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2018 (2) TMI 1340 - ITAT MUMBAIDisallowance u/s 14A r.w. Rule 8D - Held that:- CIT(A) had rightly concluded that no disallowance of the interest expenditure was called for in the hands of the assessee under Sec. 14A r.w. Rule 8D(2)(ii). While computing the disallowance as per Rule 8D(2)(iii), the average investments were to be worked out after excluding the said CCD’s. We have given a thoughtful consideration to the issue and are of the considered view that as per 8D(2)(iii) the average value of investments that have to be considered for working out the disallowance are those, the income from which does not or shall not form part of the total income. We are of the considered view that the CIT(A) rightly observing that as the interest received on the Compulsorily Convertible Debentures of Tikona Digital Networks Pvt. Ltd. was taxable, therefore, the same could not be permitted to form part of the average value of investments contemplated in the formula laid down in Rule 8D(2)(iii). We thus finding no infirmity in the directions of the CIT(A) that the disallowance under Sec. 14A r.w. Rule 8D(2)(iii) was to be worked out after excluding the Compulsorily Convertible Debentures of Tikona Digital Networks Pvt. Ltd. of ₹ 49,97,15,040/-, therefore, uphold his order to the said extent.
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