Tribunal rules in favor of assessee, dismissing revenue's appeals and upholding deletions under Sections 14A, 115JB.

The tribunal dismissed the revenue's appeals for AY 2011-12 and 2012-13, allowing the assessee's cross-objections. The revenue's appeal for AY 2009-10 was allowed for statistical purposes. The tribunal upheld the deletion of disallowances under Section 14A and Section 115JB, condoned the delay in filing cross-objections, and supported the deletion of marked to market losses and penalty under Section 271(1)(c). The order was pronounced on 16th January 2019.

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Issues Involved:
1. Disallowance under Section 14A of the IT Act.
2. Deletion of disallowance under Section 14A while computing Book Profit as per Section 115JB.
3. Condonation of delay in filing cross-objections.
4. Marked to market losses on trading in future contracts.
5. Deletion of penalty under Section 271(1)(c).

Detailed Analysis:

1. Disallowance under Section 14A of the IT Act:
The revenue contested the disallowance under Section 14A, arguing that investments in sister concerns should be considered. The assessee's cross-objection contended that the AO did not record dissatisfaction with the assessee's books before invoking Rule 8D. The tribunal noted that the AO must record satisfaction as per Section 14A(2) and (3) read with Rule 8D, as held in Godrej & Boyce Manufacturing Co. Ltd. and Maxopp Investment Ltd. The tribunal found the assessee's method of allocation logical and based on accounts, and the AO's disallowance without recording satisfaction was unsustainable. The tribunal upheld the CIT(A)'s decision to delete the additional disallowance.

2. Deletion of disallowance under Section 14A while computing Book Profit as per Section 115JB:
The tribunal agreed with the CIT(A) that the assessee's own funds exceeded the investments, and no borrowed funds were used. The CIT(A) also noted that only investments yielding exempt income should be considered, resulting in nil disallowance. The tribunal upheld the deletion of the additional disallowance under Section 115JB.

3. Condonation of delay in filing cross-objections:
The assessee filed cross-objections with a delay of 107 days, attributing it to the relief already granted in the impugned order. The tribunal found the explanation plausible and condoned the delay in the interest of justice, referencing the judgment in Collector, Land Acquisition Vs. Mst. Katiji & Others.

4. Marked to market losses on trading in future contracts:
The revenue contested the deletion of the addition of Rs. 175.59 Lacs on account of marked to market losses. The CIT(A) deleted the addition, following the tribunal's decision in the assessee's own case for earlier years. The tribunal found no distinguishing features and upheld the CIT(A)'s decision.

5. Deletion of penalty under Section 271(1)(c):
The revenue contested the deletion of penalty of Rs. 396.42 Lacs. The tribunal noted that the quantum additions, against which the penalty was levied, were remanded back by the tribunal in the assessee's appeal. Consequently, the tribunal logically set aside the penalty to the CIT(A) for re-adjudication in light of the quantum additions' decision.

Conclusion:
The revenue's appeals for AY 2011-12 and 2012-13 were dismissed, and the assessee's cross-objections were allowed. The revenue's appeal for AY 2009-10 was allowed for statistical purposes. The order was pronounced in the open court on 16th January 2019.

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