2019 (2) TMI 1543

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....The only effective issue to be decided in this appeal is as to whether Ld. CIT(A) was justified in directing the Ld. AO to consider only those investments that had yielded dividend income while computing the disallowance u/s.14A of the Act r.w.r. 8D(2)(iii) of the IT Rules in the facts and circumstances of the case. The interconnected issue thereof is as to whether the disallowance u/s.14A of the Act could be made in respect of strategic investments made by the assessee. The interconnected issue further involved herein is as to whether the disallowance u/s.14A of the Act read with Rule 8D(2) of the Rules could be made while computing the book profits u/s.115JB of the Act. 3. Facts of A.Y.2013-14 are taken up for adjudication and the decisi....

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....o moto disallowance of Rs. 35,00,000/- on an estimated basis for the purpose of computation of book profits u/s 115JB of the Act. The Ld. AO proceeded to work out the disallowance u/s.14A of the Act while computing the book profits u/s 115JB of the Act in the following manner:- Expenses as worked out u/s.14A 0.5% of investment Rs. 51,36,26,389 i. Income exempt in computation of book profit Rs. 32,43,53,846 ii. Income exempt in normal computation of income Rs. 199,64,44,659 iii. Addition under clause (f) of Explanation to Section 115JB   Rs. 51,36,26,389 x Rs. 132,43,53,846 _____________________________________ Rs.199,64,44,659 Rs.34,07,17,225 7. Accordingly, the Ld. AO made disallowance of Rs. 33,72,17,245/- u/s.14A while....

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....bmissions. We find that with regard to disallowance u/s.14A of the Act r.w.r. 8D(2)(iii) of the rules under normal provisions of the Act, we find that the Special Bench of the Delhi Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd., reported in 165 ITD 27 had held that only those investments that had yielded exempt income are to be considered while working out the disallowance under Rule 8D of Rules. Respectfully following the said Special Bench decision, we do not find any infirmity in the order of the Ld. CIT(A) with regard to disallowance u/s.14A under normal provisions of the Act. Accordingly Ground No.(i) raised by the revenue is dismissed. 11. With regard to computation of book profits u/s.115JB of the Act, the Special Ben....