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2017 (5) TMI 161 - AT - Income TaxAddition u/s 14A read with rule 8D - disallowance u/r 8D(2)(iii) made suo-moto by the assessee in the return of income at 0.5% of average investments and reiterated by AO in the assessment order - Held that:- AO accepted the disallowance computed by the assessee in the return of income. This being the position, we find that what the assessee is seeking, at the most, is rectification of mistake made by the assessee in the return of income for which separate procedure / remedy has been provided in the Act. The calculation made by assessee as well as AO were made as per the formulae prescribed u/r 8D(2)(iii) @0.5% of average investments. Even on merits, we find that the investment made by the assessee during impugned AY substantially rose from ₹ 0.22 crores as on 31/03/2010 to ₹ 52.24 Crores as on 31/03/2011 and it is hard to accept that such huge investments did not entail even a single rupee of expenses in terms of manpower / administrative resources. No distinction has been made between strategic and non-strategic investments. The Ld. AR has contested that the disallowance could not be made as the assessee did not earn any dividend and secondly, the investments were strategic and placed reliance various judicial pronouncements in this regard placed in the paper book. However, we have already noted that Rule 8D(2)(iii) uses the expression ‘shall not form’ which shows that the factum of actual receipt of dividend is not material so as to attract this disallowance. - Decided against assessee. Computation of book profit u/s 115JB - Held that:- Since, we have already dismissed the assessee’ appeal on the issue of disallowance u/r 8D(2)(iii), the same being, consequential in nature, also gets dismissed. To summarize, whatever disallowance has been suffered by assessee u/s 14A read with Rule 8D, corresponding adjustment thereof shall also be made in Book Profit u/s 115JB.
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