GIC HOUSING FINANCE LTD., MUMBAI v. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE2(1), MUMBAI

ITA 7590/MUM/2011 | 2008-2009
Pronouncement Date: 30-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 759019914 RSA 2011
Assessee PAN AAACG2755R
Bench Mumbai
Appeal Number ITA 7590/MUM/2011
Duration Of Justice 1 year(s) 11 month(s) 19 day(s)
Appellant GIC HOUSING FINANCE LTD., MUMBAI
Respondent THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE2(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-10-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 30-10-2013
Date Of Final Hearing 30-10-2013
Next Hearing Date 30-10-2013
Assessment Year 2008-2009
Appeal Filed On 11-11-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL G GG G BENCH BENCH BENCH BENCH MUMBAI MUMBAI MUMBAI MUMBAI . . !' !' !' !' #$ #$ #$ #$ BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO JM VIJAY PAL RAO JM VIJAY PAL RAO JM VIJAY PAL RAO JM & & & & SHRI SHRI SHRI SHRI D. KARUNAKARA RAO D. KARUNAKARA RAO D. KARUNAKARA RAO D. KARUNAKARA RAO AM AM AM AM ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.5295/MUM/2010 5295/MUM/2010 5295/MUM/2010 5295/MUM/2010 ( %& %& %& %& ' ' ' ' / ASSESSMENT YEAR :2007-08) M/S GIC HOUSING FINANCE LTD. UNIVERSAL INSURANCE BLDG. 3 RD FLOOR SIR P. M ROAD FORT MUMBAI-400001 & & & & / VS. THE ADDL. COMMISSIONER OF INCOME TAX RANGE 2(1) ROOM NO. 575 AAYKAR BHAVAN M. K. MARG MUMBAI-400020 ( () / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( *+() / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) ./ I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.7590/MUM/2011 7590/MUM/2011 7590/MUM/2011 7590/MUM/2011 ( %& %& %& %& ' ' ' ' / ASSESSMENT YEAR :2008-09) M/S GIC HOUSING FINANCE LTD. UNIVERSAL INSURANCE BLDG. 3 RD FLOOR SIR P. M ROAD FORT MUMBAI-400001 & & & & / VS. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 2(1) ROOM NO. 561 AAYKAR BHAVAN M. K. MARG MUMBAI-400020 $( !' ./ ./ PAN/GIR NO. :AAACG2755R ( () / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( *+() / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) %& %&%& %& -. -. -. -. / 0 / 0 / 0 / 0 ! ! ! ! /ASSESSEE BY : SHRI PERCY J. PARDIWALA $ $ $ $ / 0 ! / 0 ! / 0 ! / 0 ! / REVENUE BY : SHRI VIRENDRA OJHA & & & & / // / .' .' .' .' / DATE OF HEARING : 30 TH OCTOBER 2013 12' 12' 12' 12' / // /.' .' .' .' /DATE OF PRONOUNCEMENT: 30 TH OCTOBER 2013 #!3 / O R D E R PER : . . / VIJAY PAL RAO JM THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST THE TWO SEPARATE ORDER OF COMMISSIONER OF INCOME TAX(APPEAL S) FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09. ITA NO.5295/M/2010 & 7590/M/2011 GIC HOUSING FINANCE LTD. 2 2. FOR THE ASSESSMENT YEAR 2007-08 THE ONLY EFFECTI VE GROUND RAISED BY THE ASSESSEE IS AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) -IV HAS UPHELD THE ADDITION MADE TO THE RETURNED INCOME BY THE ASSESSING OFFICER BEING THE INTEREST ACCRUED ON NON -PERFORMING ASSETS FOLLOWING THE PROVISIONS OF SECTION 43D READ WITH RULE 6EB OF THE INCOME TAX ACT 1961 INSTEAD OF FOLLOWING TH E GUIDELINES ISSUED BY NATIONAL HOUSING BANK (NHB) ON PRUDENTIAL NORMS FOR INCOME RECOGNITION AND FOR PROVISIONING FOR BAD AND DOUBTFUL DEBTS IN RESPECT OF NON PERFORMING ASSETS (NPA). DU E TO THIS THE DIFFERENCE AMOUNT CALCULATED WHICH IS AS FOLLOWS IS BROUGHT TO TAX BEING THE INTEREST NOT COVERED BY THE PROVISIONS OF SECTION 43D OF THE INCOME TAX ACT 1961. SL. NO. INTEREST ON NPAS (AS PER SECTION 43D R.W.R RULE 6EB) INTEREST ON NPAS (AS PER NHB GUIDELINES) AMOUNTS(`) 1. 555 58 632/ - 57 148 209/ - 1 589 577/- 3. THE A.O NOTED THAT THE INTEREST RELATED TO NPA F OR THE YEAR WAS QUANTIFIED AT ` 57 148 209/- BUT THE SAME WAS NOT O FFERED TO TAX. ON QUERY THE ASSESSEE SUBMITTED THAT AS PER THE PROVISIONS O F SECTION 43D OF THE INCOME TAX ACT THE SAME WAS NOT CONSIDERED OR OFFER ED TO TAX. THE ASSESSEE SUBMITTED THAT AS PER THE PROVISIONS OF 43 D THE TAX CHARGEABLE ON INTEREST RELATING TO NPA IS AS PER THE NATIONAL HOUSING BANK GUIDELINES. THE A.O DID NOT ACCEPT THE CONTENTION OF THE ASSESS EE AND APPLIED RULE 6EB. ACCORDINGLY THE A.O HAS COMPUTED THE INTEREST RELATING TO BAD AND DOUBTFUL DEBTS CHARGEABLE TO TAX BY CONSIDERING THE DURATION AS 6 MONTHS AS PER RULE 6EB. THUS THE A.O HAS ADDED A SUM OF ` 15 89 577/- TOWARDS ITA NO.5295/M/2010 & 7590/M/2011 GIC HOUSING FINANCE LTD. 3 THE INTEREST RELATED TO BAD AND DOUBTFUL DEBTS CHAR GEABLE TO TAX. ON APPEAL THE CIT(A) HAS CONFIRMED THE ACTION OF THE A.O. 4. BEFORE US MR. PERCY J. PARDIWALA LD. SENIOR COU NSEL FOR THE ASSESSEE SUBMITTED THAT AS PER SECTION 43D THE INCOME BY WAY OF INTEREST IN RELATION TO BAD AND DOUBTFUL DEBTS HAS TO BE COMPUT ED AS MAY BE PRESCRIBED HAVING REGARD TO THE GUIDELINES ISSUE BY THE NATIONAL HOUSING BANK IN RELATION TO SUCH DEBTS. THUS THE LD. SENIO R COUNSEL HAS STRESSED THE TERM USED AS HAVING REGARD TO THE GUIDELINES I SSUED BY NATIONAL HOUSING BANK IN CLAUSE (B) OF SECTION 43D. HE HAS SUBMITTED THAT THOUGH AS PER RULE 6EB THE PERIOD IS PRESCRIBED AS 6 MONTH S HOWEVER FOR THE RELEVANT PERIOD THE NATIONAL HOUSING BANK REDUCE TH E PERIOD FROM 6 MONTHS TO 3 MONTHS (90 DAYS) THEREFORE THE INCOME BY WAY OF INTEREST RELATING TO THE CATEGORY OF BAD AND DOUBTFUL DEBTS SHOULD BE COMPUTED BY CONSIDERING THE PERIOD OF 3 MONTHS AS PER THE GUIDE LINES OF NATIONAL HOUSING BANK AND NOT 6 MONTHS AS PROVIDE UNDER RULE 6EB. THE LD. COUNSEL HAS FAIRLY CONCEDED THAT THIS ISSUE HAS BEE N DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL FOR THE ASSESSMENT YEAR 20 06-07 REPORTED IN 45 SOT 318. HOWEVER WHEN SECTION 43D HAS SPECIFICALLY PROVIDES THE GUIDELINES OF NATIONAL HOUSING BANK TO BE CONSIDERE D THEN THE PERIOD FOR THE PURPOSE OF INCOME BY WAY OF INTEREST RELATING T O NPA SHOULD BE THE PERIOD AS PER THE GUIDELINES OF NATIONAL HOUSING BA NK. ON THE OTHER HAND THE LD. D.R HAS SUBMITTED THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE. ITA NO.5295/M/2010 & 7590/M/2011 GIC HOUSING FINANCE LTD. 4 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD AT THE OUTSET WE NOTE THAT AN IDENTICAL I SSUE HAS BEEN CONSIDERED AND DECIDED BY THIS TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2006-07. THE TRIBUNAL HAS ELABORATE LY DISCUSSED THE ISSUE BY CONSIDERING THE DECISION OF HONBLE SUPREM E COURT AND CONCLUDED THE FINDING IN PARA 20 AND 21 AS UNDER: 20. WE AGREE WITH THE SUBMISSIONS OF THE LEARNED D .R. THAT THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F UCO BANK (SUPRA) DOES NOT OBLITERATE THE RATIO OF THE VERY S AME HONBLE COURT IN THE CASE OF STATE OF BANK OF TRAVANCORE (S UPRA) BUT ONLY MODIFIES THE SAME IN SO FAR AS A LATER CIRCULAR WHI CH IS BENEVOLENT HAD NOT BEEN BROUGHT TO THE HONBLE COURTS NOTICE. IN THAT VIEW OF THE MATTER WE AGREE WITH THE SUBMISSION OF THE LEARNED D.R. THAT REAL INCOME THEORY WOULD BE RELEVANT BUT WOULD HAVE NO APPLICATION SO AS TO DEFEAT THE PROVISIONS OF THE A CT. IN OUR VIEW PROVISIONS OF SEC.43D LAY DOWN THE LIMITS UPTO WHIC H INTEREST INCOME OF BAD AND DOUBTFUL DEBTS IN THE CASE OF PUB LIC COMPANIES NEED NOT BE RECOGNISED AS INCOME IN A CA SE WHERE ASSESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING. B Y IMPLICATION IT ALSO LAYS DOWN THAT ANY CLAIM THAT INTEREST INCO ME AS NOT HAVING ACCRUED OVER AND ABOVE THE LIMITS LAID DOWN BY THE RULES SHOULD NOT BE ACCEPTED. THE CLAIM OF THE ASSESSEE I N OUR VIEW IS THEREFORE CONTRARY TO THE PROVISIONS OF SEC.43D AND THE CLAIM OF THE ASSESSEE BASED ON REAL INCOME THEORY AND THERE BEING NO REAL ACCRUAL OF INCOME CANNOT BE ACCEPTED. 21. THAT LEAVES US WITH THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF VASISTH CHAY VYAPAR LTD. (SUPR A) AND THE HONBLE MADRAS HIGH COURT IN THE CASE OF ELGI FINAN CE LTD. (SUPRA). IN THE CASE OF VASISTH CHAY VYAPAR LTD. (S UPIA) THE ASSESSEE WAS A NON-BANKING FINANCE COMPANY BOUND BY THE PROVISIONS OF THE RESERVE BANK OF INDIA ACT 1934. IN COMPLIANCE WITH THE DIRECTIONS ISSUED BY THE RBI UNDER THE RBI ACT 1934 IT DID NOT RECOGNISE INTEREST ON INTERCORPORATE DEPOSI T AS INCOME. THE HONBLE DELHI HIGH COURT HELD THAT INTEREST INC OME DOES NOT ACCRUE AND THE ACTION OF THE ASSESSEE WAS CORRECT. TO THE SAME EFFECT IS THE DECISION OF THE HONBLE MADRAS HIGH C OURT IN THE CASE OF ELGI FINANCE LTD. (SUPRA). THE HONBLE DELH I HIGH COURT CONSIDERED THE DECISION OF THE HONBLE SUPREME COUR T IN THE CASE OF SOUTHERN TECHNOLOGIES LTD. (SUPRA) AND EXPL AINED THAT THE CASE DECIDED BY THE HONBLE SUPREME COURT INVOL VED A CASE WHERE PROVISION ON ACCOUNT OF NON-PERFORMING ASSETS WAS ITA NO.5295/M/2010 & 7590/M/2011 GIC HOUSING FINANCE LTD. 5 CLAIMED AS A DEDUCTION WHICH WAS HELD BY THE COURT TO BE NOT ALLOWABLE. THE HONBLE COURT FOUND THAT A DEDUCTION CLAIMED UNDER THE ACT HAD TO SATISFY THE CONDITIONS LAID DO WN UNDER THE ACT AND PRUDENTIAL NORMS OF RBI WILL NOT OVERRIDE T HE PROVISIONS OF THE ACT. BUT WHEN IT COMES TO INCOME RECOGNITIO N PRUDENTIAL NORMS WILL BE RELEVANT. AS RIGHTLY CONTENDED BY THE LEARNED D.R. THE ISSUE BEFORE THE HONBLE DELHI HIGH COURT WAS N OT IN RELATION TO PROVISIONS OF SEC.43D AND THEREFORE THE RATIO LA ID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF SOUTHERN TECHN OLOGIES LTD. (SUPRA) WOULD APPLY. THE HONBLE DELHI HIGH COURT W AS DEALING WITH A CASE WHERE THERE WAS A CONFLICT BETWEEN THEO RY OF INCOME RECOGNITION AND PRUDENTIAL NORMS OF THE RB I. 1N THE PRESENT CASE WE ARE CONCERNED WITH THE PROVISIONS OF SEC.43D VIS-A-VIS THE GUIDELINES OF NHB REGARDING BAD AND D OUBTFUL DEBTS. THE HONBLE SUPREME COURT IN THE CASE OF SOUTHERN T ECHNOLOGIES LTD. (SUPRA) HAD TO DEAL WITH DEDUCTION ON ACCOUNT OF CLAIM FOR DEDUCTION ON ACCOUNT OF PROVISION FOR NON-PERFORMIN G ASSETS IN TERMS OF RBI DIRECTIONS ISSUED UNDER THE RBI ACT 1 934. THE HONBLE COURT FOUND THAT UNDER EXPLANATION TO SEC. 36(1)(VII) OF THE ACT PROVISION FOR DOUBTFUL DEBT WAS KEPT OUT O F THE AMBIT OF BAD DEBT WRITTEN OFF. IT WAS FURTHER HELD THAT UNDE R THE ACT TAXIS ON REAL INCOME I.E. PROFITS ARRIVED AT ON COMMER CIAL PRINCIPLES SUBJECT TO THE PROVISIONS OF THE ACT. REAL PROFITS CAN BE ARRIVED AT ONLY BY MAKING THE PERMISSIBLE DEDUCTIONS. SINCE TH E PROVISION FOR BAD DEBT WAS NOT A PERMISSIBLE DEDUCTION UNDER .THE ACT THE SAME WAS V HELD TO BE NOT ALLOWABLE. THE REAL INCO ME REFERRED TO BY THE HONBLE SUPREME COURT IN ITS JUDGMENT IN PARA-35 TO 39 IS IN THE CONTEXT OF PROFITS ARRIVED AT ON COMMERCI AL PRINCIPLES SUBJECT TO THE PROVISIONS OF THE ACT. THE PROVISION S OF SEC.43D LAY DOWN THE LIMITS UPTO WHICH INTEREST INCOME OF BAD A ND DOUBTFUL DEBTS IN THE CASE OF PUBLIC COMPANIES NEED NOT BE R ECOGNISED AS INCOME IN A CASE WHERE ASSESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING. BY IMPLICATION IT ALSO LAYS DOWN THAT A NY CLAIM THAT INTEREST INCOME AS NOT HAVING ACCRUED OVER AND ABOV E THE LIMITS LAID DOWN BY THE RULES SHOULD NOT BE ACCEPTED. THE CLAIM OF THE ASSESSEE IN OUR VIEW IS THEREFORE CONTRARY TO THE P ROVISIONS OF SEC.43D AND CANNOT THEREFORE THE CLAIM OF THE ASSES SEE BASED ON REAL INCOME THEORY AND THERE BEING NO REAL ACCRU AL OF INCOME CANNOT BE ACCEPTED. THUS THE DECISION OF THE HONBL E DELHI HIGH COURT AND THE MADRAS HIGH COURT WILL NOT BE APPLICA BLE TO THE FACTS OF THE PRESENT CASE. RATHER THE DECISION OF T HE HONBLE SUPREME COURT IN THE CASE OF SOUTHERN TECHNOLOGIES (SUPRA) ALONE WILL APPLY. WE THEREFORE REJECT THE CONTENTIO N RAISED ON BEHALF OF THE LEARNED COUNSEL FOR THE ASSESSEE. ITA NO.5295/M/2010 & 7590/M/2011 GIC HOUSING FINANCE LTD. 6 6. RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIB UNAL IN ASSESSEES OWN CASE WE DECIDE THIS ISSUE AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. FOR THE ASSESSMENT YEAR 2008 FOR THE ASSESSMENT YEAR 2008 FOR THE ASSESSMENT YEAR 2008 FOR THE ASSESSMENT YEAR 2008- -- -09 0909 09 7. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED COMMISSIONER OF INCOME TAX APPEAL-IV MUMB AI HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE ASSESS ING OFFICER DCIT CIRCLE-2(1) MUMBAI ON ACCOUNT OF FOLLOWING: SL. NO. PARTICULARS AMOUNT (`) 1. EXPENDITURE IN RELATION TO EXEMPT INCOME 1 14 91 616/- 2. INTEREST ACCRUED ON NON PERFORMING ASSETS 2 77 8 0 635/- 8. GROUND NO. 2 REGARDING THE INTEREST ACCRUED OF N ON PERFORMING ASSETS IS COMMON AS IN THE ASSESSMENT YEAR 2007-08. HOWEVER THE LD. SENIOR COUNSEL HAS POINTED OUT THAT FOR THE ASSESSM ENT YEAR 2008-09 THE A.O HAS TAKEN THE PERIOD AS 24 MONTHS IN STEAD OF 6 MONTHS TAKEN IN THE ASSESSMENT YEAR 2007-08. THUS THE LD. SENIOR COUNS EL HAS SUBMITTED THAT THE A.O HAS CONSIDERED THE WRONG CLAUSE UNDER RULE 6EB WHICH IS IN RESPECT OF DOUBTFUL ASSETS AND NOT FOR INTEREST ON DOUBTFUL OR BAD DEBTS. THE LD. D.R HAS RELIED UPON THE ORDER OF THE AUTHOR ITIES BELOW. 9. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND CARE FULLY PERUSAL OF THE RECORD WE NOTE THAT THOUGH ON PRINCIPLE THE ISSUE I S DECIDED AGAINST THE ASSESSEE HOWEVER FOR COMPUTATION OF THE INCOME OF INTEREST IN RELATING TO ITA NO.5295/M/2010 & 7590/M/2011 GIC HOUSING FINANCE LTD. 7 THE BAD AND DOUBTFUL DEBTS THE A.O TOOK 24 MONTHS AS THE DURATION OF REMAINING BAD DEBTS WHICH APPEARS TO BE NOT CORRECT AS PER THE RULE 6EB. THE PERIOD OF 2 YEARS IS PROVIDED UNDER CLAUSE (A)( I) OF RULE 6EB REGARDING DOUBTFUL ASSETS WHEREAS THE PERIOD IN THE CATEGORY OF INTEREST AMOUNT IS PROVIDED UNDER SUB-CLAUSE (II)(1) OF CLAUSE (A) WHI CH IS 6 MONTHS. THEREFORE FOR THIS LIMITED PURPOSE WE SET ASIDE TH IS ISSUE TO THE RECORD OF THE ASSESSING OFFICER WITH THE DIRECTION TO APPLY T O CORRECT PROVISIONS OF RULE 6EB AS APPLICABLE FOR THE CATEGORY OF BAD DEBT S OF INTEREST REGARDING TO NPA. 10. THE ANOTHER GROUND IS REGARDING DISALLOWANCE U/ S 14A. THE ASSESSEE RECEIVED DIVIDEND INCOME OF ` 28 13 500/- OUT OF WH ICH ` 28 00 000/- RECEIVED ON ACCOUNT OF SHARES HELD AS LONG TERM INV ESTMENT AND THE DIVIDEND INCOME FROM SUCH INVESTMENT IS CLAIM EXEMP T. THE A.O APPLIED RULE 8D AND MADE A DISALLOWANCE OF ` 1 14 91 616/-. ON APPEAL THE CIT(A) HAS CONFIRMED THE DISALLOWANCE MADE BY THE A.O. 11. BEFORE US THE LD. SENIOR COUNSEL HAS SUBMITTED THAT NO FRESH INVESTMENT WAS MADE DURING THE YEAR UNDER CONSIDERA TION THEREFORE NO EXPENDITURE AS REGARDS INTEREST WAS INCURRED BY THE ASSESSEE IN RESPECT OF EARNING THE DIVIDEND INCOME. HE HAS FURTHER CONTEND ED THAT EVEN IN THE EARLIER YEAR WHEN THE INVESTMENT WAS MADE NO DISALL OWANCE WAS MADE BY THE A.O EXCEPT FOR THE ASSESSMENT YEAR 2007-08 IN W HICH THE TRIBUNAL HAS SET ASIDE THE MATTER TO THE A.O ON THE ISSUE OF APP LICABILITY OF RULE 8D. THE LD. COUNSEL HAS SUBMITTED THAT WHEN THE ASSESSI NG OFFICER HAS NOT DISALLOWED THE INTEREST EXPENDITURE FOR THE YEAR OF INVESTMENT THEN THE ITA NO.5295/M/2010 & 7590/M/2011 GIC HOUSING FINANCE LTD. 8 SAME CANNOT BE DISALLOWED IN THIS YEAR WHEN NO INVE STMENT WAS MADE BY THE ASSESSEE. AS REGARDS THE ADMINISTRATIVE EXPENSE S THE LD. COUNSEL HAS SUBMITTED THAT THE ASSESSEE ACCEPTS THE DISALLOWANC E MADE BY THE A.O ON THIS ACCOUNT. ON THE OTHER HAND THE LD. D.R HAS RE LIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT WHEN RULE 8D IS APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION THEN THERE IS NO FAULT OR ERROR IN THE ORDER OF THE ASSESSING OFFICER IN COMPUTING THE DISALLOWANCE U/S 14A. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIAL ON RECORD. SINCE THE ASSESSEE HAS NOT MADE ANY NEW INVESTMENT DURING THE YEAR UNDER CONSIDERATION THEREFORE FOR ASCERTAINING THE FACT WHETHER THE ASSESSEE HAS UTILISED THE BORROWED FUND IN MAKING THE INVESTMENT A PROPER INQUIRY HAS TO BE CONDUCTED. TH E A.O HAS NOT EXAMINED THIS ISSUE BY CONSIDERING THE FACT THAT NO INVESTMENT WAS MADE DURING THE YEAR YIELDING THE DIVIDEND INCOME. THERE FORE AS REGARDS THE DISALLOWANCE OF INTEREST ATTRIBUTABLE TO THE EXEMPT INCOME U/S 14A THIS ISSUE REQUIRES A PROPER INQUIRY AND VERIFICATION OF THE FACTS. HENCE IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTE REST OF JUSTICE WE SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFF ICER TO DECIDE THE SAME AFTER CONSIDERING VERIFYING AND EXAMINING OF THE N ECESSARY FACTS. ITA NO.5295/M/2010 & 7590/M/2011 GIC HOUSING FINANCE LTD. 9 13. IN THE RESULT THE APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 IS DISMISSED AND ASSESSMENT YEAR 2008-09 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF OCTOBER 2013 SD/- SD/- ( . ) !' #$ (D. KARUNAKARA RAO) ACCOUNTANT MEMBER ( ) % #$ (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 30 TH OCTOBER 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI