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2019 (11) TMI 1432 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - assessee has earned dividend income and claimed the same as exempted income under Section 10(35) - CIT(Appeals) allowed the claim of the assessee on the ground that it was invested in the subsidiary companies for strategic investments - HELD THAT:- As rightly submitted by the Ld. D.R. and the Ld.counsel for the assessee, even if the investment was made in subsidiary company and for strategic investment, the provisions of Section 14A of the Act would be applicable. CIT(Appeals) is not correct in saying that the strategic investment made in the subsidiary companies is to be excluded. Contention of the Ld. D.R. that in view of the language employed in Rule 8D(2)(iii) of Income-tax Rules, 1962 “does not” and “shall not”, even the investment which has potential to earn profit in the subsequent year also has to be considered for disallowance. This Tribunal is of the considered opinion that in view of the decision of Special Bench of Delhi Bench in the case of Vireet Investment (P.) Ltd . [2017 (6) TMI 1124 - ITAT DELHI] what is to be considered is only the investments which result in exempted income during the year under consideration. AO has to find out the investment which yielded exempted income during the year under consideration. Accordingly, the orders of both the authorities below are set aside and the entire issue of disallowance made under Section 14A of the Act is remitted back to the file of the AO. AO shall re-examine the matter and find out on the basis of material filed by the assessee, the investments which yielded exempted income during the year under consideration and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.- Appeal filed by the Revenue is allowed for statistical purposes.
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