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2018 (2) TMI 1934 - AT - Income TaxAddition u/s 14A - HELD THAT:- In Godrej & Boyce Manufacturing Company Ltd. [2017 (5) TMI 403 - SUPREME COURT] has held that the literal meaning of Section 14A, far from giving rise to any absurdity, appears to be wholly consistent with the scheme of the Act and the object/purpose of levy of tax on income. The statute does not grant any exemption to the strategic investments which are capable of yielding exempt income to be excluded while computing disallowance u/s 14A. Our decision is fortified by the decision of the Hon’ble Karnataka High Court in the case of United Breweries vs. DCIT [2016 (6) TMI 647 - KARNATAKA HIGH COURT] As we have relied on the decision of the Hon’ble High Court, we are not adverting to the order of the Tribunal on the same issue. We hold that strategic investment made by the appellant are not be excluded while calculating average value of investment. As the above details were not examined either by the AO or the Ld. CIT(A), we restore the matter to the file of the AO to make a fresh order on disallowance u/s 8D(2)(iii) only, after examining the shares of the appellant in the foreign company vis-a-vis its taxability and allowing the same for the purpose of working out the average investment. We direct the appellant to file the details of shares in foreign company before the AO. Needless to say, the AO would give a reasonable opportunity of being heard to the appellant before finalizing the order. Also the AO is directed to allow the benefit of ₹ 28,19,646/- suo motu disallowed by the appellant. Grounds of appeal in respect of disallowance under Rule 8D(2)(i) and Rule 8D(2)(iii) are allowed, whereas, the appeal under Rule 8D(2)(iii) is allowed for statistical purposes. Depreciation of leased assets - HELD THAT:- During the course of hearing, both the Ld. counsel and the Ld. DR agree that the issue may be sent back to the AO for verification. Having perused the relevant materials on record, we restore the matter on claim of depreciation on leased assets to the file of the AO to verify the same and allow as per the provisions of the Act, after giving reasonable opportunity of being heard to the appellant. We direct the appellant to file the relevant documents/evidence before the AO. Thus the above ground of appeal is allowed for statistical purposes.
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