TaxTMI 
TaxTMI 
2021 (2) TMI 1082
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....ive identical grounds in its appeals and the crux of the issue is that the Ld. CIT (A) has upheld the order of the Ld. AO who invoked the provisions of section 14A of the Act r.w. Rule 8D of the Rules and disallowed expenditure of Rs. 8,13,694/-, Rs. 13,25,953/- and Rs. 13,32,135/- for the AY: 2012-13, 2013-14 and 2014-15 respectively. 3. The brief facts of the case are that the assessee is a private Limited Company engaged in the business of Computer Software filed its return of income on 29/9/2012, 26/11/2013 and 28/11/2014 declaring its total income for the AY 2012-13, 2013-14 and 2014-15 respectively. Thereafter, the case of the assessee was taken up for scrutiny and the assessment was completed on 27/3/2015, 14/3/2016 and 25/8/2016 ....
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....are Inc used to subcontract all its work to M/s. Adaequare Info Private Limited (AIPL). In order to acquire M/s. Adaequare Inc. USA, Mr. P. Pavan floated M/s. AIPL Holdings Inc as a Special Purpose Vehicle to ensure takeover of M/s. Adaequare Inc. USA. M/s. Adaequare Info Private Limited invested USD 5,32,000 (Rs. 2,07,58,000/-) to hold 70% in the shares of AIPL holdings Inc in the FY 2007-08, apart from the 30% equity shares held by Mr. P. Pavan. Further, the company had invested this amount out of its accumulated profits amounting to Rs. 2,36,91,192/-. AIPL Holdings Inc in-turn acquired 100% equity stake in M/s. Adaequare Inc thereby making adaequare Inc as the Step-down subsidiary of M/s. Adaequare Info Private Limited. The appellant sub....
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....ccount, the appellant has. * Long Term Borrowings Rs. 53,01,361 (2012-13) Rs. 1,38,18,744 (AY 2013-14) and Rs. 1,22,52,160 (AY 2014-15) * Other current liabilities of Rs. 1,20,90,960 (AY 2012-13), Rs. 1,37,67,625 (AY 2013-14) and Rs. 51,73,392 (AY 2014-15) * Short term loans and advances to the tune of Rs. 1,48,95,660 (AY 2012-13, Rs. 31,53,989 (2013-14) and Rs. 58,73,749 (AY 2014-15) * The company has 'Long Term loans and advances' amounting to Rs. 1,02,87,433 (2012-13), Rs. 3,09,72,516 (2013-14). * Trade payables of Rs. 10,39,812 (AY 2012-13) Rs. 21,02,966 (2013-14) and Rs. 24,15,687 (AY 2014-15) * It is prudent also note that the finance cost as per the annual accounts for the....
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....ve that kind of money. Hence, I find that the Assessing Officer has correctly applied U/s. 14A. As the calculation has been made under Rule 8D, the addition is upheld." 4. At the outset, the Ld. AR submitted that the assessee had made the entire investment in its subsidiary companies out of its non-interest bearing funds because the assessee's equity share and accumulated profit were more than the investment made in the subsidiary companies. Therefore, neither any interest cost could be attributed for making such investment nor any other cost because the entire investment was made in its own subsidiary company. It was therefore requested that the addition made by the Ld. Revenue Authorities may be deleted. The Ld. DR on the other han....
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....investment in its own company there cannot be any cost attributable with respect to direct and indirect expenses towards the process of decision making, due diligence, managerial expenditure, and portfolio management expenditure because no such cost can arise for making investment in one's own entity. Further, only meagre expenses can be attributable with respect to clerical and stationary expenses which is negligible and that is deserved to be ignored. Therefore, factually there cannot be any expenditure attributable to the investment made in sister company when the investment is out of its own interest free fund. When the above facts were pointed out to the Ld. DR, he could not controvert to the same however, he relied on the order of....