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2017 (10) TMI 176 - ITAT DELHIDisallowance u/s. 14A read with Rule 8D - sufficiency of funds - Held that:- It is evident that the assessee had sufficient own funds, which were utilised for making any investment in inventories and to sundry debtors to the tune of ₹ 18.19 crores and for making new investment in shares of M/s HAIL of ₹ 6,63,30,000. In addition, the assessee company had current year's profit of ₹ 6.85 crores. Under the circumstances, I hold that the new investment of ₹ 6.63 crores made in the shares of M/s HAIL, the subsidiary company was made out of own funds of the assessee and not from the borrowed funds. Accordingly, no disallowance under Section 14A could have been made. Regarding the administrative expenses in respect of making such an investment, evidently the investment has been made in the subsidiary company, therefore, no effort in the form of market research, monitoring and seeking paid assistance of professionals in making such investment was needed. Accordingly, we hold that no administrative efforts can be attributed to making of investment in the shares of HAIL, the subsidiary company. On careful consideration of the reasoning given by the AO for making the addition under Rule 8D in the assessment order, we find that the AO has not examined the claim of the assessee in this regard. Moreover, the AO did not consider that investment of ₹ 18.75 crores was deleted by the ITAT and the new investment of ₹ 6.63 crores was also made in the same manner out of own fund of the assessee for the purpose of making investment in subsidiary company for the purpose of core business of the assessee. Further, it has already held that no administrative expenses can be attributed to making such an investment in the subsidiary company. Keeping in view the same, we find that the lack of satisfaction of the AO with the claim of the AO is not on cogent grounds. Accordingly, the AO could not have invoked the provisions of Rule 8D, in the light of the binding decision of the Hon'ble Delhi High Court in the case of CIT Vs. Maxopp Investments (2011 (11) TMI 267 - Delhi High Court ).- Decided against revenue
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