TaxTMI 
TaxTMI 
2021 (6) TMI 286
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....A.Y 2013-14 & 2014-15. Since the issues involved in all these four appeals are similar and identical, hence they are clubbed, heard and consolidated order is passed. For thesake of convenience, we shall take up ITA No. 3055/Mum/2019 A.Y 2010-11 as lead case and facts narrated therein. The revenue has raised the following grounds of appeal. "1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justif ied in allowing relief of Rs. 1,64,77,989/- by concluding that where the funds of the company were sufficiently more than the investment made in a year, the provisions of Sec. 14A red with rule 8D(2)(ii) of the Act are inapplicable without analyzing the decision of Apex Court in the case of M/....
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....at Para -7 to 10 of the order as under: "7. The assessee submits that it has minimal activities relating to exempt income. It is neither an investor nor a trader in shares. It has made investments in the subsidiary companies to retain management and control of such companies and not to earn income. The said investments were made out of proprietary funds and not out of borrowed funds. In this regard, the assessee has relied on the decision of the ITAT Mumbai in the case of Garware Wall Ropes Limited V Additional CIT(ITA No 5408/Mum/2012 and ITA NO.4957/Mum/2012). To this effect, the ITAT has also directed the undersigned to reconsider the issue in light of such decision, As such, during the computation of disallowance under....
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....y such investments. 10. It is worthwhile here to refer to section 14A(3) of the Act which calls for the application of rule 8D even in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to exempt income. As discussed in the foregoing paragraphs also, the investments into subsidiaries as well as mutual funds would require some expenses, the quantification of which would be done as per rule 8D, In fact, the ITAT Mumbai has also noted in its order the fact that expenses could be attributed for earning dividend income (para 5 of such order) 3. Whereas, the A.O has considered the facts referred at para 11.2 and calculated disallowance u/r 8D(ii) of the IT Rules of Rs. 1,64,77,689/- an....
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....nd therefore disallowance u/s 14A r.w.r 8D(2)(ii) is not sustainable and directed the A.O to delete the addition. Whereas, in respect of disallowance u/s 14A r.w.r 8D(2)(iii) the CIT(A) has upheld the action of the A.O and partly allowed the appeal of the assessee. Aggrieved by the CIT(A)order, the revenue has filed an appeal before the Hon'ble Tribunal. 5. At the time of hearing, Ld.DR submitted that the CIT(A) has erred in directing the A.O to delete the addition as the exempt income is received by the assessee from investments and relied on the order of the A.O. None appeared on behalf of the assessee. 4. We heard the Ld.DR and perused the material on record. Prima-facie, the sole disputed issue envisaged by the Ld.DR that the C....
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.... AO to decide the issue in light of the decision of ITAT, Mumbai In the case of Garware Wall Ropes Ltd., (supra). Barring that, the Hon'ble ITAT did not give any direction as to how the disallowance under Rule 8D(2) was to be computed. 4.4.2 1 have examined the appellant's claim that it had sufficient interest free fund of its own with reference to appellant's balance sheets and found that the claim is correct. The Hon'ble Bombay High Court in the case of Reliance Utilities & Power Ltd. (Supra) held as under: "The principle therefore would be that if there are funds available both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the int....