2018 (10) TMI 848

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....venue has raised several grounds in its appeal however the crux of the issue is that the Ld.CIT(A) has erred in directing the Ld.AO to exclude the investments made from own interest free funds and the investment which did not earn dividend income while computing disallowance U/s.14A of the Act. 3. The brief facts of the case are that the assessee is a limited company, filed its return of income for the assessment year 2014-15 on 29.11.2014 admitting total income of Rs. 832,89,61,630/-. Thereafter notice U/s.143(2) & 143(1) of the Act was issued to the assessee on 31.08.2015 and 08.08.206 respectively. Finally assessment order was passed U/s.143(3) of the Act on 31.12.2016 wherein the Ld.AO made addition of Rs. 8,10,21,643/- towards disallo....

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.... with respect to disallowance U/s.14A of the Act, we had held in ITA Nos.1729 & 1730/Chny/2016 in the case M/s. Sthithi Insurance Services Pvt. Ltd., vide order dated 18.06.2018 that application of Rule 8D is not automatic. If the assessee computes to the satisfaction of the Ld.Revenue Authorities the expenses incurred by it with respect to investments earning exempt dividend then the same should be disallowed. Only when such computation is not possible Rule 8D should be applied for computing the disallowance U/s.14A of the Act. The relevant portion of the order is reproduced herein below for reference:- "5.2 We have heard the rival submissions and carefully perused the materials on record. It is apparent from the facts of the case, that ....