AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (12) TMI 1119
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....rounds of appeal:- "1. Whether on the fact and circumstances of the case and in law the learned CIT (A) was right in holding that if there are funds available both interest free and loans fund then presumption would arise that investment is made out of interest free fund for calculation of disallowance under Section 14A read with Rule 8D2(ii) when the issue of mixed fund as pending before larger Bench of Supreme Court. More so when no nexus is established by the assessee to prove that own i.e. interest free funds were initiated to make the investment? 2. Whether on the facts and in the circumstances of the case and in law, the learned CIT (A) was correct in holding that the interest portion of the refund issued earlier has to be ignored for the purpose of calculating interest under Section 244A of the Income-tax Act, 1961 (the Act), payable to the assessee, on refund arising out of the order giving effect to order of appellate authority? 3. the learned CIT (A)'s order is contrary in law and on the facts and deserves to be set aside. 4. The appellant prays that the order of CIT (A) on the above grounds be set aside and that of the Assessing Officer restored. The appellant cr....
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....ot agree with the contentions of the assessee that if the bank is holding shares as investment or stock-in-trade, the provisions of Section 14A of the Act would apply. He held so as per the decision of Hon'ble Supreme Court in case of Maxopp Investment Ltd. However, he found that the stand of the learned Assessing Officer in invoking the provisions of Section 14A of the Act is proper. However, with respect to the indirect expenses disallowance cannot be made as the assessee having huge interest free funds more than the investment yielding tax free income. Further, the disallowance made by the learned Assessing Officer under Rule 8D(2)(ii) of the Act was restricted up to Rs.5,92,74,298/- over and above the suo moto disallowance of the assessee at Rs.11,73,702/-. This is computed at the rate of 0.5% of average investment of Rs.1,208.96 crores computed originally. 08. With respect to the granting of the interest he followed the decision of the co-ordinate Bench, wherein it has been held that amount of refund has to be adjusted towards interest payable to the assessee and then it shall be adjusted to tax. He directed the learned Assessing Officer to follow the decision of the co-o....
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....unjab and Haryana High Court on the other hand, have agreed in providing this interpretation to section 14A of the Act. The entire dispute is as to what interpretation is to be given to the words 'in relation to' in the given scenario, viz. where the dividend income on the shares is earned, though the dominant purpose for subscribing in those shares of the investee company was not to earn dividend. We have two scenarios in these sets of appeals. In one group of cases the main purpose for investing in shares was to gain control over the investee company. Other cases are those where the shares of investee company were held by the assessees as stock-in-trade (i.e. as a business activity) and not as investment to earn dividends. In this context, it is to be examined as to whether the expenditure was incurred, in respective scenarios, in relation to the dividend income or not. 34. Having clarified the aforesaid position, the first and foremost issue that falls for consideration is as to whether the dominant purpose test, which is pressed into service by the assessees would apply while interpreting Section 14A of the Act or we have to go by the theory of apportionment. We are o....
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....yielding tax free income. It was also observed that the Assessing Officer had not brought on record any nexus between the borrowed funds and amounts invested by the Respondent. The Tribunal, therefore, held that the disallowance made by the Assessing officer under rule 8D(2)(ii) of the Rules was not permissible. The learned Counsel for the Appellant has not disputed the aforesaid facts and on this ground additionally, no challenge can be maintained to the deletion of the disallowance made under this Rule. 16. The learned counsel for the Appellant has contended that the decision of the Tribunal deleting the addition of Rs. 1,58,00,000/- made by the JAO under section 14A of the Act read with rule 8D(iii) is incorrect since the said amount was offered for disallowance suo moto by the Respondent. 17. In this regard, the Tribunal has observed that the facts of the Respondent in the present appeal are similar to the order passed by another Bench of the Tribunal in the case of Nice Bombay Transport (P.) Ltd. v. Asstt. CIT [2019] 103 taxmann.com 338/175 ITD 684 (Delhi - Trib.) wherein issue relating to Section 14A of the Act read with Rule 8D of the Rules in respect of shares held in s....