TaxTMI 
TaxTMI 
2017 (8) TMI 1616
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....ment Year 2011-12 on the grounds inter alia that :- "1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance made u/s 14A read with rule 8D(iii) in respect of investment in the subsidiary domestic Company. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance u/s 14A holding no disallowance can be made when no exempt income is earned ignoring the circular no. 5/2014 of the Board. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in relying upon the decision of jurisdictional High Court in the case of M/s Holcim India Pvt. Ltd. ignoring the fact that the Hon'ble High Cou....
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....dition of Rs. 99,09,017/- made by the AO by allowing the appeal filed by the assessee. Feeling aggrieved, the Revenue has come up before the Tribunal by way of challenging the impugned order passed by ld. CIT. 5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 6. Ld. DR for the Revenue challenging the impugned order contended inter alia that the AO has worked out the disallowance under Rule 8D as per accounts rendered by the assessee having been duly explained at the second last page of the assessment order; that section 114 of the Evidence Act, 1872 raises pr....
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....ent of adopting a specific method of determining such expenditure has been introduced by virtue of .sub-section (2) of section 14A . Prior to that, the assessee was free to adopt any reasonable and acceptable method. So, even for the pre-rule 80 period, whenever the issue of section 14A arises before an Assessing Officer, he has, first of all, to ascertain the correctness of the claim of the assessee in respect of the expenditure incurred in relation to income which does not form part of the total income under the Act. Even where the assessee claims that no expenditure has been incurred in' relation to income which does not form part of the total income, the Assessing Officer will have to verify the correctness of such claim. In case, t....
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.... form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. Whether such determination is to be made on application of the formula prescribed under Rule 8D or in the best judgment of the Assessing Officer, what the law postulates is the requirement of a satisfaction in the Assessing Officer that having regard to the accounts of the assessee, as placed before him, it is not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee. It is only thereafter that the provisions of Section 14A(2) and (3) read with Rule 8D of the Rules or a best judgment determination, as earlier prevailing, would become applicable." 11.....
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....t to the tune of Rs. 19.62 crores as on 31.03.2011 was in debentures which was nil as on 31.03.2010. The interest income on debentures is taxable in India. Therefore, AO has erred in considering the above investments in debentures for the purpose of disallowance u/s 14A. Similarly, investments of Rs. 91.55 lakhs as on 31.03.2010 and Rs. 6.86 crores as on 31.03.2010 are investments in equity shares of foreign subsidiary companies. The dividend income from foreign companies is taxable. Therefore, AO has erred in considering the above investments in shares of foreign subsidiary companies for the purpose of disallowance u/s 14A. The remaining investments are entirely investments in equity shares in domestic subsidiary companies for strategic bu....