TaxTMI 
TaxTMI 
2017 (12) TMI 358
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.... and allowing consequential relief thereof. 3 The Ld CIT(A) has erred in placing reliance on the decision of the Hon'ble High Delhi Court in CIT Vs. Oriental Structural Engineering Pvt. Ltd. as the facts of which case are different from the facts of instant case. 4 The Ld CIT(A) has failed to appreciate the fact that in the case of Oriental Structural Engineering Pvt. Ltd., investments were made in Special Purpose Vehicles whereas in the present assessee investments were made in the subsidiaries that too not on account of commercial expediency but to circumvent the Land Ceiling Act, 1975 of the State of Haryana.5 " 3. The Revenue has raised the following grounds of appeal for Assessment Year 2011-12:- 1. The Ld CIT(A) has erred in law and on facts in deleting the addition of Its.97,84,132/ made by the AO on account of disallowance u/s 14A r.w Rule 8D. 2. The Ld CIT(A) has erred in placing reliance on the decision of the Hon'ble High Delhi Court in CIT Vs. Oriental Structural Engineering Pvt. Ltd. as the facts of which case are different from the facts of instant case. 3. The Ld CIT(A) has failed to appreciate the fact that in the case of Oriental Structural E....
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....er stated that amount of investment made by the assessee is also for strategic control and business expediency on such advance no disallowance can be made. 8. We have carefully considered the rival contentions and also perused various orders of the lower authorities. The ld CIT(A) dealt with this issue at para 21 to 24 as under:- "Decision: I have considered the submission of the appellant and observation of the Assessing Officer in the assessment order. It is seen that Assessing Officer has disallowed expenses of Rs. 1,63 50,876/- u/s 14A read with Rule 8D of the I.T. Rules, 1962 as expenses attributable to earning of exempt income. The appellant company is engaged in the business of development of integrated townships, Malls, development of management services. The area of operation of the appellant company is mainly in the state of Haryana, Gurjarat and Punjab. In the state of Haryana, if a company intend to develop a township, the minimum area required is 50 acres, however, as per section 4 of Haryana Urban Land Ceiling Act 1975, holding of Haryana Urban Land Ceiling Act, 1975, holding of the land in urban areas restricted to Rs. 7.25 hectares i.e. 17.915 acres by a singl....
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....4.12 Subsidiary 10,000 10,000 100% 1,00,000 Opal Development Pvt. Ltd. 14.83 Subsidiary 10,000 10,000 100% 1,00,000 Alpha G: Corp Management Services Pvt. Ltd. Subsidiary 10,000 10,000 100% 1,00,000 Accord Development Pvt. Ltd. Subsidiary 10,000 10,000 100% Regal Vista Developers Pvt. Ltd. 0.95 Subsidiary 10,000 10,000 100% Ages Education Pvt. Ltd. Subsidiary 10,000 10,000 100% Epitome Real Tech Pvt. Ltd. 17.67 Subsidiary 69,40,000 50,07,215 72% 5,00,72,150 Optima Development Pvt. Ltd. Joint Venture 20,000 10,000 50% 1,00,000 1,66,68,29,250 It is submitted by the appellant that the investments made in the above mentioned companies has been made with the intention to obtain the license and to arrange 50 acres of land with the help of subsidiary companies for developing a township. It is further submitted by the appellant that all these subsidiaries have transferred their development rights to the holding companies for the land bought in their name. Therefore, the int....
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....rom that investment these dividends were received by the appellant. It was contended by the appellant that for making these investments appellant did not incur any financial cost and administration cost. He has stated that it has deployed the funds in mutual funds and for investment in mutual funds advisor do not charge any fee and whatever fee or other charges are charged they are deducted from the amount of investment itself. Therefore, it was submitted by the appellant that no financial or administration expenses directly or indirectly have been incurred by the appellant for earning the dividend income. It is also submitted by the appellant that the dividend distributed by the mutual funds is after deduction of tax u/s 115R, therefore, these dividends are not tax-free income to the appellant. The Revenue has already collected the tax on the income earned on the investments in terms of the dividend tax, hence, the same cannot be taxed twice. In the assessment order, the Assessing Officer held that dividend earned from such investment is not includable in the total income of the appellant company, therefore, expenses relating to such exempt income has to be disallowed. However,....