PER WASEEM AHMED - AM: Both captioned appeals have been fi led at the instance of the assessee & Revenue against the order of the Commissioner of Income Tax (Appeals)-1, Ahmedabad (CIT(A) in short) dated 31/08/2017 relevant to Assessment Year (AY) 2014-15.

2. The assessee has raised following grounds of appeal:

1. The learned CIT(A) has erred in holding that the interest of Rs. 1,61,81,506 incurred for the acquisition of shares is not the part of cost of capital asset by placing the reliance on certain decisions in as much as the interest on borrowing utilized for the purpose of acquisition of shares is part of cost of the shares as held by the decisions relied by the assessee in the submission which is reproduced in the appellate order and that the learned CIT(A) failed to appreciate the ratio laid down in the decisions relied upon by the assessee ) and that the decision relied by the CIT(A) are not applicable on the facts of the case.

2. The learned CIT(A) has erred in holding that Section 35D is not applicable on the facts of the case and thereby as erred in disallowing the amortization of 1/5th preliminary expenses under Section 35D by placing reliance on certain decisions in as much as the assessee is eligible to claim deduction under Section 35D as per the ratio laid down in the decisions relied by the assessee reproduced in the submission to CIT(A) and that the decision relied by the CIT(A) are not applicable on the facts of the case.

3. The 1st issue raised by the assessee is that the learned CIT (A) erred in confirming the order of the AO by not allowing the interest cost incurred in connection with the acquisition of shares to be capitalized amounting to Rs. 1,61,81,506/-. ITA No s . 2 0 5 3 & 2 4 1 7 / Ah d / 17 [ Ad d l i f e In v es t m en t s P v t . Lt d . ] A. Y. 2 0 1 4 -1 5 - 3 -

4. The facts in brief are that the assessee in the present case is a private limited company and engaged in the business of investments. The assessee in the year under consideration has acquired shares of a company namely Sterling Addlife India Limited for a value of Rs. 305,73,77,201/- only. The investment was made by the assessee out of its own fund as well as out of the fund borrowed from the bank i.e. Kotak Mahindra Bank Limited amounting to Rs. 105,00,00,000/-. The investment was made by the assessee in the aforesaid company on 14th of February 2014 whereas the amount of loan was borrowed by the assessee from the bank on 13th February 2014 which was utilized in such investments. The assessee in connection with borrowing of such loan from the bank has incurred the cost in the form of loan processing fees as well as interest expenses which was capitalized by adding the same in the value of the investments as on 31st March 2014. As such the assessee has capitalized the amount of loan processing fees and interest expenses up to 31st March 2014 aggregating to Rs. 2,55,41,075/-. As per the assessee interest cost till 31st March 2014 stands at Rs. 1,69,00684/- for the period beginning from 13th February 2014 to 31st March 2014. However, the AO was of the view that the interest expenses, on the money borrowed from the bank which was utilized in the impugned investments, post- acquisition of shares cannot be capitalized. As the assessee has acquired the loan on 13th February 2014 which was utilized for acquiring the shares on 14th February 2014, the AO allowed the assessee to capitalize the amount of interest expenses only for 2 days i.e 13th and 14th February which was worked out at Rs. 7,19,178/- only. Thus, the AO proposed to reduce the balance amount of interest cost pertaining to the period of post-acquisition of shares for Rs. 1,61,81,506/- from the value of the shares reported by the assessee as on 31st March 2014. As per the AO, the amount of interest expenses incurred by the assessee post acquisition of shares are to be treated as revenue in nature which again is subject to the disallowance under the provisions of section 14A of the Act, against the dividend income. ITA No s . 2 0 5 3 & 2 4 1 7 / Ah d / 17 [ Ad d l i f e In v es t m en t s P v t . Lt d . ] A. Y. 2 0 1 4 -1 5 - 4 - The AO finally, in view of the above stated discussion, held that the amount of interest expenses pertaining to the period of post-acquisition of shares for Rs. 1,61,81,506/- cannot be allowed to be capitalized. Accordingly, the AO reduced the same from the value of the investments reported by the assessee as on 31 March 2014.

