TaxTMI 
TaxTMI 
2022 (3) TMI 18
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....income on 30th September, 2015 declaring the total income at Rs. 1,14,72,950/-. During the course of assessment proceedings, the AO noted that the assessee company has shown investment to the tune of Rs. 88.5 crores and has received dividend income of Rs. 5,70,99,418/-. He, therefore, asked the assessee to explain as to why the disallowance u/s 14A r.w. Rule 8D should not be made. It was explained by the assessee that it has not incurred any expenditure for the current year in relation to the exempt income and, therefore, provisions of section 14A(1) is not applicable in view of the decision of the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Hero Cycles. However, the AO was not satisfied with the arguments advanced by the ass....
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....n 14A In the instant case. Therefore, the AO held that Rule 8D of I.T. Rule 1962 is squarely applicable in this case. Since, the Appellant Company had not disallowed any expense for earning the exempt income, it failed to justify the method adopted by it for determination of disallowance u/s. 14A, therefore, the AO correctly held that the method provided under Rule 8D of I.T. Rule, 1962 is applicable in this case. The submissions filed by the appellant have been considered and not found to be tenable. In view of the decision of the Hon'ble Supreme Court in the case of Maxopp Investment Ltd. vs. CIT, New Delhi (civil Appeal nos. 104-109 of 2015) dated 12.02.2018, the addition of Rs. 40,35,192/- u/s. 14A r.w. Rule 8D is upheld. The workin....
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....d Commissioner of Income Tax (Appeals) may kindly be deleted and appeal of the appellant company be allowed." 6. The ld. Counsel for the assessee submitted that the AO has not recorded satisfaction for disallowance u/s 14A r.w.r. 8D and, therefore, the disallowance made by the AO and sustained by the ld.CIT(A) should be deleted in view of the decision of Hon'ble Supreme Court in the case of Maxopp Investments Ltd. vs. CIT, reported in 402 ITR 640. He submitted that the assessee has shown investment of Rs. 88.5 crores and has not received dividend income in respect of some of the investments. He submitted that out of 26 investments, the assessee has received dividend only on 6 investments. Referring to the decision of the Hon'ble Supreme C....
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....Ltd. vs. ACIT, reported in 374 ITR 108, submitted that for computing the average value of investments, only those investments which had yielded dividend income during the year has to be considered. 6.3 He submitted that after considering all these decisions and considering the investments on which the assessee has received dividend income, the average investment comes to Rs. 16,55,49,405/- and 0.5% of such investment comes to Rs. 8,26,747/-. Which at best can be disallowed u/s 14A r.w. Rule 8D. He accordingly submitted that the computation made by the AO for disallowance u/s 14A r.w.r. 8D has to be modified if at all any addition/disallowance is called for. 7. The ld. DR, on the other hand, heavily relied on the order of the AO and the CI....