SATGURU CORPORATE SERVICES PRIVATE LIMITED,MUMBAI vs. INCOME TAX OFFICER 11(1)(3), MUMBAI

PER OM PRAKASH KANT, AM

These cross appeals by the Revenue and the assessee respectively are directed against order dated 29.09.2017 passed by

M/s Satguru Corporate Services Pvt. Ltd. M/s Satguru Corporate Services Pvt. Ltd. 2 ITA Nos. 483 & 878/Mum/2018 ITA

the Ld. Commissioner of Income the Ld. Commissioner of Income-tax (Appeals)-18, Mumbai [in short 18, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2012 ‘the Ld. CIT(A)’] for assessment year 2012-13.

M/s Satguru Corporate Services Pvt. Ltd. M/s Satguru Corporate Services Pvt. Ltd. 3 ITA Nos. 483 & 878/Mum/2018 ITA

M/s Satguru Corporate Services Pvt. Ltd. M/s Satguru Corporate Services Pvt. Ltd. 4 ITA Nos. 483 & 878/Mum/2018 ITA

addition to sum of Rs.182 crores, but s addition to sum of Rs.182 crores, but same was not reported for ame was not reported for income-tax purpose as part of the sale consideration tax purpose as part of the sale consideration tax purpose as part of the sale consideration for acquiring the shares of the company and therefore, the Assessing Officer held the shares of the company and therefore, the Assessing Officer held the shares of the company and therefore, the Assessing Officer held the sum of Rs.50,00,45,000/ Rs.50,00,45,000/- as unexplained investment in terms vestment in terms of section 69B of the Act. Fu of the Act. Further, the Assessing Officer noted that rther, the Assessing Officer noted that the assessee company received dividend of Rs.71,25,686/- on the assessee company received dividend of Rs.71,25,686/ the assessee company received dividend of Rs.71,25,686/ investment in shares and mutual funds. However no suo-moto investment in shares and mutual funds. However no investment in shares and mutual funds. However no disallowance was made by the assessee disallowance was made by the assessee for earning the said earning the said exempted income in terms of section 14 in terms of section 14A of the Act A of the Act. The Assessing Officer noted that dividend income was set off by the assessee Officer noted that dividend income was set off by the assessee Officer noted that dividend income was set off by the assessee against expenditure incurred on expenditure incurred on work in progress. The Assessing work in progress. The Assessing Officer invoked Rule 8D of the Income Officer invoked Rule 8D of the Income-tax Rules, 1962 (in short ‘the tax Rules, 1962 (in short ‘the Rules’) and made disallowance Rules’) and made disallowance for direct interest expenses direct interest expenses amounting to Rs.185,78,555/ amounting to Rs.185,78,555/- invoking Ruld 8D(2)(i) and 0.5% of invoking Ruld 8D(2)(i) and 0.5% of the average investment investment in shares/mutual funds etc in shares/mutual funds etc amounting to Rs.45,70,475/- in terms of Rule 8D(2)(iii) of the Rules in terms of Rule 8D(2)(iii) of the Rules. In this in terms of Rule 8D(2)(iii) of the Rules manner total disallowance of Rs.5 manner total disallowance of Rs.5,29,49,030/- was made invoking was made invoking section 14A r.w.r. 8D of the Rules section 14A r.w.r. 8D of the Rules and same was reduced out of the and same was reduced out of the amount of work-in-progress carried forward by the assessee. progress carried forward by the assessee. progress carried forward by the assessee. In the assessment order passed u/s 143(3) of the Act dated 31.03.2015, assessment order passed u/s 143(3) of the Act dated 31.03.2015, assessment order passed u/s 143(3) of the Act dated 31.03.2015, the Assessing Officer asses the Assessing Officer assessed total income under the normal sed total income under the normal provisions at Rs.50,00,10,910/ provisions at Rs.50,00,10,910/-.

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relied to the assessee but the sustained disallowance u/s 14A of the relied to the assessee but the sustained disallowance u/s relied to the assessee but the sustained disallowance u/s Act. Aggrieved, both the Revenue and the assessee are in the appeal both the Revenue and the assessee are in the appeal both the Revenue and the assessee are in the appeal before the Tribunal raising grounds as reproduced above. raising grounds as reproduced above. raising grounds as reproduced above.

M/s Satguru Corporate Services Pvt. Ltd. M/s Satguru Corporate Services Pvt. Ltd. 6 ITA Nos. 483 & 878/Mum/2018 ITA

M/s Satguru Corporate Services Pvt. Ltd. M/s Satguru Corporate Services Pvt. Ltd. 7 ITA Nos. 483 & 878/Mum/2018 ITA

submitted that the Hon’ble Bombay High Cou submitted that the Hon’ble Bombay High Court has restrained the rt has restrained the assessee from creating any third party right assessee from creating any third party rights in aforesaid three flats. He further observed that flats. He further observed that those shareholders have those shareholders have also declared receipt of additional consideration in return of income filed declared receipt of additional consideration in return of income filed declared receipt of additional consideration in return of income filed and offered taxes thereon. Before the and offered taxes thereon. Before the Ld. CIT(A) Ld. CIT(A), the assessee further contended that the said flats under the Escrow agreement further contended that the said flats under the Escrow agreement further contended that the said flats under the Escrow agreement are not owned by the assessee an are not owned by the assessee and owners of those flats have d owners of those flats have not confirmed the Escrow agreement. The Ld. Counsel of the assessee confirmed the Escrow agreement. The Ld. Counsel of the assessee confirmed the Escrow agreement. The Ld. Counsel of the assessee submitted that though Escrow agreeme submitted that though Escrow agreement was agreed not to act agreed not to act upon, however without prejudice the same however without prejudice the same prescribe only further prescribe only further commitment and no present liability on the assessee. Further commitment and no present liability on the assessee. commitment and no present liability on the assessee. submitted that owners of the flat i.e. M/s Starlight Systems LLP, submitted that owners of the flat i.e. M/s Starlight Systems LLP submitted that owners of the flat i.e. M/s Starlight Systems LLP has declined to give any possession to has declined to give any possession to the assessee. Accordingly, the assessee. Accordingly, the Assessing Officer in the case of those shareholders has also the Assessing Officer in the case of those shareholders has also the Assessing Officer in the case of those shareholders has also denied claim of deduction u/s 54 of the Act. denied claim of deduction u/s 54 of the Act. In detailed discussion, detailed discussion, the Ld. CIT(A) has deleted the addition observing as under: the Ld. CIT(A) has deleted the addition observing as under: the Ld. CIT(A) has deleted the addition observing as under:

“10. Decision: I have carefully con 10. Decision: I have carefully considered the contention of the sidered the contention of the Assessing Officer, the oral as well as the written submissions of Assessing Officer, the oral as well as the written submissions of Assessing Officer, the oral as well as the written submissions of the appellant. I have perused the materials on record to name a the appellant. I have perused the materials on record to name a the appellant. I have perused the materials on record to name a few, share purchase agreement, the escrow few, share purchase agreement, the escrow agreement, Interim agreement, Interim order of the Hon'ble High Court of order of the Hon'ble High Court of Bombay, etc. The single issue The single issue here is whether the appellant has expended any amount by way of here is whether the appellant has expended any amount by way of here is whether the appellant has expended any amount by way of transfer of the three flats to the three persons of M/s Somani group transfer of the three flats to the three persons of M/s Somani group transfer of the three flats to the three persons of M/s Somani group in connection with the purchase of shares of M/s Somani & Co. P. in connection with the purchase of shares of M/s Somani & Co. P. in connection with the purchase of shares of M/s Somani & Co. P. Ltd which is not accounted i Ltd which is not accounted in its books which attracts invoking the n its books which attracts invoking the provision of Section provision of Section 69B of the Income tax Act, 1961. The 69B of the Income tax Act, 1961. The shareholders agreement on the basis of which shares of M/s shareholders agreement on the basis of which shares of M/s shareholders agreement on the basis of which shares of M/s Somani & Co. P. Ltd have been transferred to the appellant Co. P. Ltd have been transferred to the appellant Co. P. Ltd have been transferred to the appellant company at an agreed consideration does not speak about any company at an agreed consideration does not speak about any company at an agreed consideration does not speak about any other consideration or remuneration. On the other hand, the Escrow other consideration or remuneration. On the other hand, the Escrow other consideration or remuneration. On the other hand, the Escrow Agreement entered between the appellant company and the three Agreement entered between the appellant company and the three Agreement entered between the appellant company and the three shareholders, Mr shareholders, Mr. Vinay Somani, Mrs. Shreelekha Somani. & Vinay Somani, Mrs. Shreelekha Somani. & Balgopal Trust dictates terms of agreement that each of the three Balgopal Trust dictates terms of agreement that each of the three Balgopal Trust dictates terms of agreement that each of the three

