2017 (9) TMI 1148

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....nt Years 2012-13 on the grounds inter alia that :- "On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.62,58,956/- made by the A.O on account of disallowance u/s 14A r.w.r 80 of the I.T. Rules." 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : During scrutiny proceedings, Assessing Officer noticed that the assessee company has shown investment in equity shares to the tune of Rs. 10,54,72,000/- and Rs. 26,52,86,250/- as on 01.04.2011 and 31.03.2012 respectively. AO while examining the investment in view of the provisions contained under section 14A of the Income-tax Act, 1961 (for short 'the Act') observed that the investment is mor....

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....100372000+260186250   2       = 180279125/-             1107840069+1894141952 53,57,560/- balance sheet of the assessee, on the first day and the last day of the previous year. 2     = 1500991011   iii) An amount equal to one-half per cent of the average of the value of investment, 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. Average investments: Rs.18,02,79,125/-       = 0.5% of Rs.   18,02,79,125/-     = Rs. 9,01,396/- ....

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....A read with Rule 8D is not attracted; that the decision of the ITAT, Special Bench, New Delhi in case of M/s. Cheminvest Ltd. vs. ITO - 317 ITR 86, relied upon by the AO, has since been overruled and that the ld. AR further relied upon the case of Holcim India Pvt. Ltd. - ITA No.486/3024 & ITA No.299/2014. 8. Undisputedly, the AO, without recording dis-satisfaction, as the working out made by the assessee that no expenses have been incurred nor earned any dividend income, proceeded to invoke the provisions contained u/s 14A read with Rule 8D in a mechanical manner which is not permissible. 9. Hon'ble Delhi High Court in judgment cited as Maxopp Investment Ltd. (supra) while deciding the identical issue held as under :- "Secti....

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....s of section 14A(1). In case, the Assessing Officer is not, on the basis of the objective criteria and after giving the assessee a reasonable opportunity, satisfied with the correctness of the claim of the assessee, he shall have to reject the claim and state the reasons for doing so. Having done so, the Assessing Officer will have to determine the amount of expenditure incurred in relation to income which does not form part of the total income under the Act. He is required to do so on the basis of a reasonable and acceptable method of apportionment." 10. Hon'ble Apex Court in Godrej & Boyce Manufacturing Company Ltd. vs. DCIT - 394 ITR 449 (SC) thrashed the issue in controversy as to invoking of the provisions contained under Rule 8D of....