5. Aggrieved assessee preferred an appeal to the learned CIT (A).

6. The assessee before the learned CIT (A) submitted that investments made by it does not represent the business assets and therefore the provisions of section 36(1) (iii) and the explanation 8 to section 43(1) has no application in the given facts and circumstances. The income on the transfer of such investments is to be taxed under the provisions of section 48 of the Act, and which provides for the deduction for the cost of acquisition and also cost of improvement. The cost of acquisition includes interest expenses incurred on the money borrowed which was utilized for the acquisition of the capital assets. However the learned CIT (A) found that the accounting standard 13 issued by the Institute of chartered accountant of India requires the assessee not to capitalize the interest expenses on acquisition of shares. The learned CIT (A) further agreed that amount of interest expenses cannot be treated as revenue in nature in pursuance to the provisions of section 36(1)(iii) of the Act. It is because such interest expenses does not pertain to the business assets. However, the learned CIT (A) further held that such interest expenses cannot be capitalized and further directed the AO not to allow such expenses as revenue in nature. Thus, the appeal of the assessee was partly allowed. ITA No s . 2 0 5 3 & 2 4 1 7 / Ah d / 17 [ Ad d l i f e In v es t m en t s P v t . Lt d . ] A. Y. 2 0 1 4 -1 5 - 5 -

7. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us.

8. The learned AR before us filed a paper book running from pages 1 to

119 and submitted that the company was incorporated as Investment Company. As such there was no activity carried out by it other than making the investment in the shares of other companies. Accordingly, the interest expenses incurred by it are directly attributable to such investments and therefore the same needs to be capitalized.

9. On the other hand the learned DR vehemently supported the order of the authorities below.

10. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the assessee in the present case is an Investment Company and it can earn two types of income out of such investment i.e. on transfer of such investments which is chargeable to tax under the head capital gain and the dividend income under the head income from other sources but the same has been exempted under section 10(34) of the Act. It is a fact on record that interest cost has been incurred by the assessee on the money borrowed which was utilised for the purpose of the investments. The AO in his order held that the impugned interest expenses can be allowed as revenue in nature whereas the learned CIT (A) reversed the finding of the AO by holding that such expenditure cannot be treated as revenue in nature. The relevant finding of the learned CIT (A) reads as under: It is observed that as per provisions of section 36(1)(iii) of the Act, interest payable in respect of capital borrowed for the purpose of business is allowable expenditure but in present case, as appellant has not acquired shares for the purpose of its business, hence such interest cannot be allowed as revenue expenditure. Thus, appellant was correct in making disallowance of such expenditure while filing return of income and to that extent, AO's observation that income of current assessment year is required to be reduced cannot be accepted and AO is directed to disallow above interest expenditure while computing taxable income of current year. ITA No s . 2 0 5 3 & 2 4 1 7 / Ah d / 17 [ Ad d l i f e In v es t m en t s P v t . Lt d . ] A. Y. 2 0 1 4 -1 5 - 6 - The above finding of the learned CIT (A) has not been challenged by the revenue. Thus it is transpired that the finding of the learned CIT (A) has reached to its finality. Now the question arises for the treatment of such interest expenditure in the books of accounts of the assessee. There is no dispute to the fact about the incurrence of such expenditure by the assessee directly attributable to the investments. From the preceding discussion we note that the learned CIT (A) on one hand has not allowed to be treated such expenditure as revenue in nature and on the other hand he has not allowed the same to be capitalized. In our considered view, such finding of the learned CIT (A) is contrary to the provisions of Act. Accordingly we disagree with the finding of the learned CIT (A).

