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2018 (9) TMI 422 - ITAT KOLKATADisallowance made u/s 14A - assessee company made suo moto disallowance - Held that:- The assessee’s total income for the year under consideration has been computed under normal provisions of the Act since the tax payable under 115JB was less then tax payable under normal provisions of the Act. This fact is very much evident from the assessment order itself. Hence the plea of the learned AR that the assessee had paid tax on Long Term Capital Gain under section 115JB does not come to the rescue of the assessee. Only the dividend income had suffered dividend distribution tax u/s 115O and that too in the hands of dividend distributing company and not in the hands of the assessee herein. The assessee company having received dividend of ₹ 12,43,558/- had not suffered any tax thereon and had claimed the same as exempt in its return of income which is in accordance with the provisions of the Act. Hence the preliminary question reframed herein above that the provisions of Section 14A per se are not applicable to the assessee is decided against the assessee. With regard to the computation of disallowance u/s 14A read with Rule 8D of the rules, we find from the balance sheet of the assessee that the assessee has got sufficient own funds of ₹ 12.93 crores whereas investments made by the assessee was only ₹ 7.54 crores. Hence it can be safely presumed that the investments were made only out of the own funds of the assessee - As relying on Reliance Utilities & Power Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] no disallowance under the second limb of section 8D(2)(ii) towards interest is required to be made in the instant case. With regard to the disallowance made under Rule 8D(2)(iii) of the rules amounting to ₹ 3,26,941/-, we find that the Co-ordinate Bench of this tribunal in the case of REI Agro Ltd. reported in [2013 (9) TMI 156 - ITAT KOLKATA] had held that only those investments which had resulted dividend income should be considered for the purpose of computing disallowance thereon. Accordingly, we direct the Ld. A.O. to recompute the disallowance to be made under Rule 8D(2)(iii) Addition on account of Portfolio Management Services (PMS) fees paid as not eligible for deduction while computing the capital gains of the assessee - Held that:- As relying on KRA Holding & Trading Pvt. Ltd. vs DCIT [2011 (5) TMI 498 ITAT Pune] PMS fees paid by the assessee in the sum of ₹ 18,93,788/- is eligible for deduction while computing Short Term Capital Gain. Accordingly, ground raised by the assessee is allowed.
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