2018 (9) TMI 870

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.... for impugned AY was framed by Ld.Assistant Commissioner of Income Tax Range-4(1), Mumbai [AO] u/s 143(3) of the Income Tax Act, 1961 on 27/03/2015 wherein the income of the assessee has been assessed at Rs. 98.14 Lacs after disallowance u/s 14A for Rs. 60.08 Lacs as against returned income of Rs. 38.06 Lacs e-filed by the assessee on 24/09/2012. During impugned AY, the assessee, being resident corporate assessee, was engaged in the business of Investment Banking. 2. During assessment proceedings, it was noted that the assessee reflected exempt dividend income of Rs. 19.07 Lacs, which called for disallowance u/s 14A. The assessee had not made any suo-moto disallowance against the same in the return of income. The assessee defended the sa....

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....ly, the AO is directed to verify from the record regarding the availability of funds and subject to factual satisfaction of the AO, the interest disallowance under rule 8D(2)(ii) is directed to be deleted. Accordingly, this part of ground of the appellant is Allowed. 5.3.3. As regards disallowance under rule 8D(2)(iii), there is no dispute that the investment in shares, etc., was made for the strategic purpose of the appellant company. In this regard, I would like to refer and place my reliance on the recent decision of the Hon'ble ITAT, Kolkata in the case of CIT VS. Coal India Limited ITA NO. 1032/KOL/2012 and ITA NO. 1238/KOL/2012 order dated 13/05/2015 where the Hon'ble ITAT after considering all the relevant judgments has obse....

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.... expenses etc. It is difficult to accept that the assessee company was making investments decisions to the tune of Rs. 6,31,637/- lakhs of public money without incurring a single penny out of its pocket. Such decisions are highly strategic in nature and are required to be made by highly qualified and experienced professionals. The same would also require market research and analysis. The assessee company by acquiring controlling interest in the subsidiary companies would also be required to attend board meetings and make policy decisions with regard to the aforesaid huge amount of investments made. By no stretch of imagination, it can be assumed that such activities were done without incurring any expenditure. It is pertinent to mention her....

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....fore us. 4. The Ld. Authorized Representative for Assessee [AR], Shri. Anuj Kisnadwala, at the outset placed reliance on the order of Tribunal in assessee's own case for AY 2011-12 ITA No. 2103/Mum/2016 dated 18/12/2017 and submitted that no fresh investments were made during the year and therefore interest disallowance was not justified. Regarding expense disallowance, it was submitted that only income yielding investments were to be considered to arrive at the said disallowance in terms of decision of Delhi Tribunal (Special Bench) rendered in ACIT Vs. Vireet Investment (P.) Ltd. [82 Taxmann.com 415], a copy of which has been placed on record. The same has been controverted by Ld. DR, Ms. Pooja Swaroop, by submitting that disallowance ....