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shareholders will be allotted a flat each in the building complexes shareholders will be allotted a flat each in the building complexes shareholders will be allotted a flat each in the building complexes named as Signature Island/Signia Isles. On the strength of the named as Signature Island/Signia Isles. On the strength of the named as Signature Island/Signia Isles. On the strength of the Escrow Agreement, Escrow Agreement, and being asserted in the affirmative in the and being asserted in the affirmative in the information provided in response to notice u/s 133(6) by the information provided in response to notice u/s 133(6) by the information provided in response to notice u/s 133(6) by the aforesaid three shareholders of Somani Group, the Assessing aforesaid three shareholders of Somani Group, the Assessing aforesaid three shareholders of Somani Group, the Assessing officer made the addition of Rs.50 crores under section 69B of the officer made the addition of Rs.50 crores under section 69B of the officer made the addition of Rs.50 crores under section 69B of the Act stating that the c Act stating that the consideration paid in the form of flats against onsideration paid in the form of flats against sale of shares are not accounted for in the books of the appellant. sale of shares are not accounted for in the books of the appellant. sale of shares are not accounted for in the books of the appellant. 10.1 On a careful study of the Escrow agreement, it is observed On a careful study of the Escrow agreement, it is observed On a careful study of the Escrow agreement, it is observed that the agreement executed on 06.06.2011 is between the that the agreement executed on 06.06.2011 is between the that the agreement executed on 06.06.2011 is between the appellant company on appellant company on the One part and thrée others, Mr. Vinay the One part and thrée others, Mr. Vinay Somani, Mrs. Shreelekha Somani & Somani, Mrs. Shreelekha Somani & Balgopal Trust as the other Balgopal Trust as the other patt and Shri Anil Harish, Senior Partner of M/s D.M.Harish & patt and Shri Anil Harish, Senior Partner of M/s D.M.Harish & patt and Shri Anil Harish, Senior Partner of M/s D.M.Harish & Company as the solicitor. The terms of agreement are that the Company as the solicitor. The terms of agreement are that the Company as the solicitor. The terms of agreement are that the Solicitor is to (a) Release t Solicitor is to (a) Release the letter of allotment in respect of Flat No he letter of allotment in respect of Flat No B-504 in Signature Island to Vinay on payment of 50% of the 504 in Signature Island to Vinay on payment of 50% of the 504 in Signature Island to Vinay on payment of 50% of the Purchase price of the land at Oshiwara by Satguru to Somanis Purchase price of the land at Oshiwara by Satguru to Somanis Purchase price of the land at Oshiwara by Satguru to Somanis under the Agreement. (b) Release the letter of allotment in respect of under the Agreement. (b) Release the letter of allotment in respect of under the Agreement. (b) Release the letter of allotment in respect of Flat No 702 in Sign Flat No 702 in Signia Isles to Vinay on payment of further 25% ia Isles to Vinay on payment of further 25% (making a total of 75%) of the Purchase price of the land at (making a total of 75%) of the Purchase price of the land at (making a total of 75%) of the Purchase price of the land at Oshiwara by Satguruto Somanis under the Agreement and (c) Oshiwara by Satguruto Somanis under the Agreement and (c) Oshiwara by Satguruto Somanis under the Agreement and (c) Release the letter of allotment in respect of Flat No 301 in Signia Release the letter of allotment in respect of Flat No 301 in Signia Release the letter of allotment in respect of Flat No 301 in Signia Isles to Vinay on payment Isles to Vinay on payment of the final balance amount) of the of the final balance amount) of the Purchase price of the land at Oshiwara by Satguru to Somanis Purchase price of the land at Oshiwara by Satguru to Somanis Purchase price of the land at Oshiwara by Satguru to Somanis under the Agreement. The release of the third flat shall be made on under the Agreement. The release of the third flat shall be made on under the Agreement. The release of the third flat shall be made on condition that Vinay pays to Satgurus Rs.7,46,59,302/ condition that Vinay pays to Satgurus Rs.7,46,59,302/-. All the . All the above flats are stated to above flats are stated to be under construction. On verification of be under construction. On verification of the so called Allotment Letters, it is seen that these are (*) the so called Allotment Letters, it is seen that these are (*) the so called Allotment Letters, it is seen that these are (*) application forms making requisition for provisional registration/ application forms making requisition for provisional registration/ application forms making requisition for provisional registration/ enrolment for a unit in the Signature Island and agree to sign and enrolment for a unit in the Signature Island and agree to sign and enrolment for a unit in the Signature Island and agree to sign and execute the allto execute the alltoment as and when desired by the developer. (ii) the ment as and when desired by the developer. (ii) the Developer is mentioned as M/s. Developer is mentioned as M/s. Starlight Systems Pvt. Ltd. (iii) The Starlight Systems Pvt. Ltd. (iii) The application forms are blank and without signature. (iv) In each of application forms are blank and without signature. (iv) In each of application forms are blank and without signature. (iv) In each of the Personal Form attached to the application form only three items the Personal Form attached to the application form only three items the Personal Form attached to the application form only three items are filled, the name as the sole/first applicant without photo, the are filled, the name as the sole/first applicant without photo, the are filled, the name as the sole/first applicant without photo, the tentative unit No. and an amount under sale price of saleable area tentative unit No. and an amount under sale price of saleable area tentative unit No. and an amount under sale price of saleable area and the other portions in the two pages are blank, unsigned and and the other portions in the two pages are blank, unsigned and and the other portions in the two pages are blank, unsigned and undated. (v) The continuation of the Personal Form titled undated. (v) The continuation of the Personal Form titled as Broad as Broad Terms and Conditions for Provisional Allotment of a unit in Terms and Conditions for Provisional Allotment of a unit in Terms and Conditions for Provisional Allotment of a unit in Signature Island is also unsigned and undated. In the Receipt Signature Island is also unsigned and undated. In the Receipt Signature Island is also unsigned and undated. In the Receipt portion which is signed by M/s Sarlight System Pvt. portion which is signed by M/s Sarlight System Pvt. Ltd., the space Ltd., the space for specifying the amount "received as booking amount" i for specifying the amount "received as booking amount" is not filled s not filled and left blank. The above findings reveal that the documents, and left blank. The above findings reveal that the documents, and left blank. The above findings reveal that the documents, which are the basis for the Escrow Agreement do not stand to be basis for the Escrow Agreement do not stand to be executable as they are ive and incomplete as pointed out above. On executable as they are ive and incomplete as pointed out above. On executable as they are ive and incomplete as pointed out above. On the face of it, these documents cannot be treated the face of it, these documents cannot be treated or termed as or termed as Allotment Letter. Such application forms, do not create any right Allotment Letter. Such application forms, do not create any right Allotment Letter. Such application forms, do not create any right over a property unless the transaction takes place through over a property unless the transaction takes place through over a property unless the transaction takes place through registration with the concerned authority. As all the concerned registration with the concerned authority. As all the concerned registration with the concerned authority. As all the concerned signatories have not signed them, the so called allotm signatories have not signed them, the so called allotment letters/ ent letters/ documents are not legally enforceable. Further this form was documents are not legally enforceable. Further this form was documents are not legally enforceable. Further this form was

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signed by M/s Star Light Systems Pvt. Ltd., who is not a party to signed by M/s Star Light Systems Pvt. Ltd., who is not a party to signed by M/s Star Light Systems Pvt. Ltd., who is not a party to the so called Escrow Agreement. the so called Escrow Agreement. 10.2. Further in para 13 of the Interim Order dated 14.06.2014, the 10.2. Further in para 13 of the Interim Order dated 14.06.2014, the 10.2. Further in para 13 of the Interim Order dated 14.06.2014, the Hon' ble High Co Hon' ble High Court of Bombay has given a finding as "The urt of Bombay has given a finding as "The Defendants have referred to the supplementary share purchase Defendants have referred to the supplementary share purchase Defendants have referred to the supplementary share purchase agreement as also supplementary escrow agreement proposed to agreement as also supplementary escrow agreement proposed to agreement as also supplementary escrow agreement proposed to be entered between the parties, purportedly to give effect to the be entered between the parties, purportedly to give effect to the be entered between the parties, purportedly to give effect to the understanding between the understanding between the parties concerning payment of the parties concerning payment of the additional consideration of Rs.50 crores, to claim that the suit additional consideration of Rs.50 crores, to claim that the suit additional consideration of Rs.50 crores, to claim that the suit transaction was to be accomplished in the manner proposed transaction was to be accomplished in the manner proposed transaction was to be accomplished in the manner proposed therein. It is however, a matter of fact that these documents were therein. It is however, a matter of fact that these documents were therein. It is however, a matter of fact that these documents were not executed between the parties not executed between the parties. These documents, at any rate, These documents, at any rate, merely reflect on the particulars of the modalities and do not merely reflect on the particulars of the modalities and do not merely reflect on the particulars of the modalities and do not detract from the substance of the commercial detract from the substance of the commercial agreement between agreement between the parties. The so called suppression of these documents, which at the parties. The so called suppression of these documents, which at the parties. The so called suppression of these documents, which at any rate, were admittedly not any rate, were admittedly not executed between the parties, is executed between the parties, is neither here nor there". neither here nor there". 10.3 From the perusal of letter dated 07.11.2016 of Shri. Vinay 10.3 From the perusal of letter dated 07.11.2016 of Shri. Vinay 10.3 From the perusal of letter dated 07.11.2016 of Shri. Vinay Somani addressed to the ITO Ward Somani addressed to the ITO Ward-11(1)(3), Mumbai, under whose 11(1)(3), Mumbai, under whose jurisdiction, the appellant is assessed to income tax, to the specific jurisdiction, the appellant is assessed to income tax, to the specific jurisdiction, the appellant is assessed to income tax, to the specific query raised whether the transaction with the appellant has been query raised whether the transaction with the appellant has been query raised whether the transaction with the appellant has been registered and whether the possession of the flats have been given registered and whether the possession of the flats have been given registered and whether the possession of the flats have been given to him and his wife and the trust, he replied that in October 2013, to him and his wife and the trust, he replied that in October 2013, to him and his wife and the trust, he replied that in October 2013, when communication was sent for registering the three sa when communication was sent for registering the three sale deeds, le deeds, the developer, M/s Starlight Systems (1) LLP to whom M/s Starlight the developer, M/s Starlight Systems (1) LLP to whom M/s Starlight the developer, M/s Starlight Systems (1) LLP to whom M/s Starlight salorer ou stems (I) Pvt. Ltd has handed over the building assets stems (I) Pvt. Ltd has handed over the building assets stems (I) Pvt. Ltd has handed over the building assets denied the transaction. Thereafter he was constrained to file a suit denied the transaction. Thereafter he was constrained to file a suit denied the transaction. Thereafter he was constrained to file a suit before the Hor'ble Bombay High Court, Mumbai before the Hor'ble Bombay High Court, Mumbai. Further it is stated . Further it is stated that the Occupation Certificate for the flats have been issued in that the Occupation Certificate for the flats have been issued in that the Occupation Certificate for the flats have been issued in November, 2015 and that they have filed an additional Notice of November, 2015 and that they have filed an additional Notice of November, 2015 and that they have filed an additional Notice of Motion applying for possession of the flats or sealing the same by a Motion applying for possession of the flats or sealing the same by a Motion applying for possession of the flats or sealing the same by a Court Receiver. In the assessment Court Receiver. In the assessment made u/s 143(3) in the case of made u/s 143(3) in the case of each of the aforesaid three persons/ parties for A.Y. 2012 each of the aforesaid three persons/ parties for A.Y. 2012 each of the aforesaid three persons/ parties for A.Y. 2012-13, the claim for deduction u/s 54 on the plea that out of the proceeds claim for deduction u/s 54 on the plea that out of the proceeds claim for deduction u/s 54 on the plea that out of the proceeds received from sale of shares, investment has been made in the received from sale of shares, investment has been made in the received from sale of shares, investment has been made in the purchase of the said flats have purchase of the said flats have been denied on the ground that the been denied on the ground that the flats have not been purchased during the year relevant to A.Y. flats have not been purchased during the year relevant to A.Y. flats have not been purchased during the year relevant to A.Y. 2012-13. The appellant company has purchased shares of M/s 13. The appellant company has purchased shares of M/s 13. The appellant company has purchased shares of M/s Somani & Company from the shareholders vide agreement dated Somani & Company from the shareholders vide agreement dated Somani & Company from the shareholders vide agreement dated 04.01.2012 wherein it was agreed that t 04.01.2012 wherein it was agreed that the shares shall be he shares shall be transferred in favour of the appellant for a total consideration of Rs. transferred in favour of the appellant for a total consideration of Rs. transferred in favour of the appellant for a total consideration of Rs. 182 crores. The appellant has entered into a separate Escrow 182 crores. The appellant has entered into a separate Escrow 182 crores. The appellant has entered into a separate Escrow agreement with three share holders namely Mr. Vinay Somani, agreement with three share holders namely Mr. Vinay Somani, agreement with three share holders namely Mr. Vinay Somani, Smt. Shrilekha Somani & Balgopal Trust, as p Smt. Shrilekha Somani & Balgopal Trust, as per which it was er which it was agreed between the three share holders on one side and the agreed between the three share holders on one side and the agreed between the three share holders on one side and the appellant on the other side that over and above the consideration appellant on the other side that over and above the consideration appellant on the other side that over and above the consideration mentioned in share transfer agreement, the appellant shall also mentioned in share transfer agreement, the appellant shall also mentioned in share transfer agreement, the appellant shall also give three flats worth Rs.50 crore to the three sha give three flats worth Rs.50 crore to the three share holders. re holders. However the fact is that this escrow agreement was not honoured However the fact is that this escrow agreement was not honoured However the fact is that this escrow agreement was not honoured by the appellant and a dispute arose between the appellant and by the appellant and a dispute arose between the appellant and by the appellant and a dispute arose between the appellant and

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the three parties which is pending for adjudication before Hon ble the three parties which is pending for adjudication before Hon ble the three parties which is pending for adjudication before Hon ble Bombay High Court. There is no evidence on record Bombay High Court. There is no evidence on record to prove that to prove that the flats were actually allotted to the aforesaid three shareholders. the flats were actually allotted to the aforesaid three shareholders. the flats were actually allotted to the aforesaid three shareholders. 10.4 Further on careful study of the share purchase agreement 10.4 Further on careful study of the share purchase agreement 10.4 Further on careful study of the share purchase agreement dated 04.01.2012, entered between Shri Vishal Somani and the 04.01.2012, entered between Shri Vishal Somani and the 04.01.2012, entered between Shri Vishal Somani and the other shareholders of M/s Somani & Company Pvt. L other shareholders of M/s Somani & Company Pvt. Ltd. listed in td. listed in the First schedule of the agreement collectively referred to as the the First schedule of the agreement collectively referred to as the the First schedule of the agreement collectively referred to as the 'Sellers' of the first part, and Shri. 'Sellers' of the first part, and Shri. Maheshkumar Somani and four Maheshkumar Somani and four other persons enumerated therein referred to as the Directors' of the other persons enumerated therein referred to as the Directors' of the other persons enumerated therein referred to as the Directors' of the second part and Satguru Corporate Ser second part and Satguru Corporate Services Pvt Ltd., the appellant vices Pvt Ltd., the appellant company referred to as the 'Purchasers' of the third part, it is stated company referred to as the 'Purchasers' of the third part, it is stated company referred to as the 'Purchasers' of the third part, it is stated that the Sellers are the only members and registered shareholders, that the Sellers are the only members and registered shareholders, that the Sellers are the only members and registered shareholders, holding the entire 100% paid holding the entire 100% paid-up 20,000 equity share capital of Rs. up 20,000 equity share capital of Rs. 100/- each of M/s So each of M/s Somani & Company Pvt. Ltd., referred to as the mani & Company Pvt. Ltd., referred to as the 'Company'. It is also declared that the five Directors are the only 'Company'. It is also declared that the five Directors are the only 'Company'. It is also declared that the five Directors are the only directors of the Company as on the date of execution of those directors of the Company as on the date of execution of those directors of the Company as on the date of execution of those present. The Company is ceased and possessed of pieces and present. The Company is ceased and possessed of pieces and present. The Company is ceased and possessed of pieces and parcel of land at vill parcel of land at village Goregaon, Taluka Borivali, which is age Goregaon, Taluka Borivali, which is referred to as the first property and of the land in village Majas, referred to as the first property and of the land in village Majas, referred to as the first property and of the land in village Majas, Taluka Andheri referred to as the second property. The first and Taluka Andheri referred to as the second property. The first and Taluka Andheri referred to as the second property. The first and second properties are collectively referred to as the said properties. second properties are collectively referred to as the said properties. second properties are collectively referred to as the said properties. The Sellers and Directors have represented to the purchaser the and Directors have represented to the purchaser the and Directors have represented to the purchaser the properties were divided into nine plots and six out of the nine plots properties were divided into nine plots and six out of the nine plots properties were divided into nine plots and six out of the nine plots have been conveyed and transferred to its group entities and two to have been conveyed and transferred to its group entities and two to have been conveyed and transferred to its group entities and two to co-operative housing societies and one plot is remaining with the operative housing societies and one plot is remaining with the operative housing societies and one plot is remaining with the company. The Sellers have agreed to sell to the Purchasers and the company. The Sellers have agreed to sell to the Purchasers and the company. The Sellers have agreed to sell to the Purchasers and the Purchasers have agreed to acquire from the Sellers 100% of the Purchasers have agreed to acquire from the Sellers 100% of the Purchasers have agreed to acquire from the Sellers 100% of the equity shares of the Company held by the Sellers free from all equity shares of the Company held by the Sellers free from all equity shares of the Company held by the Sellers free from all encumbrances and claims at or for the Lump encumbrances and claims at or for the Lump-sum consideration of sum consideration of Rs.182,00,00,000/ Rs.182,00,00,000/- and on the terms and conditions mutually and on the terms and conditions mutually agreed upon by and between them. Thereafter, it is declared, agreed upon by and between them. Thereafter, it is declared, agreed upon by and between them. Thereafter, it is declared, confirmed and recorded that the transaction of transfer of the confirmed and recorded that the transaction of transfer of the confirmed and recorded that the transaction of transfer of the shares and handing over of the management of the company was shares and handing over of the management of the company was shares and handing over of the management of the company was completed on the said day/date and in the manner set out. Further on the said day/date and in the manner set out. Further on the said day/date and in the manner set out. Further in Clause 6 (xv) of the agreement it is stated that "there are no in Clause 6 (xv) of the agreement it is stated that "there are no in Clause 6 (xv) of the agreement it is stated that "there are no agreements, contracts, arrangements with any individual, firm, agreements, contracts, arrangements with any individual, firm, agreements, contracts, arrangements with any individual, firm, body corporate or any service contracts with any directors or body corporate or any service contracts with any directors or body corporate or any service contracts with any directors or executives or executives of company which are valid or subsisting." s or executives of company which are valid or subsisting." s or executives of company which are valid or subsisting." The above cast a question on the survival of the Escrow Agreement The above cast a question on the survival of the Escrow Agreement The above cast a question on the survival of the Escrow Agreement in the wake of the above clause, the Share purchase agreement in the wake of the above clause, the Share purchase agreement in the wake of the above clause, the Share purchase agreement being a vital document on the basis of which the Hon'ble High being a vital document on the basis of which the Hon'ble High being a vital document on the basis of which the Hon'ble High Court of Bombay has accorded approval for the taking over of the f Bombay has accorded approval for the taking over of the f Bombay has accorded approval for the taking over of the aforesaid company from the Somanis by the appellant company. aforesaid company from the Somanis by the appellant company. aforesaid company from the Somanis by the appellant company. 10.5 Further on perusal of page 146 10.5 Further on perusal of page 146-209 of the paper book, it is 209 of the paper book, it is seen that the appellant has purchased land from six parties, who seen that the appellant has purchased land from six parties, who seen that the appellant has purchased land from six parties, who were also shareholders of M/s Somani & Co. Ltd. and has paid so shareholders of M/s Somani & Co. Ltd. and has paid so shareholders of M/s Somani & Co. Ltd. and has paid separate consideration for acquisition of the said land by entering separate consideration for acquisition of the said land by entering separate consideration for acquisition of the said land by entering into separate conveyance agreement, details of into separate conveyance agreement, details of which are as under: which are as under:

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On perusal of these conveyance deeds it is noticed that the acqu On perusal of these conveyance deeds it is noticed that the acqu On perusal of these conveyance deeds it is noticed that the acquisition of land from the share holders is a separate transaction and not related of land from the share holders is a separate transaction and not related of land from the share holders is a separate transaction and not related to the acquisition of shares. to the acquisition of shares. 10.6 The Assessing officer made the addition under section 69B of the The Assessing officer made the addition under section 69B of the The Assessing officer made the addition under section 69B of the Act stating that the consideration paid in the form of flats against sale Act stating that the consideration paid in the form of flats against sale Act stating that the consideration paid in the form of flats against sale of shares are not accounted for in the books of the appellant. At this of shares are not accounted for in the books of the appellant. At this of shares are not accounted for in the books of the appellant. At this juncture, it will not be out of place to refer to the provisions of section juncture, it will not be out of place to refer to the provisions of section juncture, it will not be out of place to refer to the provisions of section 69B of the Act, which reads as under: 69B of the Act, which reads as under: "Where in any financial year the assessee has made investments or is "Where in any financial year the assessee has made investments or is "Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, und to be the owner of any bullion, jewellery or other valuable article, und to be the owner of any bullion, jewellery or other valuable article, and the 6 Assessing! Officer finds that the amount expended on making and the 6 Assessing! Officer finds that the amount expended on making and the 6 Assessing! Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other such investments or in acquiring such bullion, jewellery or other such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in valuable article exceeds the amount recorded in this behalf in the books this behalf in the books of account maintained by the assessee for any source of income, and of account maintained by the assessee for any source of income, and of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the the assessee offers no explanation about such excess amount or the the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the 1 Assessing] explanation offered by him is not, in the opinion of the 1 Assessing] explanation offered by him is not, in the opinion of the 1 Assessing] Officer, satisfactory, th Officer, satisfactory, the excess amount may be deemed to be the e excess amount may be deemed to be the income of the assessee for such financial year." From a plain reading of income of the assessee for such financial year." From a plain reading of income of the assessee for such financial year." From a plain reading of the aforesaid section it can be noted that existence of three conditions is the aforesaid section it can be noted that existence of three conditions is the aforesaid section it can be noted that existence of three conditions is essential to invoke the provisions of section 69B of the Act: essential to invoke the provisions of section 69B of the Act: (i) The appellant should have made investment or be found to be owner he appellant should have made investment or be found to be owner he appellant should have made investment or be found to be owner of any bullion, jewellery or other valuable article; of any bullion, jewellery or other valuable article; (ii) The amount expended on making such investments or in acquiring ) The amount expended on making such investments or in acquiring ) The amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount such bullion, jewellery or other valuable article exceeds the amount such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the ecorded in this behalf in the books of account maintained by the ecorded in this behalf in the books of account maintained by the assessee for any source of income; assessee for any source of income; (iii) The assessee offers no explanation about such excess amount or the ) The assessee offers no explanation about such excess amount or the ) The assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing explanation offered by him is not, in the opinion of the Assessing explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory. ctory. In the appellant's case, the documents do not speak about the appellant In the appellant's case, the documents do not speak about the appellant In the appellant's case, the documents do not speak about the appellant acquiring or investing in the said properties ie. the flats. Hence, the first acquiring or investing in the said properties ie. the flats. Hence, the first acquiring or investing in the said properties ie. the flats. Hence, the first condition is not present as the appellant company has neither made condition is not present as the appellant company has neither made condition is not present as the appellant company has neither made investment in acquiring or purch investment in acquiring or purchasing the said flats nor is the owner of asing the said flats nor is the owner of

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the said three flats. Thus, it follows that the second and third limbs do the said three flats. Thus, it follows that the second and third limbs do the said three flats. Thus, it follows that the second and third limbs do not arise. Hence the appellant company has no legal right to transfer Hence the appellant company has no legal right to transfer Hence the appellant company has no legal right to transfer the said flats to the three shareholders. The flats belong to a separat the said flats to the three shareholders. The flats belong to a separat the said flats to the three shareholders. The flats belong to a separate entity viz. M/s. Starlight Systems Pvt Ltd/ M/s. Starlight Systems (1) entity viz. M/s. Starlight Systems Pvt Ltd/ M/s. Starlight Systems (1) entity viz. M/s. Starlight Systems Pvt Ltd/ M/s. Starlight Systems (1) LLP, who is neither a party/ signatory to the Escrow Agreement nor to LLP, who is neither a party/ signatory to the Escrow Agreement nor to LLP, who is neither a party/ signatory to the Escrow Agreement nor to the Shareholders Agreement. the Shareholders Agreement. As the ownership is not there, the As the ownership is not there, the appellant is not in a position to exchange them for shares or include appellant is not in a position to exchange them for shares or include appellant is not in a position to exchange them for shares or include them in the purchase price of the shares of M/s Somani & Co. P. Ltd them in the purchase price of the shares of M/s Somani & Co. P. Ltd them in the purchase price of the shares of M/s Somani & Co. P. Ltd purchased by the appellant. Only when the appellant acquires them or purchased by the appellant. Only when the appellant acquires them or purchased by the appellant. Only when the appellant acquires them or makes advance makes advance payment for buying, the requirement for accounting payment for buying, the requirement for accounting them in its books of account arises and if the amounts recorded in the them in its books of account arises and if the amounts recorded in the them in its books of account arises and if the amounts recorded in the books is lesser than the actual price and the appellant offers no books is lesser than the actual price and the appellant offers no books is lesser than the actual price and the appellant offers no explanation about such excess, amount or the explanation offered by explanation about such excess, amount or the explanation offered by explanation about such excess, amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, Section him is not, in the opinion of the Assessing Officer, satisfactory, Section him is not, in the opinion of the Assessing Officer, satisfactory, Section 69B can be invoked. In the appellant's case I find such a situation of 69B can be invoked. In the appellant's case I find such a situation of 69B can be invoked. In the appellant's case I find such a situation of facts is not there. facts is not there. Hence to form an opinion that the amount expended Hence to form an opinion that the amount expended on purchase of shares of M/s. Somani & C on purchase of shares of M/s. Somani & Company by the appellant is ompany by the appellant is higher by Rs. 50 Crore in the form of allotment of flats to the three higher by Rs. 50 Crore in the form of allotment of flats to the three higher by Rs. 50 Crore in the form of allotment of flats to the three shareholders is unfounded. Transfer of an immoveable property such as shareholders is unfounded. Transfer of an immoveable property such as shareholders is unfounded. Transfer of an immoveable property such as a house or a flat can take place via registration of the sale deed as per a house or a flat can take place via registration of the sale deed as per a house or a flat can take place via registration of the sale deed as per the Registration Act 1908. From the perusal of the assessment order it n Act 1908. From the perusal of the assessment order it n Act 1908. From the perusal of the assessment order it is not clear as to whether the Ld. Assessing Officer wants to make is not clear as to whether the Ld. Assessing Officer wants to make is not clear as to whether the Ld. Assessing Officer wants to make addition u/s 69B of the Act on account of purchase of shares or addition u/s 69B of the Act on account of purchase of shares or addition u/s 69B of the Act on account of purchase of shares or purchase of flats which was to be given to the three shareholders as purchase of flats which was to be given to the three shareholders as purchase of flats which was to be given to the three shareholders as additional consideration. As far as purchase of flats is concerned, M/s additional consideration. As far as purchase of flats is concerned, M/s additional consideration. As far as purchase of flats is concerned, M/s Star Light Systems Pvt. Ltd. has duly informed the Assessing Officer Star Light Systems Pvt. Ltd. has duly informed the Assessing Officer Star Light Systems Pvt. Ltd. has duly informed the Assessing Officer vide letter dated 25.03.2015, copy of which is placed at page 137 of the vide letter dated 25.03.2015, copy of which is placed at page 137 of the vide letter dated 25.03.2015, copy of which is placed at page 137 of the paper book, that no flat as agreed upon ha paper book, that no flat as agreed upon has been allotted to these three s been allotted to these three shareholders. The application form addressed to M/s Star Light shareholders. The application form addressed to M/s Star Light shareholders. The application form addressed to M/s Star Light Systems Pvt Ltd to allot flats cannot be equated to be a legally valid Systems Pvt Ltd to allot flats cannot be equated to be a legally valid Systems Pvt Ltd to allot flats cannot be equated to be a legally valid document to evidence transfer of the flats or ownership of the flats in document to evidence transfer of the flats or ownership of the flats in document to evidence transfer of the flats or ownership of the flats in the absence of regi the absence of registration to that effect. Further the dispute between stration to that effect. Further the dispute between the parties before Hon'ble Bombay High Court is another proof that the the parties before Hon'ble Bombay High Court is another proof that the the parties before Hon'ble Bombay High Court is another proof that the flats were not allotted as per the Escrow Agreement. Since the flats flats were not allotted as per the Escrow Agreement. Since the flats flats were not allotted as per the Escrow Agreement. Since the flats were not allotted or parted with on behalf of the appellant dur were not allotted or parted with on behalf of the appellant dur were not allotted or parted with on behalf of the appellant during the year, to construe that additional consideration has been given by the year, to construe that additional consideration has been given by the year, to construe that additional consideration has been given by the appellant is a misplaced interpretation of facts. Mere commitment in an appellant is a misplaced interpretation of facts. Mere commitment in an appellant is a misplaced interpretation of facts. Mere commitment in an agreement between two private parties, which was not acted upon for agreement between two private parties, which was not acted upon for agreement between two private parties, which was not acted upon for the reasons best known to the parties the reasons best known to the parties where no transaction having where no transaction having financial value has taken place cannot be the basis for making addition financial value has taken place cannot be the basis for making addition financial value has taken place cannot be the basis for making addition u/s 69B of the Act. Since the appellant was not the owner of the flats, u/s 69B of the Act. Since the appellant was not the owner of the flats, u/s 69B of the Act. Since the appellant was not the owner of the flats, therefore the second option of giving these flats as additional therefore the second option of giving these flats as additional therefore the second option of giving these flats as additional consideration to the consideration to the aforesaid parties of Somani Group for purchase of aforesaid parties of Somani Group for purchase of shares is neither conceivable nor feasible. shares is neither conceivable nor feasible. 10.7 The suit pending before the Hon'ble High Court of Bombay shows 10.7 The suit pending before the Hon'ble High Court of Bombay shows 10.7 The suit pending before the Hon'ble High Court of Bombay shows that the appellant has not expended the said additional consideration that the appellant has not expended the said additional consideration that the appellant has not expended the said additional consideration during the year and so during the year and so accounting for it in the books of the appellant accounting for it in the books of the appellant will not arise. It is further important to note that addition u/s 69B can will not arise. It is further important to note that addition u/s 69B can will not arise. It is further important to note that addition u/s 69B can be made only in the year when such investment was made by be made only in the year when such investment was made by be made only in the year when such investment was made by expending expending expending the the the consideration. consideration. consideration. The The The appellant appellant appellant has has has not not not incurred incurred incurred expenditure on t expenditure on the said flats as they were not purchased by it during he said flats as they were not purchased by it during

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the current assessment year in appeal. The appellant has expended Rs. the current assessment year in appeal. The appellant has expended Rs. the current assessment year in appeal. The appellant has expended Rs. 182.82 crores, which is duly accounted in the books of 182.82 crores, which is duly accounted in the books of 182.82 crores, which is duly accounted in the books of accounts. Therefore in my opinion, considering the above facts, no addition c Therefore in my opinion, considering the above facts, no addition c Therefore in my opinion, considering the above facts, no addition can be made u/s 69B in the current assessment year. In view of the above, the made u/s 69B in the current assessment year. In view of the above, the made u/s 69B in the current assessment year. In view of the above, the Assessing Officer is directed to delete the addition of Rs.50 crores made Assessing Officer is directed to delete the addition of Rs.50 crores made Assessing Officer is directed to delete the addition of Rs.50 crores made u/s 69B of the Act. Accordingly, the grounds of appeal at No.5.1 to 5. 3 u/s 69B of the Act. Accordingly, the grounds of appeal at No.5.1 to 5. 3 u/s 69B of the Act. Accordingly, the grounds of appeal at No.5.1 to 5. 3 are allowed.” e Ld. CIT-DR submitted that, firstly, firstly, the Ld. 7.1 before us , the Ld. CIT CIT(A) has read the CIT(A) has read the “share purchase” agreement and agreement and “escrow agreement” separately and not in agreement” separately and not in sink. According to him under the sink. According to him under the Escrow agreement the parties has duly agreed for additional Escrow agreement the parties has duly agreed for additional Escrow agreement the parties has duly agreed for additional consideration was to be p was to be paid in phased manner on completion of aid in phased manner on completion of part share purchase agreement. He part share purchase agreement. He submitted that the said submitted that the said residential flats were kept in Escrow account with Shri were kept in Escrow account with Shri were kept in Escrow account with Shri Anil Harish , Senior partner of M/s DM Harish and Company on 6/06/2011 and Senior partner of M/s DM Harish and Company on 6/06/2011 and Senior partner of M/s DM Harish and Company on 6/06/2011 and escrow agreement was accordin escrow agreement was accordingly drawn. On completion of the n completion of the share purchase agreement, the agreement, the Escrow was released and thus released and thus considerations in money as well as three flats (in kind) were considerations in money as well as three flats (in kind) were considerations in money as well as three flats (in kind) were assigned to the ‘Somanis’ by the assessee. Therfore, the amount not assigned to the ‘Somanis’ by the assessee. Therfore, the amount not assigned to the ‘Somanis’ by the assessee. Therfore, the amount not shown by the assessee is liable fo shown by the assessee is liable for taxation u/s 69B of the Act. r taxation u/s 69B of the Act. Secondly, the Ld. DR also relied on the order of the Hon’ble he Ld. DR also relied on the order of the Hon’ble he Ld. DR also relied on the order of the Hon’ble Bombay High Court dated 14.06.2014 under which the assessee Bombay High Court dated 14.06.2014 under which the assessee Bombay High Court dated 14.06.2014 under which the assessee has been restrained from creating third party rights in respect of has been restrained from creating third party rights in respect of has been restrained from creating third party rights in respect of those three flats. Thirdly Thirdly, the Ld. DR submitted that R submitted that rejection of deduction u/s 54 in the case of the shareholder deduction u/s 54 in the case of the shareholder(s) under reference (s) under reference cannot be a basis for allowing relief to the assessee. be a basis for allowing relief to the assessee. be a basis for allowing relief to the assessee.

7.2 On the other hand, the Ld. Counsel of the assessee relied on On the other hand, the Ld. Counsel of the assessee relied on On the other hand, the Ld. Counsel of the assessee relied on the order of the Ld. CIT(A) and submit the order of the Ld. CIT(A) and submitted that when no ted that when no

M/s Satguru Corporate Services Pvt. Ltd. M/s Satguru Corporate Services Pvt. Ltd. 14 ITA Nos. 483 & 878/Mum/2018 ITA

consideration has been paid in the form of t consideration has been paid in the form of the flats to those he flats to those shareholders, the addition made by the Assessing Officer is not he addition made by the Assessing Officer is not he addition made by the Assessing Officer is not justified. Regarding the re justified. Regarding the restrain order of the Hon’ble Bombay High train order of the Hon’ble Bombay High Court, the Ld. Counsel submitted that the Court, the Ld. Counsel submitted that the assessee is not the owner assessee is not the owner of the said flats and therefore, restrain does not apply and further of the said flats and therefore, restrain does not apply and further of the said flats and therefore, restrain does not apply and further submitted that in case the assessee losses then assessee will pay submitted that in case the assessee losses then assessee will pay submitted that in case the assessee losses then assessee will pay the additional consideration out of its own sources which would not the additional consideration out of its own sources which would not the additional consideration out of its own sources which would not warrant u/s 69B of the Act. warrant u/s 69B of the Act.

7.3 We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. We find that dispute and perused the relevant material on record. dispute and perused the relevant material on record. the Ld. Assessing Officer has relied on firstly firstly, the “Escrow the Ld. Assessing Officer has relied on agreement”, secondly secondly, declaration of additional consideration declaration of additional consideration by the shareholders in their return of income filed f in their return of income filed f in their return of income filed for the relevant assessment year, thirdly thirdly, restrain order issued by the Hon’ble restrain order issued by the Hon’ble Bombay High Court, but Bombay High Court, but we find that in the share purchase we find that in the share purchase agreement there is no reference of agreement there is no reference of “Escrow agreement Escrow agreement” and assessee has not made any compliance of the said Escrow agreement , which has not made any compliance of the said Escrow agreement has not made any compliance of the said Escrow agreement is under litigation before the Hon’ble Bombay High Court. In such is under litigation before the Hon’ble Bombay High Court. is under litigation before the Hon’ble Bombay High Court. circumstances, it cannot be held that assessee has paid additional circumstances, it cannot be held that assessee has paid additional circumstances, it cannot be held that assessee has paid additional consideration for purchase of the shares. In absence of any proof of consideration for purchase of the shares. In absence o consideration for purchase of the shares. In absence o payment of additional sale consideration payment of additional sale consideration, particularly when particularly when owner(s) of the flat i.e M/s Starlight Systems LLP has declined LLP has declined request of the three request of the three shareholders for allotment of flats to them. for allotment of flats to them. Further documents Further documents relating to allotment of those fl relating to allotment of those flats to three

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shareholders have been observed to be defective by the Ld. CIT(A) shareholders have been observed to be defective by the Ld. CIT(A) shareholders have been observed to be defective by the Ld. CIT(A) and this fact has not been has not been controverted by the Ld. DR by the Ld. DR. Be that as it may be, it is evident that those three flats belonging to the t is evident that those three flats belonging to the t is evident that those three flats belonging to the M/s Starlight security LLP mentioned in the Es LLP mentioned in the Escrow agreement has crow agreement has ultimately not been given to not been given to those three shareholders by the those three shareholders by the assessee on anyone on behalf of the assessee assessee on anyone on behalf of the assessee and matter being and matter being under litigation before the Hon’ble Bombay High Court, no addition under litigation before the Hon’ble Bombay High Court, no addition under litigation before the Hon’ble Bombay High Court, no addition for unexplained investment could survive in the hands of the for unexplained investment could survive in the for unexplained investment could survive in the assessee company. In our opinion order of the Ld. CIT(A) on the assessee company. In our opinion order of the Ld. CIT(A) on the assessee company. In our opinion order of the Ld. CIT(A) on the issue in dispute is well reasoned and accordingly issue in dispute is well reasoned and accordingly, , we uphold the same. In the result, the ground No same. In the result, the ground Nos. 1 and 2 of the appeal of the . 1 and 2 of the appeal of the Revenue are dismissed. dismissed. The ground Nos. 3 and 4 being general in being general in nature, same are also dismissed as infructuous. nature, same are also dismissed as infructuous.

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disallowance was made by the assessee disallowance was made by the assessee for earning such exempted for earning such exempted income. The Assessing Officer invoked Rule 8D of the Rules and . The Assessing Officer invoked Rule 8D of the Rules and . The Assessing Officer invoked Rule 8D of the Rules and made disallowance of Rs.5,29,49,030/ made disallowance of Rs.5,29,49,030/- as per the computation the computation below :

Amount 1. Amount of expenses directly related to such income Amount of expenses directly related to such income 4,83,78,555/- 2. Amount of the interest expenses indirectly attributable to such Amount of the interest expenses indirectly attributable to such Amount of the interest expenses indirectly attributable to such income, in accordance with the formula AxB/C where income, in accordance with the formula AxB/C where A. Total Total Total interest interest interest expenditure expenditure expenditure minus minus minus direct direct direct interest interest interest expenditure on such income expenditure on such income NIL (A) (A) B. Average of such investment on the first and last day of Average of such investment on the first and last day of Average of such investment on the first and last day of previous year previous year 0+1,82,81,90,016 0+1,82,81,90,016 91,40,95,008/- (B) (B) 2 C. Average of total assets on Average of total assets on first and last day of previous first and last day of previous year 95,71,574+260,50,80,547 95,71,574+260,50,80,547 130,73,26,060 (C) (C) 2 AxB/C = AxB/C = 0 3. 0.5% of the ‘B’ above 0.5% of the ‘B’ above 45,70,475 Total disallowance u/s 14A Total disallowance u/s 14A 5,29,49,030 8.1 Out of total disallowance of Rs. 5,29,49,030/ disallowance of Rs. 5,29,49,030/- , the Assessing Officer reduced amount of dividend of Rs.71,25,686/ amount of dividend of Rs.71,25,686/- which was amount of dividend of Rs.71,25,686/ set off by the assessee against work in progress set off by the assessee against work in progress and the balance and the balance amount of Rs.4,58,23,162/ amount of Rs.4,58,23,162/- was reduced out of closing work in out of closing work in progress and allowed lowed balance closing work in progress of closing work in progress of Rs.48,85,376/- to be carry forward in subsequent years as against to be carry forward in subsequent years as against to be carry forward in subsequent years as against claim of Rs.46,59,08,538/ claim of Rs.46,59,08,538/- by the assessee. On further appeal, the by the assessee. On further appeal, the Ld. CIT(A) rejected the claim of the assessee observing as under : Ld. CIT(A) rejected the claim of the assessee observing as under : Ld. CIT(A) rejected the claim of the assessee observing as under :

“12 Decisions: I have considered the submission of the appellant as well have considered the submission of the appellant as well as the contention of the AO. The Assessing Officer has invoked the contention of the AO. The Assessing Officer has invoked the contention of the AO. The Assessing Officer has invoked the provisions of section 14A and disallowed a sum of Rs.5,29,19,030/ provisions of section 14A and disallowed a sum of Rs.5,29,19,030/ provisions of section 14A and disallowed a sum of Rs.5,29,19,030/-

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applying the procedure laid down in Rule 8D of the I T Rules, 1 applying the procedure laid down in Rule 8D of the I T Rules, 1 applying the procedure laid down in Rule 8D of the I T Rules, 1962. The main grievance of the appellant is that the Assessing Officer should not main grievance of the appellant is that the Assessing Officer should not main grievance of the appellant is that the Assessing Officer should not have considered investment in Shares of M/s. Somani & Co. PvtLtd. have considered investment in Shares of M/s. Somani & Co. PvtLtd. have considered investment in Shares of M/s. Somani & Co. PvtLtd. while working out disallowance u/s 14A for the reasons that (1) there is while working out disallowance u/s 14A for the reasons that (1) there is while working out disallowance u/s 14A for the reasons that (1) there is no dividend received from these sha no dividend received from these shares during the year under res during the year under consideration, (il) the company has already merged vide High Court order consideration, (il) the company has already merged vide High Court order consideration, (il) the company has already merged vide High Court order dated 17.8.2012 with the appellant company therefore Shares shown dated 17.8.2012 with the appellant company therefore Shares shown dated 17.8.2012 with the appellant company therefore Shares shown under investment got cancelled after giving effect to the High Court order under investment got cancelled after giving effect to the High Court order under investment got cancelled after giving effect to the High Court order and in the merge and in the merged balance sheet the said investment is not reflected and d balance sheet the said investment is not reflected and (i) the AO has not taken cognizance of merged balance sheet filed during (i) the AO has not taken cognizance of merged balance sheet filed during (i) the AO has not taken cognizance of merged balance sheet filed during the course of assessment proceedings. the course of assessment proceedings. 12.1 On careful perusal of the balance sheet, profit and loss account and 12.1 On careful perusal of the balance sheet, profit and loss account and 12.1 On careful perusal of the balance sheet, profit and loss account and material on record and considering the submissions of the appellant, I cord and considering the submissions of the appellant, I cord and considering the submissions of the appellant, I find that the appellant is in receipt of dividend of Rs.71,25,686/ find that the appellant is in receipt of dividend of Rs.71,25,686/ find that the appellant is in receipt of dividend of Rs.71,25,686/- from mutual funds during the year relevant to the assessment year in appeal mutual funds during the year relevant to the assessment year in appeal mutual funds during the year relevant to the assessment year in appeal as against loss of Rs.34,094/ as against loss of Rs.34,094/- declared in the Return filed for A. Y.2012 iled for A. Y.2012- 13. It is stated that the same was reduced from the interest and finance 13. It is stated that the same was reduced from the interest and finance 13. It is stated that the same was reduced from the interest and finance charges and the net interest and finance charges of Rs 4,12,52,869/ charges and the net interest and finance charges of Rs 4,12,52,869/ charges and the net interest and finance charges of Rs 4,12,52,869/- is shown under the head "Closing WIP". The appellant in doing so has not shown under the head "Closing WIP". The appellant in doing so has not shown under the head "Closing WIP". The appellant in doing so has not followed the procedure followed the procedure laid down by Rule 8D to work out the laid down by Rule 8D to work out the disallowance u/s 14A. It is a settled law that disallowance u/s 14A has disallowance u/s 14A. It is a settled law that disallowance u/s 14A has disallowance u/s 14A. It is a settled law that disallowance u/s 14A has to be computed as per Rule 8D from Assessment Year 2008 to be computed as per Rule 8D from Assessment Year 2008 to be computed as per Rule 8D from Assessment Year 2008-09 onwards. Therefore in my opinion the Assessing officer has rightly resorted to Rule Therefore in my opinion the Assessing officer has rightly resorted to Rule Therefore in my opinion the Assessing officer has rightly resorted to Rule 8D to compute the disallowance under Section 14A in accordance with to compute the disallowance under Section 14A in accordance with to compute the disallowance under Section 14A in accordance with the method specified in Rule 8D as the appellant has did not follow the the method specified in Rule 8D as the appellant has did not follow the the method specified in Rule 8D as the appellant has did not follow the norms laid down for this purpose. In fact the above receipt of dividend is norms laid down for this purpose. In fact the above receipt of dividend is norms laid down for this purpose. In fact the above receipt of dividend is not shown in the computation of total income not shown in the computation of total income. The merged financial . The merged financial statements have not been filed with the return of income for the current statements have not been filed with the return of income for the current statements have not been filed with the return of income for the current assessment year in appeal. Hence going by the financial statements filed assessment year in appeal. Hence going by the financial statements filed assessment year in appeal. Hence going by the financial statements filed with the Return, the share capital as per the balance sheet is with the Return, the share capital as per the balance sheet is with the Return, the share capital as per the balance sheet is Rs.1,00,000/- only and there is no positive amount under the head here is no positive amount under the head reserve and surplus. On the other hand the long term borrowings reserve and surplus. On the other hand the long term borrowings reserve and surplus. On the other hand the long term borrowings amounted to Rs.252.70 crores and short term borrowings is Rs.2.73 amounted to Rs.252.70 crores and short term borrowings is Rs.2.73 amounted to Rs.252.70 crores and short term borrowings is Rs.2.73 crores besides trade payables of Rs. 39.89 lacs and statutory dues of crores besides trade payables of Rs. 39.89 lacs and statutory dues of crores besides trade payables of Rs. 39.89 lacs and statutory dues of Rs.57.98 lacs. The appellant has made investment in equity shares of The appellant has made investment in equity shares of Rs.182.82 crores in M/s Somani & Company Pvt. Ltd. The financial cost Rs.182.82 crores in M/s Somani & Company Pvt. Ltd. The financial cost Rs.182.82 crores in M/s Somani & Company Pvt. Ltd. The financial cost debited and included in work in progress is Rs.4.83 crores. Thus the debited and included in work in progress is Rs.4.83 crores. Thus the debited and included in work in progress is Rs.4.83 crores. Thus the appellant has utilized, borrowed funds for investment in share appellant has utilized, borrowed funds for investment in share appellant has utilized, borrowed funds for investment in shares and mutual funds, which are exempt income yielding assets as seen from the mutual funds, which are exempt income yielding assets as seen from the mutual funds, which are exempt income yielding assets as seen from the above financial statements. The interest expenses are therefore direct above financial statements. The interest expenses are therefore direct above financial statements. The interest expenses are therefore direct cost for computation of disallowance under section 14A. In the wake of cost for computation of disallowance under section 14A. In the wake of cost for computation of disallowance under section 14A. In the wake of the above facts, computation of disal the above facts, computation of disallowance u/s 14A has to be worked lowance u/s 14A has to be worked out as per the formula prescribed in Rule 8D. The Assessing officer has out as per the formula prescribed in Rule 8D. The Assessing officer has out as per the formula prescribed in Rule 8D. The Assessing officer has rightly, invoked the provisions of Section 14A and applied Rule 8D to rightly, invoked the provisions of Section 14A and applied Rule 8D to rightly, invoked the provisions of Section 14A and applied Rule 8D to compute the disallowance. The disallowance made u/s.14A is herewith compute the disallowance. The disallowance made u/s.14A is herewith compute the disallowance. The disallowance made u/s.14A is herewith confirmed 12.2. With regard to the contention of the appellant that the appellant 2. With regard to the contention of the appellant that the appellant 2. With regard to the contention of the appellant that the appellant company and M/s. Somani & Company Pvt Ltd has amalgamated as per company and M/s. Somani & Company Pvt Ltd has amalgamated as per company and M/s. Somani & Company Pvt Ltd has amalgamated as per the order of the Hon'ble High court of Bombay dated 17.08.2012 and due the order of the Hon'ble High court of Bombay dated 17.08.2012 and due the order of the Hon'ble High court of Bombay dated 17.08.2012 and due to merger of accounts, the purchase of shares canno to merger of accounts, the purchase of shares cannot be construed as t be construed as

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investment in exempt yielding assets, cannot be accepted. For the investment in exempt yielding assets, cannot be accepted. For the investment in exempt yielding assets, cannot be accepted. For the assessment year in appeal this issue has to be dealt with on the basis of assessment year in appeal this issue has to be dealt with on the basis of assessment year in appeal this issue has to be dealt with on the basis of the financial statements ed with the return of income under Section 139. the financial statements ed with the return of income under Section 139. the financial statements ed with the return of income under Section 139. The appellant has not fil The appellant has not filed the merged accounts with the return of ed the merged accounts with the return of income. Even otherwise also, it is not justiger of two companies. If is a income. Even otherwise also, it is not justiger of two companies. If is a income. Even otherwise also, it is not justiger of two companies. If is a situation where in the entire equity shares of M/s Somani & company Pvt situation where in the entire equity shares of M/s Somani & company Pvt situation where in the entire equity shares of M/s Somani & company Pvt Ltd has been acquired from its shareholders by the appellant for a Ltd has been acquired from its shareholders by the appellant for a Ltd has been acquired from its shareholders by the appellant for a payment of Rs.182.82 crores which is sourced from long term borrowings ayment of Rs.182.82 crores which is sourced from long term borrowings ayment of Rs.182.82 crores which is sourced from long term borrowings received in the form of Redeemable Non received in the form of Redeemable Non-convertible Debentures/ICD. convertible Debentures/ICD. Taking into account this factor, I am not inclined to agree with the Taking into account this factor, I am not inclined to agree with the Taking into account this factor, I am not inclined to agree with the submission of the appellant that it is a case of i submission of the appellant that it is a case of investments made by the nvestments made by the assessee to promote a subsidiary company and investments were made assessee to promote a subsidiary company and investments were made assessee to promote a subsidiary company and investments were made on account of business expediency and that dividend there from is purely on account of business expediency and that dividend there from is purely on account of business expediency and that dividend there from is purely incidental. The crux of the matter here is that the appellant has received incidental. The crux of the matter here is that the appellant has received incidental. The crux of the matter here is that the appellant has received dividend receipts dividend receipts of Rs.71,25,686/- from mutual funds which is claimed from mutual funds which is claimed as exempt from tax. The investment made out of borrowed funds is not to as exempt from tax. The investment made out of borrowed funds is not to as exempt from tax. The investment made out of borrowed funds is not to promote a subsidiary company. It is rather an outright purchase of the promote a subsidiary company. It is rather an outright purchase of the promote a subsidiary company. It is rather an outright purchase of the entire equity shares of the aforesaid company. In other word entire equity shares of the aforesaid company. In other word entire equity shares of the aforesaid company. In other words, equity shares of a company has been acquired out of borrowed funds for which shares of a company has been acquired out of borrowed funds for which shares of a company has been acquired out of borrowed funds for which expenses have been incurred in the form of interest/financial cost during expenses have been incurred in the form of interest/financial cost during expenses have been incurred in the form of interest/financial cost during the year relevant to the assessment year in appeal. Therefore the the year relevant to the assessment year in appeal. Therefore the the year relevant to the assessment year in appeal. Therefore the investment amount of Rs. 182.82 cror investment amount of Rs. 182.82 crores has to be taken into account in es has to be taken into account in computing average investment and average total assets for the current computing average investment and average total assets for the current computing average investment and average total assets for the current assessment year. The appellant is also in receipt of dividend of assessment year. The appellant is also in receipt of dividend of assessment year. The appellant is also in receipt of dividend of Rs.71,25,868/- - claimed as exempt from tax by the appellant. The claimed as exempt from tax by the appellant. The Assessing officer has Assessing officer has rightly computed as per Rule 8D the disallowance rightly computed as per Rule 8D the disallowance u/s 14A. Accordingly in the light of the above facts and circumstances, u/s 14A. Accordingly in the light of the above facts and circumstances, u/s 14A. Accordingly in the light of the above facts and circumstances, the stand taken by the Assessing Officer is confirmed and the ground of the stand taken by the Assessing Officer is confirmed and the ground of the stand taken by the Assessing Officer is confirmed and the ground of appeal at 5.5 is dismissed. appeal at 5.5 is dismissed.” 8.2 We have heard rival submission We have heard rival submission of the parties on the issue in of the parties on the issue in dispute and perused the relevant material on record. Before us, the dispute and perused the relevant material on record. Before us, the dispute and perused the relevant material on record. Before us, the Ld. Counsel of the assessee submitted that assessee has already Ld. Counsel of the assessee submitted that assessee has already Ld. Counsel of the assessee submitted that assessee has already adjusted the dividend income against the work in progress which adjusted the dividend income against the work in progress which adjusted the dividend income against the work in progress which means the expenses to the ex the expenses to the extent of Rs.71,25,868/ tent of Rs.71,25,868/- has already been disallowed by the assessee. The Ld. Counsel submitted that been disallowed by the assessee. The Ld. Counsel submitted that been disallowed by the assessee. The Ld. Counsel submitted that firstly in view of the decision of the Hon’ble Delhi High Court in the in view of the decision of the Hon’ble Delhi High Court in the in view of the decision of the Hon’ble Delhi High Court in the case of Joint Investment Private Limited Vs. CIT 372 ITR 694 Joint Investment Private Limited Vs. CIT 372 ITR 694 Joint Investment Private Limited Vs. CIT 372 ITR 694 held that the disallowance u/s 14A disallowance u/s 14A of the Act cannot exceed the of the Act cannot exceed the exempted income and therefore, no further disallowance is exempted income and therefore, no further disallowance is exempted income and therefore, no further disallowance is warranted in the case of the assessee. Secondly, he submitted that warranted in the case of the assessee. he submitted that

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in view of the amalgamation shares of the Somani and Company in view of the amalgamation shares of the Somani and Company in view of the amalgamation shares of the Somani and Company Pvt. Ltd. has already extinguished and therefore while considering dy extinguished and therefore while considering dy extinguished and therefore while considering Rule 8D , the interest paid corresponding the same cannot be , the interest paid corresponding the same cannot be , the interest paid corresponding the same cannot be disallowed and also quantum of those shares cannot be taken into quantum of those shares cannot be taken into quantum of those shares cannot be taken into account for computation of disallowance. account for computation of disallowance. He referred to paper book He referred to paper book page 153 to 167 and submitted that revised financial ststemnts and submitted that revised financial ststemnts and submitted that revised financial ststemnts were already filed before the AO. were already filed before the AO.

8.3 We have noted that Hon’ble Delhi High Court in the case of M/s noted that Hon’ble Delhi High Court in the case of M/s noted that Hon’ble Delhi High Court in the case of M/s Joint investment Company Company (supra) (supra) has has already already held he that disallowance u/s 14A of the Act cannot disallowance u/s 14A of the Act cannot exceed dividend income dividend income. In the the the case case case of of of PCIT PCIT PCIT vsc vsc vsc Era Era Era Infrastructure Infrastructure Infrastructure (India) (India) (India) Ltd., Ltd., Ltd., (2022)141taxmann.com 289(Delhi), the Hon’ble Delhi High Court (2022)141taxmann.com 289(Delhi), the Hon’ble Delhi High Court (2022)141taxmann.com 289(Delhi), the Hon’ble Delhi High Court considered the effect of amendment made by the Finance Act, 2022 considered the effect of amendment made by the Finance Act, 2022 considered the effect of amendment made by the Finance Act, 2022 to section 14A of the Act by insertion of a non obst to section 14A of the Act by insertion of a non obstante clause and ante clause and explanation after the proviso, subsequent to the decision of the explanation after the proviso, subsequent to the decision of the explanation after the proviso, subsequent to the decision of the Hon’ble Delhi High Court in the case of PCIT vs. IL&FS Energy Hon’ble Delhi High Court in the case of PCIT vs. IL&FS Energy Hon’ble Delhi High Court in the case of PCIT vs. IL&FS Energy Development Co. Ltd., (2017) 84 com186 ment Co. Ltd., (2017) 84 com186. The Hon’ble High Court The Hon’ble High Court analysed the same in the light of the decision of the Hon’ble analysed the same in the light of the decision of the Hon’ble analysed the same in the light of the decision of the Hon’ble Supreme Court in the case of Sedco Forex International Drill. Inc. Supreme Court in the case of Sedco Forex International Drill. Inc. Supreme Court in the case of Sedco Forex International Drill. Inc. vs. CIT (2005) 149 Taxman 352 reiterated in M.M. Aqua vs. CIT (2005) 149 Taxman 352 reiterated in M.M. Aqua vs. CIT (2005) 149 Taxman 352 reiterated in M.M. Aqua Technologies Ltd. vs. CIT (2021) 129 taxmann.com Ltd. vs. CIT (2021) 129 taxmann.com Ltd. vs. CIT (2021) 129 taxmann.com 145 and held that the amendment to that the amendment to section 14A of the Act which is ‘for removal section 14A of the Act which is ‘for removal of doubt’ cannot be presumed to be retrospective even where such of doubt’ cannot be presumed to be retrospective even where such of doubt’ cannot be presumed to be retrospective even where such language is used, if it alters or changes law as it earlier stood. language is used, if it alters or changes law as it earlier stood. language is used, if it alters or changes law as it earlier stood.

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Thereupon the Hon’ble High Court followed the decision of IL&FS upon the Hon’ble High Court followed the decision of IL&FS upon the Hon’ble High Court followed the decision of IL&FS Energy Development Co. Ltd., (supra) and concluded that no Energy Development Co. Ltd., (supra) and concluded that no Energy Development Co. Ltd., (supra) and concluded that no disallowance under section 14A of the Act can be made if the disallowance under section 14A of the Act can be made if the disallowance under section 14A of the Act can be made if the assessee had not earned any exempt income during the year under assessee had not earned any exempt income during the year under assessee had not earned any exempt income during the year under consideration. Hon’ble High Court, however, was pleased to clarify . Hon’ble High Court, however, was pleased to clarify . Hon’ble High Court, however, was pleased to clarify that the orders passed in the case of Era Infrastructure (India) Ltd., that the orders passed in the case of Era Infrastructure (India) Ltd., that the orders passed in the case of Era Infrastructure (India) Ltd., (supra) shall abide by the final decision of the Hon’ble Supreme (supra) shall abide by the final decision of the Hon’ble Supreme (supra) shall abide by the final decision of the Hon’ble Supreme Court in the SLP filed in the case of IL&FS Energy Development Co. Court in the SLP filed in the case of IL&FS Energy Development Co. Court in the SLP filed in the case of IL&FS Energy Development Co. Ltd., (supra). The decision in Era Infrastructure (India) Ltd., (supra) Ltd., (supra). The decision in Era Infrastructure (India) Ltd., (supra) Ltd., (supra). The decision in Era Infrastructure (India) Ltd., (supra) was followed by the Hon’ble Delhi High Court in the case of Delhi was followed by the Hon’ble Delhi High Court in the case of Delhi was followed by the Hon’ble Delhi High Court in the case of Delhi International Airport (P.) Ltd., (supra). Since in the case assessee International Airport (P.) Ltd., (supra). Since in the case assessee International Airport (P.) Ltd., (supra). Since in the case assessee has already made disallowance to the extent of e has already made disallowance to the extent of exempted income, xempted income, therefore, respectfully following the finding of the Ho respectfully following the finding of the Hon’ble Delhi respectfully following the finding of the Ho High Court, we set aside the finding of the Ld. CIT(A) on the issue in e set aside the finding of the Ld. CIT(A) on the issue in e set aside the finding of the Ld. CIT(A) on the issue in dispute and delete the addition made by the Assessing Officer. The dispute and delete the addition made by the Assessing Officer. dispute and delete the addition made by the Assessing Officer. arguments of the ld of the ld counsel for the assessee for restricting the for restricting the disallowance under rule 8D to the disallowance under rule 8D to the extent of interest corresponding interest corresponding to the investment in mutual funds mutual funds, are rendered academic only. The rendered academic only. The ground Nos. 1 to 4 of the appeal are accordingly allowed. ground Nos. 1 to 4 of the appeal are accordingly allowed. ground Nos. 1 to 4 of the appeal are accordingly allowed.

8.3 In ground No. 5, the assessee 5, the assessee is aggrieved with the direction of aggrieved with the direction of the Ld. CIT(A) upholding the stand upholding the stand of the Assessing Officer of not of the Assessing Officer of not considering the revised computation of the income filed in considering the revised computation of the income filed in considering the revised computation of the income filed in compliance to the amalgamation of the order of the Hon’ble High compliance to the amalgamation of the order of the Hon’ble High compliance to the amalgamation of the order of the Hon’ble High Court passed on 12.12.2012. n 12.12.2012. The ld Counsel referred to PB 153 to ed to PB 153 to

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169 , which is a copy of revised computation of income and copy of revised computation of income and copy of revised computation of income and financial statement prepared in prepared in consequent to the order of Hon’ble consequent to the order of Hon’ble Bombay high Court and relied on the order of Hon’ble supreme Bombay high Court and relied on the order of Hon’ble supreme Bombay high Court and relied on the order of Hon’ble supreme of Dalmia Power Ltd vs ACIT in (2019) 112 Dalmia Power Ltd vs ACIT in (2019) 112 court in the case of taxmann.com 252 (SC) taxmann.com 252 (SC) , wherein it is held that at the time of , wherein it is held that at the time of passing order by the NCLT for approval and sanction of passing order by the NCLT for approval and sanction of passing order by the NCLT for approval and sanction of merger/amalgamation , the time for filing revised return already merger/amalgamation , the time for filing revised return already merger/amalgamation , the time for filing revised return already expired and therefore it was imp expired and therefore it was impossible for the assessee to file ossible for the assessee to file revised returns of income , thus department was directed to receive revised returns of income , thus department was directed to receive revised returns of income , thus department was directed to receive revised return and complete assessment after tasking into account revised return and complete assessment after tasking into account revised return and complete assessment after tasking into account scheme of arrangement and amalgamation as sanctioned by the scheme of arrangement and amalgamation as sanctioned by the scheme of arrangement and amalgamation as sanctioned by the NCLT. We find that that the We find that that the Ld. CIT(A) upheld the decision of the Ld. CIT(A) upheld the decision of the Assessing Officer in view of the decision of the Hon’ble Supreme Assessing Officer in view of the decision of the Hon’ble Supreme Assessing Officer in view of the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. [(2006, 284 ITR 323, (SC)] Goetze (India) Ltd. [(2006, 284 ITR 323, (SC)] Goetze (India) Ltd. [(2006, 284 ITR 323, (SC)] but the Ld. CIT(A) however has mentioned that direction given and he Ld. CIT(A) however has mentioned that direction given and he Ld. CIT(A) however has mentioned that direction given and the date specified in the original order dated 17.08.2012 as well as in the original order dated 17.08.2012 as well as in the original order dated 17.08.2012 as well as revised order dated 10.12.2012 of Hon’ble High Court will have to revised order dated 10.12.2012 of Hon’ble High Court will have to revised order dated 10.12.2012 of Hon’ble High Court will have to be complied with by the AO by the AO. Accordingly, following the finding of the following the finding of the Hon’ble supreme court in the case of Dalmiya Power Ltd (supra) Dalmiya Power Ltd (supra), Hon’ble supreme court in the case of we uphold the direction uphold the direction of ld CIT(A) to the Assessing Officer to take the Assessing Officer to take into consideration revised computation of the income of the into consideration revised computation of the income of the into consideration revised computation of the income of the assessee in compliance of the amalgamation order approved by the assessee in compliance of the amalgamation order approved by the assessee in compliance of the amalgamation order approved by the Hon’ble Bombay High Court vide order dated 12.12.2012. The Hon’ble Bombay High Court vide order dated 12.12.2012. The Hon’ble Bombay High Court vide order dated 12.12.2012. The ground No. 5 of the appeal of the assessee is accordingly allowed. d No. 5 of the appeal of the assessee is accordingly allowed. d No. 5 of the appeal of the assessee is accordingly allowed.

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Order pronou Order pronounced in the open Court on 09/10/2023. /2023. Sd/- Sd/ Sd/- (PAVAN KUMAR GADALE PAVAN KUMAR GADALE) (OM PRAKASH (OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 09/10/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai