DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1), RAIPUR vs. MAHAMAYA STEEL INDUSTRIES LTD, RAIPUR

PER PRADIP KUMAR KEDIA - AM:

The captioned appeal has been filed at the instance of the Revenue against the order of the Commissioner of Income Tax(Appeals)-I, Raipur (‘CIT(A)’ in short), dated 22.10.2019 arising in the assessment order dated 27.12.2018 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2016-17.

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“1. “Whether on the facts of the cases and in law, the CIT(A) is justified in deleting the addition of Rs,15,94,08,394/- made by the AO after rejecting the books of account as per provision of section 145(3), based on the detail reasons recorded in the assessment order?" 2. "Whether on the facts of the cases and in law, the CIT(A) is justified in deleting the addition of Rs.15,94,08,394/- made by the AO as the various case laws cited by the Ld.CIT(A) which do not apply to this case as even after conclusion of search, during assessment proceedings, the assessee had offered no satisfactory explanation on reconciliation of the discrepancies found and on analysis of books of account and other documents furnished?" 3. "Whether on the facts of the cases and in law, the CIT(A) is justified in deleting the addition of Rs.15,94,08,394/- made on the basis of estimation of income based on average yield across the business @ 89%?" 4. "Whether on the facts of the cases and in law, the CIT(A) is justified in deleting the disallowances of Rs.1,09,83,112/- made u/s 14A r.w. Rule 8D, thereby ignoring the fact that the assessee has made investment in shares out of loan borrowings, as it has no other free fund available in its Balance Sheet more so when the Assessee had claimed a huge amount of interest expenses thereby reducing its net profit?" 5. "Whether on the facts of the cases and in law, the CIT(A) is justified in deleting the disallowances of Rs. 1,09,83,112/- made u/s 14A r.w.Rule 8D, ignoring the CBDT's Circular no. 14/2006 dated 28.12.2006?"

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4.1 A search operation was carried out in the case of assessee on 17.10.2011 at the main office and the factory premises of the assessee company. Consequently, the assessment of A.Y. 2012-13 and preceding six years were subjected to search assessment proceedings. In the search assessment, the AO rejected the books of accounts of the assessee and alleged that the assessee company has suppressed its yield of SMS/Furnace division. The AO assumed the average yield of the industry at 89% in the SMS/ Furnace division and consequently, the difference between actual yield shown by the assessee vis-à-vis standard yield of 89% assumed by the AO was treated as unaccounted production/unrecorded sales in those years. In the first appeal against the search assessment, the additions on account of alleged lower yield of production declared was deleted and reversed. The Revenue preferred appeal against the aforesaid first appellate order. However, the co-ordinate bench of Tribunal also did not see any merit in such additions towards lower yield made by AO in ITA Nos. 232 to 235/RPR/2014 order dated 07.11.2019 concerning AYs. 2009-10 to 2012-13.

4.2 The present appeal in question relates to A.Y. 2016-17 which is subsequent to the year covered in the search assessment proceedings. It is noticed that the additions have been made by the AO in the instant case in the same manner by comparing yield declared by the assessee in SMS/ Furnace division with the average industry yield of 89% assumed by the AO and for this purpose the AO has referred to the conclusion drawn by his predecessor AO in search assessment completed in relevant to A.Y. 2006-07 to 2012-13 wherein also the similar additions were made on account of alleged suppression of yield. The AO has simply continued with the additions towards lower yield as shown in the search assessment on the ground that the deletion of addition in first appellate order in

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those years have not been agreed by the department and an appeal has been preferred against the first appellate order before the ITAT which is pending for adjudication.

“10. I have considered the grounds of appeal, gone through the order of the AO and seen the submission of the appellant. I observe that the AO has rejected the books of accounts u/s 145 of the Act and for doing so the AO has mentioned that the GP rate of the appellant has gone down drastically as compared to the preceding years and the appellant had not satisfactorily explained the reasons for decline in GP and NP rates. The AO further stated that the yield declared by the appellant in steel melting shop i.e. SMS division is nearly 83.32% which is much below the average yield in the last 7 assessment years of the assessee itself and thereafter the AO calculated the amount of suppression in production and sales by taking the yield of 89% and worked out the amount of suppression in sales and income and made an addition of Rs 15,94,08,394/-. The AO further stated that for the better comparison across parties dealing with the same manufacturing business, enquiries were done in the yield percentage being offered by other assessees being assessed during the same year, on perusal of Audit Reports and Balance sheets of various other parties in the same business, it was seen that yield percentage of as high as 97% has been furnished for manufacturing of MS Ingot/Billets. 10.1 In its submission and against the views of the AO, the appellant stated that the AO has only provided figures of yield declared by another party but the AO has not provided the complete details relating to comparable instance, even the AO has not provided the name of the party whose figures have been mentioned in the assessment order and benchmarked against him. It was stated the AO has adopted higher yield i.e. yield of 89%, on the basis of certain unknown and unspecified comparable cases, without confronting the same to the appellant. The appellant submitted that the AO did not mention in the assessment order whether yield percentage of 97% pertains to SMS/CCM division or any other division and that the AO has also not mentioned about the nature of product, production mechanism, technology being used, scale of operation etc. It was stated that the AO has reproduced the table showing calculation of yield, in the said Table, name of 'Billets' figures as' Raw Material' against which yield % of 97% has been mentioned 'Billets', in fact, constitutes 'Finished Products' of SMS division and not raw material as has been mentioned by the AO in the said table. It

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was clarified by the appellant that Billets constitute raw material in the Rolling Mill Division and not in the SMS/CCM Division and that in the instant case of the appellant, the AO has made the addition in respect of SMS/CCM Division and not in respect of Rolling Mill Division, thus, it was contended that the AO seems to have fallen into error. The appellant further submitted that since the complete details were not provided by the AO, therefore, same cannot be said to have any evidentiary value. The assessments in the case of the appellant in all the preceding A.Ys have been completed adopting yield rate of 89% in the SMS division. 10.2 Vide this office letter dated 7.12.2017 in F. No.CIT(A)- 11/RPR/Appeal Proceed 2017-18 dated 07.12.2017 in the case of the appellant for A.Y 2013-14 the AO was asked to explain the basis for adopting yield at 89% vide letter dated 21.12.2017 the AO has enclosed the assessment order of the appellant for the AY 2006-07 to 2012-13 and relied upon the findings and conclusion of the predecessor AO in the search assessment proceedings completed in the case of the appellant. I observe that the addition made in the search assessment by adopting 89% yield in the SMS division stands deleted by my ld predecessor in his order which have been followed in the order passed by me for AY 2013-14 on the same facts and circumstances. As regards decline in GP rate the appellant contended that the Iron and Steel sector had been going through a challenging face owing to sluggish domestic demand and constraints of iron ore supply along with steep rise iron ore prices. It was brought to my notice that the cost of power in SMS division has increased by nearly 6.27% in comparison to the FY 2014-15 and in the case of rolling mill division it has increased by nearly 15.08%. My attention was also invited to the decrease in the selling rate of output of SMS and rolling mill division. It was submitted that the selling rate in SMS division has decreased by nearly 24.29% in comparison to the FY 2013-14 and in the case of rolling mill division it had decreased by nearly 28.82% in comparison to immediately preceding year. My attention was also drawn to the increase in cost on account of salary expenses.

10.3 I observe that the AO has made addition by estimating the yield at 89% of the total raw material consumed in the SMS division after rejecting the books of accounts of the appellant. The only reason for rejection of books of accounts adduced by the AO is that the appellant had declared yield in SMS division less than 89%. In the opinion of the AO as can be seen the yield of the appellant company should have been same in all the years as the nature of the business is the same as it was during the period covered under the search proceedings. In the assessment order the AO has not brought on record any irregularity or defect in the books of accounts bills and vouchers and other documentary evidences pertaining to the year under consideration. What can be noticed from the assessment order is that the AO has based the assessment on the outcome of the search assessment proceedings for the search period covered during action u/s 132 of the Act and extended the same to the impugned assessment year i.e. 2016-17 which in my opinion had no bearing for the assessment proceedings of the impugned AY.

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10.4 There is no merit in the contention of the AO that the conclusions drawn in the search assessment proceedings and enhancements made, which in fact were deleted, can be made basis for assessing the income of other subsequent years without considering the facts and circumstances of earlier years or the year in question. Each year's assessment is a separate assessment which attains finality for the year unless disturbed by cogent facts and materials, and cannot be extended for subsequent years without any valid reasons. The findings in the search assessments for the relevant years cannot be stretched for later years by adopting the figures of the search assessment as a benchmark for the subsequent years even if the assessee is carrying on the same business. The facts and circumstances of each year are to be considered separately and must find reference in the assessments completed on the basis of cogent material. In the case of Ramesh Steel industries in ITA No: 48 of 2015 the Hon'ble Chhattisgarh High court held that the graph of business was not always in a straight line and fluctuates from year to year. Under section 145(3)of the act the jurisdiction of the Assessing Officer arises if he was not satisfied with the accounts of the assessee.

