TaxTMI 
TaxTMI 
2016 (11) TMI 654
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessee submitted that the said provision has already taken into consideration by the assessee and the assessee has suomotu disallowed Rs. 85,823/- u/s.14A of the I.T. Act. The relevant submission of the assessee before the AO reads as under : "Your Honour has asked our company to show cause as to why the addition of Rs. 13,27,400/- u/s.14A r.w. Rule 8D as per our Company's working. In this respect, it is submitted that your Honour has considered the investment made by our company in shares of Kalyani Mauritius Pvt. Ltd. (a Company incorporated in Mauritius) of Rs. 25,33,44,800/- for the purposes of working average value of investment as per Rule 8D. Further, it is submitted that as per Rule 8D(2)(ii) and (iii) of the Income Tax Rules, 1962, "the average of value of investment" means average of value of investments, income from which does not or shall not form part of the total income, as appearing in the balance sheet of the assessee, on the first day and the last day of the previous year. Thus shares in Kalyani Mauritius Pvt. Ltd. are to be excluded while working the average value of investments as the dividend thereon is not exempt." 4. However, the AO was not satisf....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the AO in order to give effect of the ground of appeal No.1.2. Ostensibly, appellant did not furnish details of dividends received and AO being not satisfied with expenses claim the exempt dividend income invoke rule 8D. Therefore, invocation of rule 8D is upheld and Ground No.1.1 of the appeal is dismissed." 6. Aggrieved with such order of the CIT(A) the assessee is in appeal before the Tribunal with the following grounds : The following grounds are taken without prejudice to each other: On the facts of the case and in law, "1.1 The learned CIT(A) erred in confirming disallowance u/s.14A r. w. Rule 8D at Rs. 13,27,400/- as against Rs. 85,823/- as worked out by the Appellant Company while computing Total Income as per Regular Provisions as well as Book Profits u/s 115JB of the Act. 1.2 The learned CIT(A) erred in not specifically deleting the disallowance of Rs. 12,41,577/- made by the ld. A.O. u/s. 14A over and above the disallowance offered by the assessee of Rs. 85,823/- when he himself has accepted that the investment made by the assessee company in Kalyani Mauritius Pvt. Ltd. was to be excluded while computing the disallowance u/s. 14A r.w.r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of disallowance u/s.14A r.w. Rule 8D as per the company vis-à-vis as per the AO. Referring to the same he submitted that the AO while computing the working of investment has made addition of Rs. 25,23,44,800/- as investment in shares of Kalyani Mauritius Pvt. Ltd. which was not considered by the assessee. Referring to page 37 of the paper book he drew the attention of the Bench to the submissions made before the CIT(A). Referring to the decision of Hon'ble Gujarat High Court in the case of CIT Vs. Suzlon Energy Ltd. reported in 354 ITR 630 and the decision of the Mumbai Bench of the Tribunal in the case of ITO Vs. Strides Arcolab Ltd. reported in 138 ITD 323 and various other decisions he submitted that investment in foreign company of Rs. 25,23,44,800/- should be excluded while computing disallowance u/s.14A r.w. Rule 8D. 8. Referring to the computation of total income, a copy of which is placed at pages 2 to 5 of the paper book, he submitted that the assessee in the said computation has claimed exempt dividend of Rs. 4,44,237/- and has also disallowed an amount of Rs. 85,823/- u/s.14A r.w. Rule 8D. Referring to the profit and loss account and schedules thereto the Ld. C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd in appeal the Ld.CIT(A) while holding at the first para of 5.3 that amount of investment made in a company incorporated outside India the dividend income of which is taxable in India should not be considered for calculation of Rule8D, however, has upheld the action of the AO in making disallowance of Rs. 12,41,577/- on the ground that assessee did not furnish details of dividend received and AO was not satisfied with the claim of expenses for the exempt dividend income. 11. I find the order of the CIT(A) is self contradictory. While in one part of the order he holds that no disallowance is called for under Rule 8D since the investment made in the company is incorporated outside India and dividend there from is taxable in India, however, at the same time he holds that the computation done by the AO is correct. The assessee has successfully demonstrated before the Bench that it has received only an amount of Rs. 4,44,237/- as dividend from mutual funds and has calculated the disallowance u/s.14A r.w. Rule 8D on Rs. 85,823/-. A comparison between the calculation made by the AO and calculation made by the assessee shows that the only difference is regarding the consideration of i....