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2016 (9) TMI 1527 - ITAT BANGALOREDisallowance u/s 14A - HELD THAT:- There is no quarrel on the point that Rule 8D is applicable only from the Assessment Year 2008-09 onwards and therefore the same is not retrospective and not applicable for the year under consideration. Hence in view of the order of this Tribunal for the Assessment Year 2007-08, the issue of disallowance under Section 14A is set aside to the record of the Assessing Officer with the similar direction. Disallowance as per Rule 8D(2)(iii) - HELD THAT:- So far as fresh investment is concerned the assessee’s own fund is more than sufficient to cover them and therefore to that extent no disallowance is called for under Section 14A on account of interest expenditure. As records the old investment which was made prior to the Assessment Year 2007-08, the issue has a direct bearing of the finding and final outcome on this issue for the Assessment Year 2006-07 [2014 (12) TMI 1010 - ITAT BANGALORE] . Since the said issue is also set aside to the record of the Assessing Officer therefore the issue of disallowance of interest expenditure under Section 14A of the Act to the extent of old investment is set aside to the record of the Assessing Officer with same direction as given for the Assessment Year 2006-07. Since there is a dividend income for the Assessment Year 2009-10 therefore the decision of Hon'ble Delhi High Court in the case of Cheminvest Ltd. Vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT] was not applicable for the Assessment Year 2008-09 regarding disallowance of administrative expenditure being 0.5% of the average investment. Assessee has submitted that the investment for the purpose of disallowance of administrative expenditure should be considered only on which the assessee has earned dividend from mutual funds. AR has submitted that only ₹ 90 Crores and ₹ 2,58,000 can be considered as investment for the purpose of disallowance as per Rule 8D(2)(iii). Accordingly, we direct the Assessing Officer to recompute the disallowance as per Rule 8D(2)(iii) by considering the investment in mutual funds which has yielded dividend income. Disallowance of claim of depreciation on goodwill - assessee being amalgamated company - HELD THAT:- It is not the case of the assessee that the subsidiary has claimed any depreciation of goodwill. Therefore by virtue of 5th proviso to Section 32(1), the depreciation on the hands of the assessee is allowable only to the extent if such succession has not taken place. Therefore the assessee being amalgamated company cannot claim or be allowed depreciation on the assets acquired in the scheme of amalgamation more than the depreciation is allowable to the amalgamating company. There is no quarrel on the issue that goodwill is eligible for depreciation. However the said judgment would not over-ride the provisions of 5th proviso to Section 32(1) of the Act which restricts the claim in the cases specified thereunder. The consideration paid by the assessee for acquiring the shareholding of the subsidiary in the earlier years is not relevant for the issue of depreciation on the assets taken under amalgamation and for the purpose of 5th proviso to Section 32(1) of the Act. Accordingly, in view of the above facts and circumstances of the case as well as the above discussion, we hold that the claim of depreciation in the hands of the assessee is subjected to the 5th proviso to Section 32(1) of the Act.- Decided against the assessee.
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