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2016 (9) TMI 637 - AT - Income TaxDisallowance under section 14A - Held that:- Disallowance of interest expenditure is concerned under Rule 8D(2)(ii), we find that, at the time of making the investment, the assessee had huge surplus/own funds available which far exceeded the investment made, therefore no disallowance of interest should be made. Accordingly, we direct the AO to delete the disallowance of interest. As regards the disallowance of indirect expenditure under Rule 8D(2)(ii) we agree with the contention of the Ld. Counsel that, so far as the investment made in subsidiary and Associate Companies are concerned, they are by way of strategic investments and, therefore, same should not form part of the working of average value of investment while computing the disallowance. Accordingly, we hold that investments which have been made mostly by way of strategic investments and stock-in-trade should not rope in for the purpose disallowance. Looking to the facts and circumstances of the case and in the interest of justice, we are of the opinion that the disallowance should be scaled down and some estimate disallowance should be made, having regard to the nature of expenditure debited and the exempt income earned at ₹ 2,95,450/-. Accordingly, we hold that 10% of the dividend income would be reasonable for allocating the indirect expenditure for the earning of exempt income. Such an estimate is purely on the facts and circumstances of the case. Thus, grounds with regard to disallowance under section 14A are treated as partly allowed. Disallowance on account of transaction charges paid to stock-exchange by invoking of the provisions of section 40(a)(ia) - Held that:- The payments made to the stockexchange is not in the nature of ‘technical services’ but for facilities provided by the stock-exchange and accordingly, no TDS is deductible under section 194J. Assessee was not required to deduct TDS on such payment and accordingly, no disallowance under section 40(a)(ia) is called for.
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