2018 (5) TMI 1035

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....0 of the Income Tax Act by the learned Commissioner of Income Tax (Appeals), New Delhi (here- in-after referred to as 'CIT (A)') is bad in law and wrong on facts, in upholding the disallowance to the extent of Rs. 8,45,28,000/- under Section 14A of the Income Tax Act, 1961 without appreciating the assessee's submissions that the assessee has not incurred any expenditure to earn the incomes which do not form part of the Total Income. ii. That on the facts and in the circumstances of the case, the learned CIT(A) has erred in upholding the action of A.O. in applying Rule 8D automatically without the A.O first giving cogent reasons for rejecting the assessee's claim in this regard. iii. That on the facts and in the circumstanc....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....A) on this issue, we remit the issue to the file of AO to examine and verify the average value of investments after excluding the investments on which dividend has not been earned during the year, investments in OM I FCO, Omar and investments in cooperative societies. The AO shall thereafter proceed to calculate the disallowance under section 14A read with Rule 8D (2) (iii). Needless to say that the assessee shall be afforded proper opportunity to present its claim." 2.1. Thereafter assessee preferred an application under section 254 (2) of the Act for rectification of certain mistake apparent from record. This Tribunal while deciding the application observed and held as under: "2................... it was also submitte....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....mpt income which were in the nature of strategic investments for the purposes of business and not made with the intent to earn dividend income. Ld. counsel submitted that these were not to be considered for the purpose of making disallowance under section 14 A of the Act. 2.3. It has also been submitted by Ld. counsel that expenditure in respect of interest under rule 8D (2) (iii) cannot be attributed for computing the disallowance under section 14 A since assessee has its own funds in the form of reserves and surplus as well as share capital. 2.4. On the contrary Ld.Sr.DR submitted that the issue regarding investments by way of strategic investments now stands covered with the decision of Hon'ble Supreme Court in the case of Maxopp I....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the Ld. Sr. DR that under section 14 A, dominant purpose for which investment in shares is made by assessee is not relevant. He submitted that the moment assessee earns dividend which do not form part of total income, expenditure incurred in relation to earning of such income needs to be computed for the purposes of disallowance under section 14 A. 2.6. Ld. Sr. DR also submitted that insofar as attribution of interest under Rule 8D (2) (iii) is concerned, this issue has been set aside by this Tribunal to Ld.AO to be calculated by giving proper opportunity to assessee vide order dated 30/11/16. This issue according to him has not been recalled by order dated 08/08/2017. 3. We have perused the submissions advanced by both the sides in ....