2025 (8) TMI 148

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....nd the corresponding disallowance while computing book profit under section 115JB. 3. The brief facts qua the issue involved are that the assessee company is engaged in selling of advertising space, subscriber management services and other related services. The Assessing Officer noted that the assessee had invested in instruments yielding exempt income. The assessee had made a suo moto disallowance under section 14A read with Rule 8D to the tune of Rs. 8,21,54,351/- on exempt income of Rs. 36,21,04,362/- earned from investments in Zee Entertainment Enterprises Ltd. (ZEEL). The assessee computed the disallowance under Rule 8D(2)(iii). However, the Assessing Officer, without recording his dissatisfaction as mandated under section 14A(2), p....

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....ct, 1961, read with Rule 8D of the Income Tax Rules, which was subsequently deleted by the learned CIT(A), both under the normal provisions and while computing book profits under section 115JB. 8. At the outset, it is imperative to underscore that the assessee had, on a suomoto basis, disallowed an amount of Rs. 8,21,54,351 under section 14A read with Rule 8D(2)(iii), acknowledging the expenditure incurred in relation to the earning of exempt income. The Assessing Officer, however, proceeded to invoke Rule 8D(2)(ii) as well, thereby enhancing the disallowance to Rs. 77,69,33,907, without recording any objective dissatisfaction with the assessee's method of computation, as required under section 14A(2). 9. The factual substratum of the....

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....rves amounting to Rs. 95,100.08 lakhs, which far exceeded the value of investments at Rs. 17,647.78 lakhs. Therefore, it would be a fallacy to presume that any part of the investment in tax-free instruments was funded through interest-bearing borrowings. 12. The learned CIT(A) has rightly relied upon the binding decisions of the Tribunal in the assessee's own case for A.Ys. 2014-15 and 2015-16, where the identical issue had arisen and was adjudicated in favour of the assessee. In the decision rendered in ITA No. 1209/Mum/2023 for A.Y. 2014-15, the Tribunal meticulously analysed the nature and source of investments, particularly the shares acquired under amalgamation, and held that no disallowance under Rule 8D(2)(ii) was called for, as t....