10.5 I further observed that the books of accounts of the appellant was subject to tax audit and since the appellant is dealing in excisable product it has filed excise returns on monthly basis as well as the VAT returns as per sales tax laws. These evidences were produced before the AO who examined the same including the bills and vouchers. With a view to bringing on record basis behind adoption of yield at 89% in the appellant proceedings of A.Y. 2013-14 the AO was asked to convey the basis for doing so. From the remand report of the AO it was found that the reliance was placed on the assessment order passed u/s 153A r.w.s 143(3) for the search period i.e. AY 2006-7 to 2012-13. Importantly even in the assessment order pertaining to search period there is no reference of any seized material or any other documentary evidences to establish that the appellant had indulged in unaccounted production and unaccounted sales, not any kind of justification have been made in adoption of 89% yield. The additions were made mainly on the pretext that the average yield in the industry is nearly 89% and the yield declared by the appellant is low as compared to the yield shown by other manufacturers of Chhattisgarh. There could be several reasons for variation of GP and NP but the variation per se is not sufficient to draw an inference that the books of accounts are liable to be rejected u/s 145 until and unless specific defect or irregularity are pointed out and brought on record pertaining to the books of accounts of the appellant. Even in the assessment order for the year under consideration it appears that the extracts have been reproduced without mentioning the sources thereof, and moreover the AO has not confronted the same to the appellant for its rebuttal. The yield percentage of 97% referred by the AO in the assessment order with which comparison has been made by the AO is not of SMS division as the Billets has been mentioned in the table as ‘raw material’ whereas billets are the finished product of SMS division.

10.6 I have seen the appellant order in A.No. 718 to 722 for AY 2008- 09 to 2012-13 of my Id predecessor who has adjudicated the search assessments of the appellants for all the years and deleted the addition made. It is fruitful to reproduce his observations as under:

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“It is seen that the AO has not pointed out any suppression of production based on any cogent and incriminating material against the appellant. Material showing financial nexus can only be a valid basis for holding suspicion or making the addition. Unfortunately, not a single document showing any financial dealings by the appellant has been referred to either in the assessment order, or even during the course of hearing, despite the liberty granted vide this office letters on 28.04.2014 and 16.05.2014. The facts and circumstances of the present case reveal that the AO just brushed aside the objections/submissions and contentions raised by the appellant and evidences placed on record. The AO has made mechanical addition of the difference between the unaccounted production/sales worked out on the basis of 89% yield suspected by the AO that must have been achieved by the appellant. The AO has not brought any material on record to disbelieve the book result shown by the appellant. If there is no suppression of material facts, the authority cannot embark upon a speculative assessment of notional profits. The assessment should be based on cogent facts and there should be no vindictiveness or arbitrariness in passing the assessment order. The estimated additions made by the AO do not bear any relationship with the specific defects in books of accounts and the AO cannot be permitted to make arbitrary addition. The core thing to be seen is the evidence found which will be the basis for making the assessment. Coming to the facts of the case, the AO estimated unaccounted production and sales based on benchmark yield of 89% in case of SMS division. The entire estimated suppressed sale has been treated as profit. I am convinced that the determination of undisclosed income in this case is merely on the basis of presumption and on an estimate basis. Search assessment has to be framed on the basis of some material, which in this case is raw material consumed in SMS Division for manufacturing of blooms and billets in furnace. No other material or assets details were found during the course of search. On the contrary, the appellant had provided all the requisite details regarding its production activity. The items of raw material purchased are excisable products, the quantity of raw material purchase as mentioned in Excisable and Commercial Invoice was test checked with the entries in the Excise Record for raw material i.e. RG-1 and the same was found to be in order. The quantity appearing in the excise registers was cross checked with the entries in the excise returns and the same was found to be in order and tallying with excise record. The inventory appearing in the excise records and excise returns was found to be the same as in financial records i.e. the books of accounts and Audited financial statements. Undisputedly, the production was meticulously routed through the appellant's daily production register/Excise records. The entries therein were definitely co-relatable to the entries in the stock register, enabling an easy stock tally, if one was so required. However, the AO did not deem it fit to carry out the exercise of tallying the stock as per these entries in the two types of books .He merely went by the alleged suppressed yield. Various submissions regarding reasons for variation in consumption of power, furnace oil, yield etc were duly furnished by the appellant. The

