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2017 (6) TMI 293 - AT - Income TaxAddition u/s 2(22)(e) - determination of shareholding of the assessee - Held that:- We are of the view that the Assessee was a registered and beneficial shareholder of shares of M/S.Mega Resources Ltd., that conferred voting rights of only 1.7%. It is only this share holding that has to be considered for applying the first limb of Section 2(22)(e) and the shareholding of the Assessee’s subsidiary M/S.Hooghly Mills Projects Ltd., should not be considered and it is irrelevant. The question in the present case is not even as to whether the Assessee is a beneficial shareholder of the shares held by M/S.Hoogly Mills Projects Ltd. We therefore uphold the order of CIT(A) and dismiss ground no.1 raised by the revenue. Disallowance of expenses incurred in earning exempt income u/s 14A - Held that:- As far as the disallowance u/r 8D(2)(iii) is concerned, we are of the view that the CIT(A)’s direction to direct the AO to consider, while working out the average value of investments, only investments that yielded tax free income is correct and is line with the decision of the ITAT, Kolkata Benches in the case of REI Agro Ltd. Vs DCIT [2013 (9) TMI 156 - ITAT KOLKATA] which has since been approved by the Hon’ble Calcutta High Court. We therefore confirm the order of the CIT(A) and dismiss Gr.No.2 raised by the revenue.
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