11. In our considered view, once the assessee has been held as Investment Company, then the interest expenses directly attributable to such investments required to be capitalized. In this regard we find support and guidance from the judgement of Honble Madras High Court in the case of CIT versus Trishul Investments Ltd reported in 305 ITR 434 wherein it was held as under: As per the memorandum of association of the assessee company, it could be seen that the assessee company was incorporated on 24-1-1995 under the Companies Act, 1956 to engage in the business of investment. The finding given by the Tribunal was that the assessee had no intention to trade in shares. Hence, the purchase of shares could not be business asset in the hands of the assessee. The assessee had rightly offered the same under the head 'Capital gain'. The Tribunal also correctly arrived at a conclusion that it was only an investment activity and held that the profit derived from the sale of shares was subject to capital gain. The reasons given by the Tribunal were based on valid materials and evidence and there was no infirmity in the order of the Tribunal. Moreover, the interest paid for acquisition of shares would partake character of cost of share and, therefore, the same was rightly capitalized along with the cost of acquisition of shares. The principles laid down by the Honble Madras High Court in the case cited above are directly applicable to the present facts of the case. Therefore, we are of the view that the impugned interest expenses needs to be capitalized. ITA No s . 2 0 5 3 & 2 4 1 7 / Ah d / 17 [ Ad d l i f e In v es t m en t s P v t . Lt d . ] A. Y. 2 0 1 4 -1 5 - 7 - Before parting, it is also pertinent to note that the authorities below and the assessee has referred to many cases which are recorded in the respective orders but we do not find any reason to deal with all of them individually for the sake of brevity and convenience but suffice to hold that the principles laid down in the case of Trishul Investment Limited (supra) are directly applicable in the present facts of the case. Hence the ground of appeal of the assessee is allowed.

12. The 2nd issue raised by the assessee is that the learned CIT (A) erred in confirming the order of the AO by holding that the provisions of section 35D are not applicable to the assessee.

13. The assessee company was incorporated on 28th of November 2013 with the authorized capital of Rs. 3 crores and the assessee incurred expenses by way of fees for registering the company under the Companies Act for Rs 4,12,908/- only. The assessee subsequently increased its authorized share capital dated 18 December 2013 from Rs. 3 crores to Rs. 211 crores and incurred an expense of Rs. 1,27,98,500/- only. Thus the assessee effectively incurred total expense of Rs. 1,32,11,408/- in the year under consideration and accordingly claimed deduction of 1/5 of such expenditure amounting to Rs. 26,42,282/- under the provisions of section 35D of the Act. However, the AO was of the view that the assessee cannot claim the expenditures under section 35D of the Act, which were incurred in connection with the increase of authorized share capital. It is because the expenses incurred on the increase of authorized capital /stamp duty for allotment of shares were incurred much later after the date of incorporation of the company. Accordingly, the AO sought clarification from the assessee. ITA No s . 2 0 5 3 & 2 4 1 7 / Ah d / 17 [ Ad d l i f e In v es t m en t s P v t . Lt d . ] A. Y. 2 0 1 4 -1 5 - 8 - The assessee in response to such notice vide letter dated 22nd December 2016 submitted that the authorized share capital was increased within 3 weeks of the incorporation of the company for the reason that it decided to buy the shares of Sterling Addlife Limited which is nothing but new business activity for the 1st time since incorporation. Accordingly the assessee claimed that it is eligible for deduction of such expenditure under the provisions of section 35D of the Act. However, the AO disregarded the contention of the assessee by observing that the main object of the assessee is to make investment in the shares of other companies. As such the assessee has fulfilled its object by acquiring the shares of another company as discussed above but the same cannot be considered a new business activity of the assessee. However, the AO was of the view that the expenditure incurred at the time of incorporation of company by way of fees paid to the registrar of companies amounting to Rs. 4,12,908/- is eligible for deduction under section 35D of the Act. Thus the AO disallowed the claim of the assessee for the balance amount of the deduction claimed under section 35D of the Act, amounting to Rs. 25,59,701/- and added to the total income of the assessee.

14. Aggrieved assessee preferred an appeal to the learned CIT (A).

15. The assessee before the learned CIT (A) submitted that the company was registered dated 28th of November 2013 but it started activity by acquiring the shares in the company as discussed above subsequent to the incorporation of the company. As such to acquire shares of such company, the share capital was increased and thus expenditure incurred for the increase in the authorized capital is for the initial registering activity of the company. Therefore the assessee claimed that it is entitled for the deduction of the expenses incurred before the commencement of the business under the provisions of section 35D of the Act. However the learned CIT (A) disregarded the contention of the assessee by observing that the activity of acquiring the shares of a new company cannot be ITA No s . 2 0 5 3 & 2 4 1 7 / Ah d / 17 [ Ad d l i f e In v es t m en t s P v t . Lt d . ] A. Y. 2 0 1 4 -1 5 - 9 - treated as new business of the assessee. Accordingly, the learned CIT (A) confirmed the order of the AO.

16. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us.

17. The learned AR before us submitted that the impugned expenditure have been incurred by the assessee before the commencement of the business activity and therefore the same is eligible for deduction under section 35D of the Act.

18. On the other hand the learned DR vehemently supported the order of the authorities below.

19. We have heard the rival contentions of both the parties and perused the materials available on record before us. Admittedly, the assessee company was incorporated on 28th November 2013 with the object of making the investment in another company. The 1st investment was made by the assessee by acquiring the shares of Sterling Addlife Pvt. Ltd. for a value of Rs. 305 crores. Thus the business of the assessee commenced only upon the acquisition of the shares of such company. As such the registration of the company and the commencement of the business of the assessee are 2 different things. The incorporation/registration of a company does not mean that the assessee has commenced business activities. In fact the business activities of the assessee company commences only after doing the transaction for which it was established. Thus in such a situation, we are of the view that the activity of the assessee commenced upon the acquisition of the shares of the company as discussed above. Thus the expenses incurred by the assessee as specified under the provisions of section 35D of the Act, before the commencement of the business are eligible for deduction. The relevant provisions of section 35D of the Act reads as under: ITA No s . 2 0 5 3 & 2 4 1 7 / Ah d / 17 [ Ad d l i f e In v es t m en t s P v t . Lt d . ] A. Y. 2 0 1 4 -1 5 - 1 0 - 35D. (1) Where an assessee, being an Indian company or a person (other than a company) who is resident in India, incurs, after the 31st day of March, 1970, any expenditure specified in sub-section (2),

(i) before the commencement of his business, or

(ii) after the commencement of his business, in connection with the extension of his 92[***] undertaking or in connection with his setting up a new 92[***] unit, the assessee shall, in accordance with and subject to the provisions of this section, be allowed a deduction of an amount equal to one-tenth of such expenditure for each of the ten successive previous years beginning with the previous year in which the business commences or, as the case may be, the previous year in which the extension of the 92[***] undertaking is completed or the new 92[***] unit commences production or operation : 93[Provided ********* (2) The expenditure referred to in sub-section (1) shall be the expenditure specified in any one or more of the following clauses, namely : (a) expenditure in connection with

(i) preparation of feasibility report;

(ii) preparation of project report;

(iii) conducting market survey or any other survey necessary for the business of the assessee;

(iv) engineering services relating to the business of the assessee : Provided that the work in connection with the preparation of the feasibility report or the project report or the conducting of market survey or of any other survey or the engineering services referred to in this clause is carried out by the assessee himself or by a concern which is for the time being approved94 in this behalf by the Board; (b) legal charges for drafting any agreement between the assessee and any other person for any purpose relating to the setting up or conduct of the business of the assessee; (c) where the assessee is a company, also expenditure

(i) by way of legal charges for drafting the Memorandum and Articles of Association of the company;

(ii) on printing of the Memorandum and Articles of Association;

(iii) by way of fees for registering the company under the provisions of the Companies Act, 1956 (1 of 1956)94a;

(iv) in connection with the issue, for public subscription, of shares in or debentures of the company, being underwriting commission, brokerage and charges for drafting, typing, printing and advertisement of the prospectus; (d) such other items of expenditure (not being expenditure eligible for any allowance or deduction under any other provision of this Act) as may be prescribed. It is a fact on records that the expenditure in connection with the increase in authorized share capital was incurred before the commencement of the business. Therefore we hold that the assessee is eligible for deduction of the impugned expenditure under the provisions of section 35D of the Act. In view of the above, we set aside the finding of the learned CIT (A) and direct the AO to allow the claim of the assessee. Hence the ground of appeal of the assessee is allowed. ITA No s . 2 0 5 3 & 2 4 1 7 / Ah d / 17 [ Ad d l i f e In v es t m en t s P v t . Lt d . ] A. Y. 2 0 1 4 -1 5 - 1 1 - Coming to the ITA No. 2417/AHD/2017 for the assessment year 2014-15, an appeal by the revenue.

20. The Revenue has raised following grounds of appeal:

1. That the ld. CIT(A) has erred in law and on facts in deleting the disallowance of Rs.1,63,29,319/- u/s 14A of the Act without considering that expenses relatable to earning exempt income cannot be allowed.

21. The only issue raised by the revenue is that the learned CIT (A) erred in deleting the disallowances made by the AO for Rs. 1,63,29,319/- under the provisions of section 14A of the Act.

22. The AO during the assessment proceedings found that the assessee has made investments in the shares of other companies which are capable of giving rise to the exempted income. But the assessee has not made any disallowance of the expenses claimed in the profit and loss account amounting to Rs. 1,47,813 under the provisions of section 14A read with rule 8D. The AO also observed that the assessee has incurred interest expenses on the acquisition of shares of the company namely Sterling Addlife Pvt. Ltd. out of the borrowed fund. Accordingly he was of the view that the expenditure incurred against the borrowed fund amounting to Rs. 1,61,81,506/- not eligible for deduction by virtue of the provisions of section 14A read with rule 8D of income tax rules. Accordingly he made the disallowance of Rs. 1,63,29,319/- and added to the total income of the assessee.

23. Aggrieved assessee preferred an appeal to the learned CIT (A) who has deleted the addition made by the AO by observing that there was nil income exempted received by the assessee in the year under consideration. Therefore there cannot be any disallowance of interest and administrative expenses. ITA No s . 2 0 5 3 & 2 4 1 7 / Ah d / 17 [ Ad d l i f e In v es t m en t s P v t . Lt d . ] A. Y. 2 0 1 4 -1 5 - 1 2 -

24. Being aggrieved by the order of the learned CIT (A) the revenue is in appeal before us.

25. Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them.

26. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly there was nil income of the assessee being exempted. Now the issue arises before us for the adjudication whether the disallowances made under section 14A r.w. rule 8D can exceed the amount of exempted income earned during the year under consideration. At this juncture, we find important to refer the provisions of section 14A of the Act which reads as under: Expenditure incurred in relation to income not includible in total income85.

86 14A. 87[(1)] For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred88 by the assessee in relation to88 income which does not form part of the total income88 under this Act.] 87[(2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed89, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. The above provision requires to make the disallowance of the expenses in relation to the income which does not form part of the total income under this Act. The term used under section 14A of the Act amount of expenditure incurred in relation to such income implies that the expenditure cannot exceed the amount of exempted income. In holding so we find support and guidance from the judgment of Honble Delhi High Court in the case of joint investments private Ltd versus CIT reported in

372 ITR 694 wherein it was held as under: By no stretch of imagination can s. 14A or r. 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in s. 14A, and is only to the extent of disallowing expenditure "incurred by the assessee ITA No s . 2 0 5 3 & 2 4 1 7 / Ah d / 17 [ Ad d l i f e In v es t m en t s P v t . Lt d . ] A. Y. 2 0 1 4 -1 5 - 1 3 - in relation to the tax exempt income". This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. We also note that in the identical facts and circumstances the Honble jurisdictional High Court has decided that the amount of disallowance of the expenditure cannot exceed the amount of exempted income in the case of CIT vs. Vision Finstock Stock Ltd. In tax appeal No. 486 of 2017 vide order dated 31 July 2017. The relevant extract of the order is extracted below: "1. The Revenue has challenged the judgement of the Income Tax Appellate Tribunal dated 07.07.2016 raising following questions for our consideration: "A. Whether on the facts and circumstances of the case and in low, the ITAT was justified in restricting the disallowance made of Rs. l,02,82,049/- u/s. 14A to the extent of exempt income of Rs. 55,6047- only? B. Whether on the facts and circumstances of the case and in law, the ITAT was justified in restricting the disallowance of Rs. 1,02,82,049/- made u/s. 14A of the Act to the extent of income earned of Rs. 55,6047- without appreciating that the assessee had paid interest of Rs.1,45,52,6327- on borrowed funds?"

2. From the record it emerges that, during the period relevant to the assessment year 2008-09, the assessee had earned exempt income of Rs.55,604/-. As against that, the Assessing Officer had worked out the disallowance of expenditure under section 14A of the Act read with Rule 8D to Rs. 1,02,82,049/-. The Tribunal, while restricting the disallowance to Rs. 55,604/-, relied on the decision of Delhi High Court in case of Joint Investments (P) Ltd vs. CIT reported in 372 ITR 694 holding that disallowance of expenditure in terms of section 14A read with Rule 8D cannot exceed the exempt income itself. Our High Court has also adopted the similar view in case of Commissioner of Income Tax vs. Corrtech Energy Pvt Ltd. reported in 372 ITR

3. Tax appeal is, therefore, dismissed. We also note that the Honble Apex court has also confirmed the principles laid down by the Honble High Court as discussed above in the case of CIT vs. State Bank of Patiala reported in 99 taxmann.com 286 by dismissing the Special Leave petition.

27. In view of the above, we hold that the disallowance of the expenses under section 14A read with rule 8D cannot exceed the amount of exempted income. Hence we do not find any reason to interfere in the order of the learned CIT (A). Accordingly, we direct the AO to delete the addition made by him. Hence the ground of appeal of the Revenue is dismissed. ITA No s . 2 0 5 3 & 2 4 1 7 / Ah d / 17 [ Ad d l i f e In v es t m en t s P v t . Lt d . ] A. Y. 2 0 1 4 -1 5 - 1 4 -

28. Before we part with the issue/appeal as discussed above, it is pertinent to note that the clause (c) of rule 34 of the Appellate Tribunal Rules 1963 requires the bench to make endeavour to pronounce the order within 60 days from the conclusion of the hearing. However the period of 60 days can be extended under exceptional circumstances but the same should not ordinarily be further extended beyond another 30 days. In simple words the total time available to the Bench is of 90 days upon the conclusion of the hearing. However, during the prevailing circumstances where the entire world is facing the unprecedented challenge of Covid 2019 outbreak, resulting the lockdown in the country, the orders though substantially prepared but could not be pronounced for the unavoidable reasons within the maximum period of 90 days. In such circumstances we find that the Honble Mumbai Tribunal in the case of JSW Limited Vs Deputy Commissioner of Income Tax in ITA No. 6103/MUM/2018 vide order dated 14-5-2020 extended the time for pronouncing the order within 90 days of time by observing as under:

9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Honble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Honble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown. Honble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, It is also clarified that while calculating time for disposal of matters made time- bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly, and also observed that arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020. It has been an unprecedented situation not only in India but all over the world. ITA No s . 2 0 5 3 & 2 4 1 7 / Ah d / 17 [ Ad d l i f e In v es t m en t s P v t . Lt d . ] A. Y. 2 0 1 4 -1 5 - 1 5 - Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure. The term force majeure has been defined in Blacks Law Dictionary, as an event or effect that can be neither anticipated nor controlled When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an ordinary period.

10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Honble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Honble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly. The extraordinary steps taken suo motu by Honble jurisdictional High Court and Honble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily, in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.

11. To sum up, the appeal of the assessee is allowed, and appeal of the Assessing Officer is dismissed. Order pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962, by placing the details on the notice board. Considering the above, we express to pronounce the order beyond the period of 90 days. Accordingly, we proceed to pronounce the order as on date. ITA No s . 2 0 5 3 & 2 4 1 7 / Ah d / 17 [ Ad d l i f e In v es t m en t s P v t . Lt d . ] A. Y. 2 0 1 4 -1 5 - 1 6 -

29. In the result, the appeal of the Revenue is dismissed.

30. In the combined result, the appeal of the assessee is allowed whereas the appeal of the revenue is dismissed. Sd/- Sd/- (RAJPAL YADAV) (WASEEM AHMED) VICE PRESIDENT True Copy ACCOUNTANT MEMBER Ahmedabad: Dated 01/06/2020 S. K. SINHA  !" #" / Copy of Order Forwarded to:-

1.  / Revenue

2. / Assessee

3. * , / Concerned CIT

4. ,- / CIT (A)

5. 0 33*,  *, / DR, ITAT, Ahmedabad

6. 9 / Guard file. By order/ ,  *, This Order pronounced in Open Court 01/ 06/2020