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appellant did furnish the comparable instances and also demonstrated with technical details of production. These copious evidences were wrongly ignored by the AO. Commissioner of Income Tax vs. Hindustan Tin Works Ltd. (2007) 291 ITR 290 (Del) : (2007) 164 TAXMAN 529.” 10.7 From the above observations of my Id Predecessor who adjudicated the search assessments for the relevant assessment years covered in action u/s 132 there was no seized material leading to the conclusion that the appellant has suppressed the yield and hence adoption of 89% yield stood justified .When there is no material for adopting 89% even during the search assessment there is no basis for relying on the search assessments in adopting 89% yield for the year under consideration. I also observe that in the appellate order my Id predecessor has tabulated comparable instances of GP and NP of industry averages wherein the GP and NP of the appellant is much higher than the others. The case laws relied upon in the appellate order of my predecessor some of which are reproduced as under are relevant to the facts in question.

(a) ACIT Vs M/s Balajee Structurals (1) Pvt Ltd (supra), the jurisdictional Bench Hon’ble ITAT; (b) ACIT vs. M/s Super Iron & Steel Pvt Ltd, ITA No. 139 to 141/BLPR/2010; (c) Lalchand Bhagat Ambica Ram vs. CIT (1959) 37 ITR 288; (d) Income Tax Officer vs. W.D. Estate P. Ltd. (1993) 46 TTJ (Bom) 143 : 45 ITD 473; (e) Commissioner of Income Tax Vs. Discovery Estates Pvt. Ltd. (2013) 356 ITR 159 (Delhi); (f) Mangilal Rameshwarlal Soni (HUF) vs. Assistant Commissioner of income Tax (2004) 83 TTJ (Jd) 770: (2004) 4 SOT 680 (Jd); (g) Bansal Strips (P) Ltd & Ors. vs. Assistant Commissioner of Income Tax (2006) 100 TTJ(Del)665 : (2006) 99 ITD 177(Del) by the Hon’ble ITAT, DELHI ”A” BENCH; (h) Dhakeshwari Cotton Mills Ltd. Vs Commissioner of Income Tax (1954) 26 ITR 775 (SC);

10.8 The appellant also relied upon the decision of the jurisdictional of High court of Chhattisgarh in M/s Ramesh Steel Industries vs. DCIT- 1(1), Raipur, Tax case (ITA) No. 48 of 2015 wherein the Hon 'ble High Court has inter alia held that power consumption in an industry may vary for various reasons, the appellant also relied upon the decision of the jurisdictional ITAT Raipur Bench in ACIT-1(2), Raipur vs Balajee Structural (India ) Pvt Ltd, Raipur wherein following facts were noted: "The appellant has maintained quantitative details as per required under excise rules. Monthly returns are also submitted to the Excise Authorities and no discrepancy was noticed so as to establish that the yield shown by the appellant is unreasonable or on lower side in comparison to yield prevailing in this line of industry. The yield shown by the appellant in respect of furnace division is 81% as against 76% of the immediately preceding year and in respect of rolling mill division it is 93% which is at par with that of immediately preceding year. In the immediately preceding year, in scrutiny assessment, the department has

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accepted the books of accounts on the basis of yield of furnace division at 76% and 93% of Rolling Mill Division." 10.9 In the appellant's own case for AY. 2013-14 in Appeal No CIT(A) -11/RPR/A.No.104 /17-18 dated 02.02.2018 on same facts and circumstances the appeal was allowed by me by holding when there is no material for adopting 89% even during the search assessment there is no basis for relying on the search assessments in adopting 89% yield for the AY 2013-14. In accordance with maintaining consistency and uniformity on same set of facts and circumstances and legal position as discussed above I find no basis for adopting 89% yield and hence the addition of Rs 15,94,08,394/- is unwarranted. Accordingly grounds no 2 & 3 are allowed.”

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appeal of the Revenue against the order of CIT(A) in identical factual and legal matrix. The Revenue has failed to show the departure in substantial facts. The whole basis for addition on account of alleged suppression of production in SMS/ Furnace division is merely relying upon the conclusion drawn by the predecessor AO in the search assessment of the assessee, which was found to be unsustainable both by the CIT(A) as well as the ITAT in earlier years. We simultaneously note of the fact that the yield percentage of 97% referred by the AO in the assessment year with which comparison has been made does not relate to SMS division as the billets have been mentioned in the table as raw material whereas billets are finished products of SMS division. It appears that AO has proceeded on misconception of facts. Thus, on this point too, the action of the AO is not justifiable. In consonance with the view taken in the matter, we see no merit in the appeal of the Revenue. The relevant operative para of the order of the ITAT is reproduced here for ready reference:

“8. We have perused the case records and heard the rival contentions. We have also analyzed the judicial pronouncements placed before us. The facts on records clearly demonstrates that the Assessing Officer has failed to bring any cogent reasons/evidences for making addition in the case of the assessee. He has arrived at various mathematical calculations and has derived the yield at 89%. All these were done by the Assessing Officer without bringing on record any single document which indicates that the assessee has suppressed its yield or has indulged in any unaccounted sales. It is also on record that though the Assessing Officer has estimated production at 89% in SMS division and had made various mathematical calculations at Pages 7 to 11 of the assessment order regarding Rolling Mill Division, however, it is seen from the assessment order that the Assessing Officer has not drawn any adverse inference as regards Rolling Mill Division and nor did the Assessing Officer find yield of Rolling Mill Division to be lower. The Assessing Officer has not substantiated the relevance and significance of these mathematical calculations pertaining to Rolling Mill Division. 8.1 We further observe that the Ld. CIT(A) on his own conducted specific enquiry in order to find out the percentage of yield declared by the other assessee engaged in similar line of business. It is noted from such comparison that the yield declared by the different assessees in the same year is not uniform, conversely every assessee declared

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different yield. Not even a single comparable instance was found declaring yield of 89%. That further, action of the Assessing Officer in rejecting the books of accounts merely due to the reason that the yield achieved by the assessee is less than the yield percentage i.e.89% which has not been achieved even by other assessees engaged in similar line of business. The Assessing Officer has not brought on record the manner in which he has worked out yield of 89% in SMS Division. 9. In the case of M/s. Ramesh Steel Industries Vs. DCIT-1(1), Raipur, ITA No.48 of 2015, the Hon'ble Chhattisgarh High Court has held and observed that "the power of the Assessing Officer under Section 145(3) is not absolute but was regulated and circumscribed by statutory provisions." That further "power consumption in an industry may vary for various reasons. Under Section 145(3) of the Income Tax Act, the jurisdiction of the Assessing Officer arises if he was not satisfied about the correctness of the accounts of the assessee. However, the Assessing Officer should give specific reasons for rejecting books of accounts." 10. In the instant case, the Assessing Officer calculated yield of 89% and has also calculated consumption of power and difference thereto pertaining to production and has held that the books of accounts are therefore not reliable and rejected the books of account while resorting to Section 145(3) of the Act. As per the legal principles laid down by the Hon'ble Chhattisgarh High Court (supra.) that this power is not unfettered and it has to be used judicially by giving specific reasons which in the instant case, the Assessing Officer has not complied with.

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that in the case of St. Teressa's Oil Mill (761 ITR 365) and Sulabh Marbles (P.) Ltd. (205 CTR 464) decided by the Hon'ble Kerala and Rajasthan High Court has held that "disparity in electricity consumption cannot be the criteria for rejection of accounts and for making ad-hoc additions. The assessee had maintained regular books of account and the Assessing Officer had not come across any unaccounted purchase or suppressed sale. In these circumstances, only on the basis of power consumption, no addition could be or sustained." 13. It is apparent from the records that the Assessing Officer has not brought on record any evidence stating lower or suppression of sales by the assessee. He tried to support his case by showing deficiency in power consumption by the assessee. But the Hon'ble High Courts have held without any direct corroborative evidences on low yield or suppressed sales, the disparity of power consumption cannot be the sole ground or reason for making addition by the Assessing Officer. 14. In view of the aforesaid examination of facts and judicial pronouncements, we find the order of the Ld. CIT(A) is absolutely correct and therefore, the same does not call for any interference. Thus, ground relating to "issue of the lower yield declared by the assessee" in all the appeals for all the assessment years are therefore dismissed.”

In the light of the view taken by the co-ordinate bench in the case of assessee in earlier assessment years, the issue is no longer res integra. It is evident that issue is squarely covered by the decision of the co-ordinate bench in assessee’s own case for AYs. 2009-10 to 2012-13 wherein also the appeal of the Revenue was dismissed after elaborate discussion on factual and legal matrix. The Revenue could not bring any cogent reason to take a departure from the earlier view. Thus, in consonance with the view expressed earlier, we do not see any merit in the plea of the Revenue for restoration of the additions deleted by the CIT(A) on this score.

