCOUNT NUMBER AACCR7446Q $' (/! 0 1 / ASSESSEE BY : MR. JITENDRA SANGHVI 2 0 1 / REVENUE BY : MR. RAKESH RANJAN PRASAD ' 0 ! / DATE OF HEARING 04.07.2013 ' 34) 0 ! / DATE OF ORDER 19.07.2013 ' '' ' / ORDER ! '# ! '# ! '# ! '# $ $ $ $ 5 5 5 5 / PER AMIT SHUKLA J.M. THESE CROSS APPEALS HAVE BEEN PREFERRED BY THE RIV AL PARTIES CHALLENGING THE IMPUGNED ORDER DATED 21 ST APRIL 2011 PASSED BY THE LEARNED COMMISSIONER (APPEALS)XXI MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 200809. 2. AT THE OUTSET THE LEARNED AUTHORIZED REPRESENTATIV E ON BEHALF OF THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSEE HAS BY MISTAKE FILED TWO APPEALS CONTAINING SAME GROUNDS AGAINST THE SAME IM PUGNED ORDER ONE BEING ITA NO.5039/MUM./2011 AND THE OTHER BEING ITA NO.4419/MUM./2011 RELIANCE INFRASTRUCTURE LTD. 3 AND THEREFORE ONE APPEAL IS REQUIRED TO BE WITHDR AWN AND TREATED AS INFRUCTUOUS. 3. AFTER HEARING THE AUTHORIZED REPRESENTATIVE AND ALS O IT IS AN ADMITTED FACT WE FIND THAT THE APPEAL IN ITA NO.5039/MUM./2 011 WHICH HAS BEEN FILED SUBSEQUENTLY IS HEREBY TREATED AS INFRUCTUOU S AND THE SAME IS DISMISSED. WE NOW FIRST PROCEED TO DISPOSE OFF THE REVENUES A PPEAL IN ITA NO.5285/MUM./ 2011 VIDE WHICH FOLLOWING GROUNDS H AVE BEEN RAISED: 1. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE ASSESSEES CLAIM O F THE ENVIRONMENT MONITORING AND COMMUNITY DEVELOPMENT EXPENSES OF RS .4 91 62 163/- TREATING IT AS EXPENDITURE INCURRED FIR THE PURPOSE OF BUSINESS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE EXPENDITURE ON REPLACEMENT OF METERS AMOUNTING TO RS.19 99 36 872/ - AS REVENUE EXPENDITURE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER NOT TO ALLOCATE ANY HEAD OFFICE EXPENSES FOR THE PURPOSE OF COMPUTING DEDUCT ION U/S.80-IA IN RESPECT OF GOA UNIT SAMALKOT UNIT AND WINDMILL UNIT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ADOPT THE MARKET PRICE OF POWER GENERATED AS PROVIDED UNDER SUB-SECTION 8 OF SECTION 801A AS THE PRICE OF POWER PURCHASED FROM TATA POWER COMPANY AS AGAINST THE REASONABLE RATE OF RETURN OF 16% AS PER THE ORDERS OF MAHARASHTRA STATE ELECTRICITY REGULATORY COMMISSION ADOPTED BY ASSESS ING OFFICER FOR THE PURPOSE OF COMPUTING THE DEDUCTION U/S.801A IN RESP ECT OF DAHANU UNIT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S. 801A TO THE EXTENT OF GROSS TOTAL INCOME AND NOT TO THE EXTENT OF THE NET BUSINESS INCOME. 6. IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THE PROVISION OF S ECTION 115JB ARE NOT APPLICABLE TO THE ASSESSEE SINCE THE ACCOUNTS PREP ARED BY THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF ELECTRICITY SUPPL Y ACT AND NOT IN ACCORDANCE WITH THE PROVISIONS OF PART II & III OF SCHEDULE VI OF THE COMPANIES ACT. 7. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT ( A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED. RELIANCE INFRASTRUCTURE LTD. 4 4. BEFORE US BOTH THE PARTIES HAVE FAIRLY ADMITTED TH AT ALL THE GROUNDS RAISED IN THIS APPEAL ARE COVERED BY THE EARLIER DE CISIONS OF THE TRIBUNAL IN ASSESSEES OWN CASE RIGHT FROM THE ASSESSMENT YEARS 19992000 TO 2007 08. THE COMPILATION OF SUCH CASE LAWS WAS FILED BEF ORE US IN THE FORM OF PAPER BOOK. THE LEARNED DEPARTMENTAL REPRESENTATIVE HOWEVER CHOSE TO RELY UPON THE ORDER PASSED BY THE ASSESSING OFFICER . 5. THE TRIBUNAL IN ITA NO.5692/MUM./2010 AND ITA NO.67 60/MUM./ 2010 FOR THE ASSESSMENT YEAR 200708 VIDE ORDER D ATED 28 TH SEPTEMBER 2011 HAS CONSIDERED ALL THE GROUNDS WHICH ARE IDEN TICAL TO THE GROUNDS RAISED IN THE PRESENT APPEALS THEREFORE A REFEREN CE HAS BEEN MADE OF THE EARLIER ORDERS PASSED BY THE TRIBUNAL AND THE SAME WAS RELIED UPON. THE LEARNED COMMISSIONER (APPEALS) ALSO IN RESPECT OF A LL THE GROUNDS HAS DECIDED THE ISSUES IN FAVOUR OF THE ASSESSEE FOLLO WING THE EARLIER ORDERS PASSED BY THE TRIBUNAL. 6. GROUND NO.1 RELATES TO THE CLAIM OF ENVIRONMENTAL MONITORING AND COMMUNITY DEVELOPMENT EXPENSES OF ` 4 91 62 163 AS EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS. 7. WE FIND THAT THIS ISSUE HAS BEEN DEALT BY THE TRIBU NAL IN ITS ORDER CITED SUPRA VIDE PARAS2 TO 6 WHEREIN THE TRIBUNAL WHI LE DISMISSING THE GROUND RAISED BY THE REVENUE HAS FOLLOWED THE EARLIER YEA RS ORDER. CONSEQUENTLY FOLLOWING THE SAID ORDER GROUND NO.1 RAISED BY TH E REVENUE IS TREATED AS DISMISSED. 8. IN GROUND NO.2 THE REVENUE HAS CHALLENGED THE DELE TION OF EXPENDITURE ON REPLACEMENT OF METERS AMOUNTING TO ` 19 99 36 872 AS REVENUE EXPENDITURE. 9. THIS ISSUE HAS BEEN DISCUSSED BY THE TRIBUNAL IN IT S ORDER CITED SUPRA FROM PARAS8 TO 12 WHEREIN THE TRIBUNAL HAS DECIDE D THE ISSUE IN FAVOUR OF THE ASSESSEE FOR THE REASONS STATED THEREIN. SINCE THE ISSUE BEFORE US IS IDENTICAL TO THE ISSUE DECIDED BY THE TRIBUNAL IN A SSESSEES OWN CASE CITED RELIANCE INFRASTRUCTURE LTD. 5 SUPRA CONSEQUENTLY THE GROUND RAISED BY THE REVEN UE IS TREATED AS DISMISSED. 10. GROUND NO.3 RELATES TO ALLOCATION OF HEADQUARTER E XPENSES FOR THE PURPOSE OF COMPUTING THE DEDUCTION UNDER SECTION 80 IA IN RESPECT OF GOA UNIT SAMALKOT UNIT AND WIND MILL UNIT. 11. THIS GROUND HAS BEEN DISCUSSED BY THE TRIBUNAL IN I TS ORDER CITED SUPRA IN PARAS14 TO 18 WHEREIN THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE FOR THE REASONS STATED THEREIN. SINCE THE ISSUE BEFORE US IS IDENTICAL TO THE ISSUE DECIDED BY THE TRIBUNAL IN A SSESSEES OWN CASE CITED SUPRA CONSEQUENTLY THE GROUND RAISED BY THE REVEN UE IS TREATED AS DISMISSED. 12. IN GROUND NO.4 THE REVENUE HAS CHALLENGED THAT THE DIRECTION OF THE LEARNED COMMISSIONER (APPEALS) TO THE ASSESSING OFF ICER TO ADOPT A MARKET PRICE OF POWER GENERATED AS PROVIDED UNDER SECTION 80IA(8) AS THE PRICE OF POWER PURCHASED FROM TATA POWER COMPANY AS AGAINST THE REASONABLE RATE OF RETURN OF 16% AS PER THE ORDERS OF MSERC ADOPTED BY THE ASSESSING OFFICER FOR COMPUTING THE DEDUCTION UNDER SECTION 8 0IA IN RESPECT OF THE DAHANU UNIT. 13. THIS ISSUE HAS BEEN DISCUSSED BY THE TRIBUNAL IN IT S ORDER CITED SUPRA FROM PARAS20 TO 29 WHEREIN THE TRIBUNAL AFTER DE TAILED DISCUSSION HAS FOLLOWED THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 200607. SINCE THE ISSUE BEFORE US IS IDENTICAL TO THE ISSUE DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE CITE D SUPRA CONSEQUENTLY THE GROUND RAISED BY THE REVENUE IS TREATED AS DISM ISSED. 14. IN GROUND NO.5 THE REVENUE HAS CHALLENGED THE ALLO WANCE OF DEDUCTION UNDER SECTION 80IA TO THE EXTENT OF GROSS TOTAL INCOME AND NOT TO THE EXTENT OF NET BUSINESS INCOME. RELIANCE INFRASTRUCTURE LTD. 6 15. THIS ISSUE HAS BEEN DISCUSSED BY THE TRIBUNAL IN IT S ORDER CITED SUPRA FROM PARAS29 TO 35 WHEREIN THE TRIBUNAL AFTER DE TAILED DISCUSSION HAS FOLLOWED THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 200102 TO 200506. SINCE THE ISSU E BEFORE US IS IDENTICAL TO THE ISSUE DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE CITED SUPRA CONSEQUENTLY THE GROUND RAISED BY THE REVENUE IS T REATED AS DISMISSED. 16. IN GROUND NO.6 THE REVENUE HAS CHALLENGED NONAPPL ICABILITY OF THE PROVISIONS O SECTION 115JB. 17. WE FIND THAT THE TRIBUNAL IN ITS ORDER CITED SUPRA IN ASSESSEES OWN VIDE PARAS37 TO 40 HAS DECIDED THE ISSUE IN FAVOU R OF THE ASSESSEE. SINCE THE ISSUE BEFORE US IS IDENTICAL TO THE ISSUE DECID ED BY THE TRIBUNAL IN ASSESSEES OWN CASE CITED SUPRA CONSEQUENTLY THE GROUND RAISED BY THE REVENUE IS TREATED AS DISMISSED. 18. GROUND NO.7 AND 8 BEING GENERAL IN NATURE HENCE N O SEPARATE ADJUDICATION IS REQUIRED. ACCORDINGLY THESE GROUND S ARE TREATED AS DISMISSED. 19. / !6 2 0 /2 ' 2! 78 9 19. IN THE RESULT REVENUES APPEAL IS TREATED AS D ISMISSED. WE NOW PROCEED TO DISPOSE OFF THE ASSESSEES APPEAL IN ITA NO.4419/ MUM./2011 VIDE WHICH THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE MADE UNDER SECTION 14A R/W RULE 8D AMOUNTING TO ` 65 58 58 204 ON ACCOUNT OF EXPENDITURE INCURRED FOR EARNING OF EXEMPT INCOME. 20. THE ASSESSING OFFICER NOTED THAT DURING THE YEAR UN DER CONSIDERATION THE ASSESSEE HAS CLAIMED DIVIDED INCOME OF ` 23 80 81 398 WHICH HAS BEEN CLAIMED AS EXEMPT UNDER SECTION 10. THE ASSESSEE WA S REQUIRED TO FURNISH THE DETAILS OF DISALLOWANCE AS PER SECTION 14A AND RULE 8D. IN RESPONSE THE ASSESSEE SUBMITTED THAT IT HAS OFFERED DISALLOWANCE UNDER SECTION 14A OF ` RELIANCE INFRASTRUCTURE LTD. 7 5 46 16 385 AS PER THE WORKING UNDER RULE 8D AND A LSO MADE VARIOUS OTHER SUBMISSIONS WHICH HAS BEEN INCORPORATED IN PARA4.1 OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER HELD THAT THE DISALLOW ANCE WORKED OUT BY THE ASSESSEE IS NOT IN ACCORDANCE WITH THE PROVISIONS O F RULE 8D AND THEREFORE HE WORKED OUT THE DISALLOWANCE IN PARA4.0 IN THE F OLLOWING MANNER: 4.10 CONSIDERING THE ABOVE THE DISALLOWANCE U/S 14 A IS COMPUTED AS UNDER: I. DISALLOWANCE OF DIRECTLY RELATED EXPENDITURE; II. DISALLOWANCE OF INTEREST EXPENSES; A. AMOUNT OF INTEREST PAID ` 3 08 76 49 956 B. AVERAGE AMOUNT OF INVESTMENTS / STOCKINTRADE OPENING BALANCE OF INVESTMENTS 940.81 CRORES CLOSING BALANCE OF INVESTMENTS 5876.52 CRORES TOTAL 6817.33 CRORES C. AVERAGE AMOUNT OF ASSETS OPENING BALANCE OF ASSETS 18584.15 CRORES CLOSING BALANCE OF ASSETS 20393.54 CRORES TOTAL 38977.69 CRORES AVERAGE ASSETS 19488.85 CRORES III. DISALLOWANCE OF OTHER EXPENSES 0.5% OF AVERAGE AMOUNT OF INVESTMENTS 0.5% OF ` 3408.67 RS.17 04 33 500 TOTAL DISALLOWANCE U/S 14A RS.71 04 74 589 21. THUS THE DISALLOWANCE WAS COMPUTED AT ` 71 04 74 589 INSTEAD OF DISALLOWANCE OF ` 5 46 16 385 OFFERED BY THE ASSESSEE. THE NET ADDI TION OF ` 65 58 58 204 WAS MADE IN THE IN THE ASSESSMENT ORD ER. 22. THE ASSESSEE BEFORE THE LEARNED COMMISSIONER (APPE ALS) SUBMITTED DETAILS OF THE BORROWED FUNDS AS ON 31 ST MARCH 2008 AND AS ON 31 ST MARCH 2007 AND ALSO THE DETAILS OF FINANCIAL EXPENDITURE AND INTEREST CHARGES INCURRED BY IT AND CONTENDED THAT THE INVESTMENT IN THE SECURITIES GIVING RISE TO EXEMPT INCOME WAS MADE OUT OF SURPLUS FUNDS OVER THE PERIOD OF TIME AND NO EXPENDITURE IN THE NATURE OF INTEREST HAD BEEN I NCURRED IN EARNING THE AFORESAID INCOME. AS REGARDS OTHER INCIDENTAL EXPEN DITURE IT WAS SUBMITTED THAT DIVIDEND WARRANTS AND INTEREST WARRANT IN RESP ECT OF EXEMPT INCOME HAS BEEN RECEIVED EITHER ONCE OR TWICE IN THE YEAR WHIC H WAS RECEIVED DIRECTLY BY RELIANCE INFRASTRUCTURE LTD. 8 THE PARTY HENCE THERE WAS NO ACTUAL EXPENDITURE I NCURRED BY WAY OF COLLECTION CHARGES OR IN ANY OTHER FORM. THUS IN T HE ABSENCE OF ANY SPECIFIC EXPENDITURE HAVING BEEN INCURRED FOR THE PURPOSE OF EARNING THE EXEMPT INCOME DISALLOWANCE UNDER SECTION 14A COULD NOT HA VE BEEN MADE. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS PAIDUP CAP ITAL IN THE RESERVES AT THE BEGINNING OF THE YEAR AT ` 9339 CRORES. AS AGAINST THIS THE TOTAL INVESTMENTS WERE AT ` 2512 CRORES AND AT THE BEGINNING OF THE YEAR IT WA S ` 7947 CRORES AT THE END OF THE YEAR. THUS THE ADDIT IONAL INVESTMENT OF ` 5396 CRORES WERE MADE OUT OF THE PROFITS OF THE YEAR AS INCREASED BY THE DEPRECIATION. IN THIS REGARD RELIANCE WAS PLACED O N THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S RELIAN CE UTILITIES AND POWERS LTD. [2009] 313 ITR 340 (BOM.). LASTLY IT WAS SUBMITTED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER RULE 8D WAS INC ORRECT BECAUSE WHILE CONSIDERING THE INVESTMENT WHICH INCLUDED THE TAX F REE INCOME ONLY THOSE INVESTMENT WHICH HAS ACTUALLY YIELDED TAX FREE INCO ME DURING THE YEAR CAN ONLY BE CONSIDERED. IN OTHER WORDS THE EXPENDITURE ON INVESTMENT WHICH HAD NOT YIELDED TAX FREE INCOME DURING THE YEAR SHO ULD HAVE NOT BEEN TAKEN INTO CONSIDERATION IN THE FORMULA OF RULE 8D WHILE WORKING OUT THE DISALLOWANCE. IT WAS ALSO ARGUED THAT RULE 8D(2) CA N ONLY BE INVOKED WHEN THE ASSESSING OFFICER HAS NOT SATISFIED WITH THE CL AIM MADE BY THE ASSESSEE. 23. THE LEARNED COMMISSIONER (APPEALS) HOWEVER REJECT ED THE ASSESSEES ENTIRE CONTENTIONS AND HELD THAT FIRSTLY THE PROV ISIONS OF SECTION 14A WILL APPLY IN THIS CASE AND DISALLOWANCE HAS TO BE WORKE D OUT AS THE ASSESSEE ITSELF HAS ADMITTED THAT THE SAID PROVISIONS ARE AP PLICABLE AND HAS SUOMOTU MADE DISALLOWANCE OF ` 5 46 16 385. FURTHER HE ALSO HELD THAT THE ASSESS EE HAS ONLY OFFERED THE DISALLOWANCE BY CONSIDERING ON LY THOSE INVESTMENTS ON WHICH INCOME WAS RECEIVED. IN OTHER WORDS THE INVE STMENT ON WHICH THE INCOME WAS NOT RECEIVED WAS NOT CONSIDERED FOR THE PURPOSE OF DISALLOWANCE. THIS IS CONTRARY TO THE PROVISION OF LAW AND ALSO C LAUSE (2) OF RULE 8D. THE ASSESSING OFFICER HAS ACCORDINGLY INVOKED THE FOR MULA PROVIDED IN RULE 8D AND THERE IS NO ERROR IN THE WORKING OF DISALLOWANC E. INSOFAR AS SATISFACTION OF RELIANCE INFRASTRUCTURE LTD. 9 THE A.O. ON THE CORRECTNESS OF ASSESSEES DISALLOWA NCE IS CONCERNED HE HELD THAT THE WORKING ITSELF GIVEN BY THE ASSESSEE WAS I NCORRECT INSOMUCH SO IT HAS NOT CONSIDERED THOSE INVESTMENTS ON WHICH THE I NCOME WAS NOT RECEIVED. HE THUS CONFIRMED THE DISALLOWANCE MADE BY THE A. O. 24. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE REI TERATING THE SAME CONTENTIONS AS WERE MADE BEFORE THE AUTHORITIES BEL OW SUBMITTED THAT ONCE THE INVESTMENT WHICH HAD NOT YIELDED DIVIDEND INCOM E OR EXEMPT INCOME THE SAME CANNOT BE CONSIDERED FOR THE PURPOSE OF DI SALLOWANCE BECAUSE NO EXPENDITURE CAN BE SAID TO BE ATTRIBUTABLE TO SUCH INCOME. IN ANY CASE THE DISALLOWANCE SUSTAINED BY THE LD. CIT(A) IS VERY HI GH AND EXCESSIVE. HE HAS NOT DISPUTED BEFORE US THAT RULE 8D WILL NOT APPLY ON THE FACTS OF THE CASE. 25. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND RELIED UPON THE FINDINGS OF THE ASSESSING OFFICER AS WELL AS TH E LEARNED CIT (APPEALS). 26. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS PERUSED THE RELEVANT FINDINGS OF THE ASSESSING OFFICER AS WELL AS THAT OF THE LEARNED COMMISSIONER (APPEALS) AND THE MATERIAL PLACED ON R ECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS EARNED HUGE DIVIDEND INCOME WHICH HAS BEEN CLAIMED AS EXEMPT AND FOR THE PURPOSE OF DISALLOWAN CE UNDER SECTION 14A IT HAS DISALLOWED A SUM OF ` 5 46 16 385. THE ASSESSEES WORKING OF DISALLOWANCE WAS TOO BASED ON RULE 8D. HOWEVER IN ITS WORKING THE ASSESSEE HAS NOT CONSIDERED THOSE INVESTMENTS WHICH HAVE NOT YIELDED ANY INCOME. IN OUR OPINION SUCH A WORKING IS NOT CORRE CT AS ONCE THE EXPENDITURE HAS BEEN INCURRED IN RELATION TO AN INC OME WHICH DO NOT FORM PART OF THE TOTAL INCOME THEN THE PROVISIONS OF SE CTION 14A COMES INTO PLAY. IDENTICAL ISSUE HAS COME UP FOR CONSIDERATION BEFOR E MUMBAI SPECIAL BENCH OF THE TRIBUNAL IN CHEMINVEST LTD. V/S ITO [2009] 121 ITD 318 (MUM.) WHEREIN IT HAS BEEN HELD THAT DISALLOWANCE UNDER SE CTION 14A CAN ALSO BE MADE IN THE YEAR IN WHICH NO EXEMPT INCOME HAS BEEN EARNED OR RECEIVED BY THE ASSESSEE. WHEN THE EXPENDITURE IS INCURRED IN R ELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME IT HAS TO S UFFER THE DISALLOWANCE RELIANCE INFRASTRUCTURE LTD. 10 UNDER SECTION 14A IRRESPECTIVE OF THE FACT THAT WH ETHER OR NOT ANY INCOME HAS BEEN EARNED BY THE ASSESSEE. THE SECTION ITSELF DOES NOT CARVE OUT ANY SUCH EXCEPTION. THUS RESPECTFULLY FOLLOWING THE DE CISION SPECIAL BENCH DECISION OF THE TRIBUNAL IN CHEMINVEST LTD. (SUPRA) WE DO NOT FIND ANY MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT THOSE INVES TMENTS WHICH HAS NOT YIELDED ANY INCOME IN THIS YEAR SHOULD BE EXCLUDED FOR THE PURPOSE OF DISALLOWANCE IN THE FORMULA GIVEN IN RULE 8D. ONCE IT IS NOT DISPUTED THAT THE PROVISION OF RULE 8D ARE APPLICABLE ON THE CONDITIO NS STATED THEREIN THEN DISALLOWANCE HAS TO BE MADE AS PER THE FORMULA GIVE N IN RULE 8D EXCEPT WHEN THE ASSESSEE BRINGS OUT COGENT MATERIAL ON REC ORD TO SHOW THAT A PARTICULAR EXPENDITURE AS PROVIDED IN THE FORMULA W AS NOT ATTRIBUTABLE TO EARNING OF THE EXEMPT INCOME. CONSEQUENTLY WE DO N OT FIND ANY INFIRMITY IN THE FINDING AND CONCLUSION DRAWN BY THE LEARNED COM MISSIONER (APPEALS) AND THE SAME ARE HEREBY UPHELD. 27. / !6 2 0 /2 ' 2! 78 9 27. IN THE RESULT ASSESSEES APPEAL IS TREATED AS DISMISSED. 28. $' (: '; 2 0 $' (/! 0 < /2 ' 2! 78 9 28. TO SUM UP REVENUES APPEAL AND ASSESSEES APPE ALS ARE TREATED AS DISMISSED. ' 0 34) < ='6 19 TH JULY 2013 4 0 > 9 ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JULY 2013 SD/- . .. . . . . . R.S. SYAL ACCOUNTANT MEMBER SD/- ! ! ! ! '# '# '# '# $ $ $ $ AMIT SHUKLA JUDICIAL MEMBER MUMBAI =' =' =' =' DATED: 19 TH JULY 2013 RELIANCE INFRASTRUCTURE LTD. 11 ' 0 $! ? @?)! / COPY OF THE ORDER FORWARDED TO : (1) $' (/! / THE ASSESSEE; (2) 2 / THE REVENUE; (3) A () / THE CIT(A); (4) A / THE CIT MUMBAI CITY CONCERNED; (5) ?D> $!$' / THE DR ITAT MUMBAI; (6) >( E / GUARD FILE. -?! $! / TRUE COPY '' / BY ORDER 2. FG / PRADEEP J. CHOWDHURY /H $'2 F / SR. PRIVATE SECRETARY I / 7 2 / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI RELIANCE INFRASTRUCTURE LTD. 12 DATE INITIAL DICTATION PAD ENCLOSED WITH THE FILE 1. DRAFT DICTATED ON 8.7.2013 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 11.7.2013 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 15.7.2013 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 15.7.2013 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 16.7.2013 SR.PS 6. DATE OF PRONOUNCEMENT 19.7.2013 SR.PS 7. FILE SENT TO THE BENCH CLERK 22.7.2013 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER