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TMI Blog2024 (7) TMI 1485X X X X Extracts X X X X X X X X Extracts X X X X ..... e Hon ble Supreme Court [ 2013 (7) TMI 1111 - SC ORDER ] therefore, the finding of Ld. CIT(A) cannot be sustained and same deserved to be reversed. CIT(A) has deleted the impugned addition without giving specific finding regarding the properties being vacant farm land and there was no construction of house property by the assessee. Therefore, the issue of taxability of properties claimed as being vacant farm lands needs verification by the AO for ascertaining the correctness of the claim that no house/building was constructed on such lands. Thus the issue is hereby, restored to AO. If it is found true that during the relevant time, no house property/commercial space were constructed thereon. No addition would be called for. Thus, Ground No.2 of the Revenue s appeal is partly allowed. Allocation of various expenses to eligible projects on the basis sales ratio for computing allowance of deduction u/s 80IB(10) - preliminary objections of the assessee against allocation of expenses is that the assessee company has been maintaining separate books of accounts, qua the eligible projects which is duly supported by the audit report in Form No.10CCB - HELD THAT:- We find that Ld. CIT(A) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be notionally set off again while computing current income admissible for deduction u/s 80IB(10) of the Act during relevant year. In the light of binding precedent cited by assessee wherein it has been held that loss if already absorbed against the profit of other eligible project could not be notionally brought forward . Revenue has not brought any contrary material to rebut the contention that losses of earlier year which had already been set off against the income of the eligible projects in earlier years could not be notionally brought forward. Therefore, we do not see any reason to disturb the findings of CIT(A), the same is hereby affirmed. Thus, Ground No.7 raised by the Revenue is dismissed. Addition u/s 14A of the Act r.w. Rule 8D - CIT(A) deleted addition - HELD THAT:- CIT(A) was of the view that no disallowance u/s 14A should be made in the case of the assessee company as the AO was unable to establish any link between fund borrowed from public deposits and the fund that was used for the purpose of earning of exempt income. We do not find fault with this finding of CIT(A), even before this Tribunal, no material is furnished suggesting that the investments were made o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as erred in law and facts of the case in deleting the addition of Rs. 58,09,780/- made by AO on account of notional ALV in respect of unsold spaces/ flats treating the same as income from house property. 3. On the facts and circumstances of the case, the Ld. CIT(A) has erred in law and facts of the case allowing part relief towards this allowance of deduction u/s 80-IB at Rs. 4,69,59,072/- made by AO by way of proportionate allocation various expenses to eligible projects where as such deduction is to be computed as if each eligible unit was an independent and only source of income as provided u/s 80- IA(5) of the income tax Act, 1961 and see 80-IB (13) of income tax Act, 1961. 4. On the facts and circumstances of the case, the Ld. CIT(A) has erred in law and facts of the case in allowing part relief towards this allowance on deduction u/s 80-IB at Rs. 4,69,59,072/- by admitting additional details and evidences without affording any opportunity to AO in violation of provision of Rule 46A of income tax Rule 1962 and ignoring the request of AO in prescribed form ITNS -51 as required by Ld. CIT (A) before disposal of appeal. 5. On the facts and circumstances of the case, the Ld. CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s 14A of the Act, addition made by the AO, qua the ALV of vacant properties amounting to INR 58,09,780/-. However, in respect of the disallowance of deduction u/s 80IB(10) of the Act, he partly allowed the claim of the assessee. Thereby, he reduced the disallowance of deduction u/s 80IB(10) of the Act out of total disallowance of INR 4,69,59,072/- by directing the AO to re-compute the disallowance on the basis of his finding in respect of allocation of various expenses on eligible projects. The Ld.CIT(A) deleted addition(s) related to ALV of vacant properties, disallowance u/s 14A of the Act and he substantially reduced disallowance of deduction u/s 80IB(10) of the Act, from INR 4,69,59,072/-. 5. Aggrieved against this, both the assessee and the Revenue have assailed the finding of Ld.CIT(A) in appeal and cross-objection respectively before this Tribunal. 6. Ground No.1 9 of Revenue s appeal are general in nature, need no separate adjudication. 7. Ground No.2 is against the deleting the addition of INR 58,09,780/- made on account of notional ALV in respect of unsold spaces/flats treating the same as income from house property. 8. At the time of hearing, Ld. Sr. Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty was vacant for the whole of the previous year, the annual letting value thereof shall be taken to be nil in view of section 23(1)(c), on the ground that since the properties were held by the assessee as stock in trade and not for the purpose of letting out, 'vacancy allowance' provided under section 23(1)(c) of the Act could not be claimed. The Court also rejected the contention of the assessee that subsection (5) inserted under section 23 of the Act, to provide for determination of notional ALV in case of real estate developers, had for the first time introduced the charge of notional ALV in cases where building etc. are held by such developer as stock-in-trade after the end of one year from the end of financial year in which the certificate of completion is obtained, was applicable from 01.04.2018 and thus, was no charge of notional ALV in cases where building/ flats etc. were held as stock-in-trade. It would, however, be pertinent to point out that the Supreme Court has admitted the Special Leave Petition filed by the assessee against the said decision of the High Court which is reported at 256 Taxman 294 (SC), which is pending disposal. It is pertinent to point o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is being applied in the name of the owner who purchases the flat or commercial space from the assessee. The flats/commercial space lying in stock do not have any electricity connection and thus are not in habitable condition. [Refer, Shree Nirmal Commercial Ltd. v. CIT 193 ITR 694 (Bom.), Shyam Sunder Behl v. ADIT: 147 Taxman 1 (Amritsar)(Mag.), S.M. Chandrashekar v. ITO: 76 taxman.com 278 (Bang. Trib.), ACIT v. Dr. Amrit Lal Adlakha: (2006) 105 TTJ Asr. 271] It is further pertinent to point out that the properties at S. No. 13 and 14 (Refer pg. no. 26 of the PB) are merely farm lands on which no residential unit has been constructed, which are outside the purview of section 22 of the Act. It would be pertinent to point out that the aforesaid issue, whether any building was constructed on farm lands was set-aside by Delhi Bench of the Tribunal to the file of assessing officer for fresh examination in assessee's own case for assessment years 2004-05 to 2006-07 [Refer, Order dated 28.03.2017 of Delhi Bench of Tribunal (ITA No. ITA Nos. 3193/Del/2008, 1248/Del/2009, 1254/Del/2009 and 1576/Del/2010 placed at pg. no. 107-138 of PB, relevant finding @ pg. no. 135, para 38)] That a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) on the issue of taxability of vacant house property/ commercial space is hereby, set aside and the corresponding finding by the AO are sustained. Except the claim of the assessee that the properties mentioned at Sl.Nos.13 and 14 at page No.26 of Paper Book were merely farm lands and no house properties were constructed thereon, would be outside the purview of section 22 of the Act. However, the Ld.CIT(A) has deleted the impugned addition without giving specific finding regarding the properties being vacant farm land and there was no construction of house property by the assessee. Therefore, the issue of taxability of properties claimed as being vacant farm lands needs verification by the AO for ascertaining the correctness of the claim that no house/building was constructed on such lands. Thus the issue is hereby, restored to AO. If it is found true that during the relevant time, no house property/commercial space were constructed thereon. No addition would be called for. Thus, Ground No.2 of the Revenue s appeal is partly allowed, in the terms indicated herein before. 11. Ground Nos.3 to 6 of Revenue s appeal are against the substantial relief granted by the Ld.CIT(A) in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions and submitted that the authorities below did not appreciated the facts in right perspective. He contended that AO failed to bring any defect into the separate accounts prepared by the Assessee for each project. Hence, the allocation made by the AO is arbitrary and unjustified. 14. Ld.Sr. Counsel for the assessee pointed out that by way of Ground Nos. 3 4, the Revenue has challenged against the part relief granted by the Ld.CIT(A) in respect of allocation of various expenses to the eligible projects. The AO allocated various expenses to the eligible projects in ratio of sales and consequently, proposed disallowance of deduction of INR 3,59,98,438/- in respect of all nine projects. But having considered that out of nine projects, he had already disallowed the entire claim of deduction in respect of three projects namely, Avantika Aakriti, Golf Link I and Golf Link II, by treating for not eligible for deduction, the AO restricted disallowance on the six projects only for an amount of INR 3,45,09,112/-. He submitted that Ld.CIT(A) following the decision of Tribunal in assessee s own case for the year 2001-02 has rightly allowed deduction on three projects excluding six units out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ojects in the ratio of sales of each project. On further appeal, the Ld.CIT(A) allowed relief qua allocation of advertisement expenditure to the extent of INR 2,97,95,338/-. Considering that such expenditure was debited to the cost of construction of respective projects, not warranting further allocation to the profit of eligible unit. With respect to remaining expenses, Ld.CIT(A) upheld the action of AO in treating the same, to be common expenditure, warranting allocation to eligible projects in sales ratio. However, ld.CIT(A) observed that since advertisement expenditure incurred during the relevant year was abnormally high vis-a-vis earlier year, Ld.CIT(A) took average advertisement expenses of Assessment Years 2005-06, 2006-07 and 2008-09, amounting to INR 38,22,503/- and allocated the same to the eligible projects in sales ratio. The contention of the assessee is that the assessee maintained separate books of accounts in respect of eligible projects and all the expenses, including advertisement expenses, having direct relation to such project(s) were already allocated/debited in the independent books. It was contended that the total amount allocated to the project in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest expenditure of INR 16,60,41,925/-. The assessee had maintained separate books of accounts in respect of eligible projects and thus, interest expenses of INR 8,20,91,514/-, having direct relation to such project(s) were already allocated/debited in the independent books. The balance interest cost of INR 8,39,50,411/- represent interest cost which was not directly identified to any project inasmuch as the same related to projects which were under conceptualization stage or were not identifiable or where the assessee expected abnormal delays in obtaining approval therefore, i.e. where the land acquisition was slow or projects were kept in abeyance due to certain legal/market related consideration. Such borrowing cost was shown as period cost under the head interest expenses . It is contended on behalf of the assessee that the assessee company had claimed deduction u/s 80IB(10) of the Act in respect of nine projects eligible for deduction. Out of these nine projects, seven projects were already completed or were more than 90% completed as at the beginning of the financial year. It was submitted that these projects were self-contained and had surplus funds. Infact, on perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roject Sales Ratio (%) Particulars of expenses allocated to eligible projects in sales ratio Advertiseme nt Publicity (Rs. 6,03,86,8 13) Interest expenses (Rs. 16,60,41,92 5) Professional Charges (Rs. 3,09,90,57 2) Directors s meeting fees (Rs. 9,65,00 0) Director s travelling expenses (Rs. 28,14,14 1) Total Avantika Aakriti Housing Project 0.19 % 1,14,735 3,15,480 58,880 1,830 5,850 4,96,775 Golf Link I Housing Project, Greater Noida, UP 0.24 1,44,928 3,98,500 74,377 2,316 6,750 6,26,871 Golf LinkII Housing Project, Gautam Budh Nagar, UP 0.14 84,540 2,32,460 43,390 1,350 3,940 3,65,680 Green Glade-II Housing Project, Gautam Budh Nagar, UP 0.23 1,38,890 3,81,890 71,278 2,220 6,470 6,00,758 Green Glade-I Housing Project, Greater Noida, UP 0.37 2,23,430 6,14,355 1,14,665 3,750 10,410 9,66,610 Nest Homes (Ahsiana) Group Housing Project, Lucknow 0.9 5,43,481 14,94,377 2,78,915 8,685 25,327 23,50,785 Whispering Meadows (Mulund) Housing Project, Mumbai 4.7 28,38,180 78,03,970 14,56,556 45,355 1,32,261 1,22,76,322 Ansal Court Yard-Agra Housing Project, Agra, UP 3.88 23,43,008 64,42,426 12,02,434 3,667 10,693 1,00,02,228 East End Loni Housing Project, Ghaziabad 3.08 18,59,913 51,14,091 9,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ush Boake Allen (India) Ltd. v. CIT: 273 ITR 152 (Mad.) It is further submitted that all the impugned eligible projects were launched in earlier years which stood substantially sold out and were nearing completion during the year under consideration. The details of launch of the project and percentage of completion as at the end of the relevant assessment year are as under: S.No. Name of the eligible Project Year of lauch of the project (FY) Stage of completion of the project Relevant pg.no. of Form No.10CCB 1. Avantika akriti Housing Project 1997-98 100% 140 143 2. East End Loni Housing Project 2000-01 100% 151 155 3. Golf Link-I Housing Project 1997-98 100% 163 167 4. Green Glade I Housing Project 1997-98 100% 174 178 5. Golf Link-II Housing Project 1997-98 100% 186 190 6. Green Glade II Housing Project 2001-02 100% 197 201 7. Agra Courtyard Housing Project 2006-07 66.31% 208 212 8. Nest Housing Project 2004-05 100% 220 225 9. Whispering Meadows-Mulund Housing Project 1995-96 79.88% 232 237 Attention is also invited to the sales due summary of the aforesaid eligible projects enclosed in Supp. paperbook at pg. no. 314-329 showing that the projects were sold-out. In view of the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertisement expenditure incurred during the relevant year was abnormally high vis-a-vis earlier year due to advertisement placed for fund raising through Qualified Institutional Placement, the CIT(A) took average advertisement expense of assessment years 2005-06, 2006-07 and 2008-09, amounting to, Rs. 38,22,503/- and allocated the same to eligible projects in sales ratio. Submission It is submitted that the assessee maintains separate books of accounts in respect of eligible projects and all the expenses, including advertisement expenses, having direct relation to such project(s) were already allocated/debited in the independent books. During the year, the assessee had following projects, which were eligible for deduction under section 80- IB(10) of the Act. The details of said project and the amount of advertisement expenses allocated to each eligible project since launch thereof is as under:- S.No. Name of the eligible Project Stage of completion of the project Relevant pg.no. of Form No.10CCB Advertisement cost allocated to the project since launch thereof 1. Avantika akriti Housing Project 100% 143 Rs. 4,89,905 2. East End Loni Housing Project 100% 155 Rs. 15,41,244 3. Golf Link ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed by the assessee under that section by a sum of Rs. 2,27,97,559. The CIT(A) deleted the allocation of interest expenditure made by the AO holding that the assessee had not used borrowed funds for investment in such eligible projects and that most of the eligible projects were complete and/or were running in surplus i.e. internal accruals from the projects was higher than the investment made in such projects. Submission During the year under consideration, the assessee had incurred interest expenditure of Rs. 16,60,41 ,925/-. It is submitted that the assessee maintains separate books of accounts in respect of eligible projects and thus, interest expenses of Rs. 8,20,91,514/-, having direct relation to such project(s) were already allocated/debited in the independent books. The balance interest cost of Rs. 8,39,50,411/- represented interest cost which was not directly identified to any project inasmuch as the same related to projects which were under conceptualization stage or were not identifiable or where the assessee expected abnormal delays in obtaining approval therefor i.e. where the land acquisition was slow or projects were kept in abeyance due to certain legal/market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 ITR 449 (SC) CIT v. Sridev Enterprises: 192 ITR 165 (Kar.) CIT vs. Givo Ltd.: ITA No. 94112010 (Del.) CIT v. Gujarat Narmada Valley Fertilizers Co. Ltd.: 221 Taxman 479 (Guj.) Punjab Woolcombers Ltd. v. ACIT: (2004) 1 SOT 114 (Chand) Meenakshi Synthetics vs CIT: 84 ITD 563 (Lucknow) GR Agencies vs ITO; 79 TTJ 496 (Lucknow) In view of the above, it is respectfully submitted that there was no warrant to allocate any interest expenditure incurred by the Head Office to the eligible units since no part of interest-bearing funds were utilized for making investment or for undertaking regular operations in the eligible unit. It may be appreciated that the assessing officer has allocated interest expense purely on ad-hoc basis by considering the same as common expenditure without reaching a finding or establishing that borrowed funds have nexus with such units. Reliance in this regard, is placed on the following decisions, wherein the Tribunal had deleted ad-hoc allocation of interest expenditure made by the assessing officer, without establishing nexus of borrowed funds with the eligible unit: CIT v. Hindustan Lever Ltd.: 343 ITR 161 (Born. HC) Canon India Pvt. Ltd. v. DCIT: ITA No.3497a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the said projects. The AO, however, allocated the aforesaid expenses incurred on professional charges on pro-rata basis in the ratio of sales of each eligible project. The CIT(A), however, on analyzing the details of professional charges held that expenditure only to the extent of Rs. 1,04,23,153/- being retainership charges paid to various professionals for looking after legal cases of the company ought to be allocated to the eligible units. The Assessee as well as Revenue has challenged the aforesaid order of the CIT(A). Submission From perusal of the details of the professional charges enclosed in the PB at pg. no. 255-269, it would be appreciated that the assessee incurred expenditure on account of the following: Legal and Professional Charges (IT, law matters) includes payment to Advocates for representing income tax related matters pending before various forums like IT AT or High Court for the years 92-93 to 97-98 which was not related to any project eligible for deduction under section 80IB(10) of the Act (which have commenced only from A Y 1998-1999 and onwards), and thus, the same cannot be allocated to the said eligible projects; Legal Professional Charges (Others) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or deduction under section 80IB-(10) of Act. The details of foreign travelling expenses are placed at Pg. no. 270 of the PB. It is pertinent to note that the foreign travelling expenditure were mainly incurred for travel to Thailand which were in relation to non-eligible projects at Mumbai. On perusal of the details, the CIT(A) held that no allocation of the said expenses was warranted since the assessee was maintaining separate books of accounts and the eligible projects were not benefitted from the foreign visit of the directors. Re: Principle of consistency Even otherwise, it is respectfully submitted that the assessing officer had in earlier assessment years allowed the deduction under section 80-IB(10) of the Act after due application of mind and no disallowance has ever been made on account of allocation of any expenses shown under the head' Administrative Expenses' in earlier years. Thus keeping in view of law of consistency the allocation made by the Ld. Assessing Officer is liable to be deleted. Reliance in this regard is placed on the following decisions: CIT vs. Excel Industries Ltd.: 358 ITR 295 (SC) Radhasoami Satsang v. CIT: 193 ITR 321 (SC) DIT (E) v. Apparel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2006-07, be not set off in assessment year 2007-08 against profits computed under section 80IB(10). (f) Explanation why profits of projects of Avantika Akriti, Golf Link - I II commenced prior to 1.10.1998, be not excluded from deduction under section 80-IB(10) of Income Tax Act 1961. (g) Why administrative and interest expenses in Profit and loss account of the assessee company in respect of all business activities as per tax audit report be not allocated to profits computed in respect of projects claimed as covered under section 80-IB(10) in various projects that various expenses have been incorrectly. It is not the modus operandi that Directors of other staff does not work for such projects or vehicles, computers or other assets of the assessee company are denied for use for such projects or such projects are not financed. The assessee company was required to compute such profits and gains from projects after allocation of expenses to each project and compute the deduction. 18. In response thereto, the assessee filed its explanation. The AO observed that the assessee company had shown a sum of INR 12,88,63,163/- (deduction u/s 80IB(10) of the Act) against sale of INR 25,34,44, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different projects cannot be reallocated. However, he considered that a sum of Rs. 38,22,503/- being average of advertisement expenses incurred during Assessment Years 2005- 06, 2006-07 and 2008-09 should be allocated on pro-rata basis in the sales ratio u/s 80IB(10) of the Act on eligible projects. In respect of Interest on borrowed capital , the Ld.CIT(A) has given a finding that investment made u/s 80IB(10) of the Act was negative. Most of the projects eligible for deduction u/s 80IB(10) of the Act, were more than 90% completed prior to 01.04.2006 and were running in surplus. Therefore, he was of the view that no allocation should be made out of interest on borrowed funds. Further, in respect of Professional Charges , the assessee company had incurred a sum of INR 3,09,90,572/- under the head professional charges . Out of total amount, the Ld.CIT(A) was of the view that a sum of INR 1,04,23,153/- being retainer ship charges paid to various professionals who looked after legal cases etc. should be allocated on pro-rate basis in the ratio of sales on all projects eligible for deduction u/s 80IB(10) of the Act. It is recorded by the Ld.CIT(A) that other professional expenses amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the eligible projects in question were launched in earlier years which stood substantially sold out and were nearing completion during the year under appeal. Ld. Counsel for the assessee drew our attention to the status of the project and also summary of the eligible projects by pointing out to supplementary Paper Book pages No.314 to 329 to buttress the contention that the projects were sold out. It was further contended that since the projects stood substantially sold out in earlier years, the same were financially and operationally independent from head-office and other projects. Further, separate and independent books of accounts were maintained for said projects and all the direct and indirect expenses including borrowing, advertisement cost relating to such projects were allocated in the respective books of accounts. Therefore, it was urged that no further expenses were incurred at head office in relation with the said projects warranting allocation to the eligible units, which was further appreciated by examining the nature of each expense allocated by the Assessing Officer. The contention of the assessee is that since all the direct and indirect expenses are already adde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, the Ground Nos. 3 to 6 of appeal of Revenue against deletion of allocation of expenses to eligible project are dismissed. 21. Ground No.7 raised by the Revenue is against allowing setting off losses against profits of succeeding years. 22. Ld. Sr. DR for the Revenue supported the assessment order and submitted that the Ld.CIT(A) grossly erred in allowing the first setting off against the profits from other eligible projects and holding that balance if any need to be carried forward for set off against the income of the eligible projects. Hence, he contended that the claim of the assessee relating to setting off of loss of INR 45,40,806/- for earlier years was erroneously allowed in the projects qualified for deduction u/s 80IB(10) of the Act against the other income. The AO was directed to allow set off of loss of eligible projects against the income of the eligible units in Assessment Year 2006-07. 23. Per contra, Ld. Senior Counsel for the assessee supported the findings of Ld.CIT(A) and reiterated the submissions as made in written synopsis. The relevant contents of the written synopsis of the assessee are reproduced as under:- During assessment year 2006-07, the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of earlier years which had already been set off against other income in earlier years, could not be notionally set off again while computing current income admissible for deduction u/s 80IB(10) of the Act during relevant year. In the light of binding precedent cited by the Ld. Counsel for the assessee wherein it has been held that loss if already absorbed against the profit of other eligible project could not be notionally brought forward . The Revenue has not brought any contrary material to rebut the contention that losses of earlier year which had already been set off against the income of the eligible projects in earlier years could not be notionally brought forward. Therefore, we do not see any reason to disturb the findings of Ld.CIT(A), the same is hereby affirmed. Thus, Ground No.7 raised by the Revenue is dismissed. 25. Ground No.8 raised by the Revenue is against the deleting of addition u/s 14A of the Act r.w. Rule 8D of the Income Tax Rules, 1962. 26. Ld.Sr.DR for the Revenue supported the assessment order and relied upon the finding of the AO. 27. Per contra, Ld. Senior Counsel for the assessee supported the findings of Ld.CIT(A) and reiterated the submissions as made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Utilities and Power Ltd.: 313 ITR 340 (Bom.) - CIT v. Torrent Power Ltd.: 363 ITR 474 (Guj). As regards old investment, it is respectfully submitted that such investment has been accepted to be made out of interest free funds inasmuch as no disallowance under section 14A of the Act was made in respect thereof in preceding assessment years. It is pertinent to note that the opening investments stood at Rs. 13.45 crores and the opening reserves stood at Rs. 80.02, which were sufficient for making investment in the securities wherefrom the assessee has earned tax exempt income. Reliance in this regard is placed on the following decisions wherein it has been held that where opening advance/investments have been accepted to be made out of interest free funds, no part of the interest bearing borrowed funds can be attributed to such investments/advances: - Godrej Boyce Manufacturing Company Ltd. v. DCIT: 394 ITR 449 (SC) - CIT v. Sridev Enterprises: 192 ITR 165 (Kar.) - CIT vs. Givo Ltd.: ITA No. 941/2010 (Del.) The fresh investment, it is respectfully submitted, has been made from surplus funds available with the assessee and not from borrowed funds. It is pertinent to note that the net ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pectfully submitted that no part of interest expenditure can be disallowed under section 14A of the Act. It is also pertinent to point out that the assessing officer has not made any disallowance under section 14A of the Act in any preceding or succeeding assessment years. In that view of the matter, the ground of appeal raised by the Department deserves to be dismissed. 28. We have heard the rival contentions and perused the material available on record. The Ld.CIT(A) deleted the addition by following the judgement of Hon ble Delhi High Court rendered in the case of CIT, Delhi vs Hindustan Tin Works Ltd. [2010] 187 Taxman 298 (Del.). The Ld.CIT(A) was of the view that no disallowance u/s 14A of the Act should be made in the case of the assessee company as the AO was unable to establish any link between fund borrowed from public deposits and the fund that was used for the purpose of earning of exempt income. We do not find fault with this finding of Ld.CIT(A), even before this Tribunal, no material is furnished suggesting that the investments were made out of borrowed fund and/or any expenditure related to earning of exempt income is debited to profit and loss account by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been elaborately dealt in Revenue s appeal in ITA No.2731/Del/2010 (supra) wherein we have confirmed the finding of Ld. CIT(A). For the same reasoning, Ground No.1 raised by the assessee in this cross-objection is therefore, rejected. 35. Ground No.2 is against upholding of allocation of retainership fee. 36. Ld. Sr. Counsel for the assessee vehemently argued that the Ld.CIT(A) grossly erred in allocation the retainership fee amounting to INR 1,04,23,123/- to eligible projects. He contended this expenditure ought not to have been attributed to the eligible projects as the assessee has been maintaining separate books of accounts for each eligible projects. Further, he reiterated the submissions as made in the written synopsis. 37. On the contrary, Ld. Sr. DR for the Revenue opposed these submissions and supported the assessment order. 38. We have considered the rival contentions and perused the material available on record. We do not see any merit into the contention of the assessee that no services were rendered qua the eligible projects. No detail has been filed regarding nature and scope of services rendered to the assessee by the retainers. In the absence of such evidences, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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