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“15 I have considered the grounds of appeal, perused to the assessment order and gone through the submissions of the appellant. I observe that the appellant has claimed that no expenditure was incurred in relation to exempt income and that the investments were made in the preceding years and not during the year under consideration except investment of Rs 14.41 crores. The AO has noted that no exempt income has been earned by the assessee during the year under consideration from investments in shares. The appellant has claimed that the cash profits earned by the appellant in the year in which the investments were made in the shares of group companies was more than the amount of investment in shares and also that the investments were made out of non-interest bearing funds available with the appellant.

The details of non-interest bearing funds available with the appellant and cash profits earned by the appellant and amount of investments made in shares are reproduced here under:

Calculation of Net Worth and Non Interest Bearing Funds Rs. in lacs

31.03.2015 31.03.2016 Particulars 31.03.2006 31.03.2009 31.03.2011 31.03.2013 4557.04 4557.04 Share Capital 1654.27 3854.27 4654.27 4557.32 7915.33 6389.97 Reserve and Surplus 1758.92 3637.59 6528.65 7470.39 Deferred Tax Liabilities/(Deferred Tax Asset) -497.88 458.05 566.38 683.47 618.21 945.61 13090.58 11892.62 Total Net Worth 2915.31 7949.91 11749.30 12711.18 Add: Non Interest bearing Funds 174.50 100.00 A) Unsecured loan 1841.48 1765.00 355.00 1416.5 B) Advance from customers 244.08 358.42 771.77 536.61 564.80 584.63 C)Share Application Money 0.00 230.00 1645.00 0.00 0.00 0.00 Total Non Interest bearing Funds 5000.87 10303.33 14521.07 14664.29 13755.38 12477.25

Table Showing Proportion of Investment to Cash Profit earned by the assessee during the F.Y in which investments were made

Total Non- Investment to Investment to Investment Net-worth interest Non-interest Net-worth F.Y (Rs. in (Rs. in bearing bearing funds Ratio Lacs) Lacs) funds Ratio (%) (Rs. in Lacs) (%)

2005-06 30.01 2915.31 1.03 5000.87 0.60 2008-09 200.00 7949.91 2.52 10303.33 1.94 2010-11 10.00 11749.30 0.09 14521.07 0.07 2012-13 282.00 12711.18 2.21 14664.29 1.92 2014-15 999.92 13090.58 7.64 13755.38 7.27 2015-16 1441.41 11892.62 12.12 12477.25 11.55

On going through the above submissions and details of Total Non- interest bearing funds available with the appellant and cash profits earned in the respective years and proportion thereof utilized by the

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appellant in investment in shares I find that there was sufficient Non- interest bearing funds and cash profit available with the appellant for making the investment in shares. What is important in this regard is that the appellant had sufficient non-interest bearing funds for making the investments in shares of the group companies. As stated earlier the appellant has not earned any exempt income in the relevant assessment year which could raise the issue of disallowance u/s 14A of the Act. It was held in the case of PCIT vs Oil Industries Development board reported in 262 Taxmann 103 (Delhi) that in the absence of any exempt income disallowance u/s 14A of the Act of any amount was not permissible. On same facts the Hon'ble Supreme court in the case of CIT vs Chettinad Logistics Pvt. Ltd, dismissed the SLP of the Department. In view of the above the disallowance of Rs.1,09,83,112/- by invoking section 14A is unwarranted and accordingly ground no. 4 is allowed.”

12.1 Secondly, the assessee has demonstrated sufficient net worth from which a presumption would naturally arise that investment for

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the purposes of earning exempt income is out of such own interest free funds available at the disposal of the assessee. A reference in this regard has been made on behalf of the assessee to the several judicial precedents including CIT vs. HDFC Bank Ltd. (2014) 89 CCH 0185 (Bombay High Court); CIT vs. Suzlon Energy Ltd. (2013) 354 ITR 630 (Guj.).

12.2 Thus, having regard to absence of any exempt income as well as availability of sufficient net worth of interest free nature, we do not see any reason to differ with the view taken by the CIT(A). Thus, no interference with the order of the CIT(A) is called for. Consequently, ground nos. 4 & 5 of Revenue’s appeal is dismissed.

Order pronounced on 22/10/2021 by placing the result on the Notice Board as per Rule 34(4) of the Income Tax (Appellate Tribunal) Rule, 1963.

Sd/- Sd/- (N. K. CHOUDHRY) (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER JUDICIAL MEMBER True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, रायपुर / DR, ITAT, RAIPUR 6. गाड� फाइल / Guard file. By order,

Sr. Private Secretary ITAT, Raipur (on Tour)