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2018 (5) TMI 496 - AT - Income TaxDisallowing the additional amount u/s 14A r.w.r. 8D(2)(i) on account of interest expenditure directly relating to earning the exempt income - Held that:- The investments in the subsidiary company are out of commercial expediency and made from the strategic point of view in order to gain control over the said subsidiary company and not to earn dividend. As in Max Opp Investments Ltd Vs CIT [2018 (3) TMI 805 - SUPREME COURT OF INDIA] has held that the disallowance has to be made even in case of strategic investments in the associate company. Therefore, following the ratio laid down by the apex court we uphold the order of CIT(A) . The ground raised by the assessee is dismissed. MAT computation - addition made u/s 14A - Held that:- Addition made under section 14A while computing the profit under MAT provision is squarely covered by the decision of Special Bench of the Tribunal in the case of ACIT vs. Vireet Investment (P.) Ltd [2017 (6) TMI 1124 - ITAT DELHI]wherein it has been held that computation under clause (f) of Explanation 1 to section 115JB(2) is to be made without resorting to computation as contemplated under section14A read with rule 8D of the Act. Accordingly, the ground raised by the assessee is allowed and the AO is directed to delete the addition while computing book profit under MAT Addition of interest not allowable under section 36(1)(iii) - Held that:- The advances were either transferred to the assessee company from those subsidiary which merged with the assessee w.e.f. 01.04.10 or given to subsidiary out of commercial expediency for purchase of flat are under business commitment under MOU entered into by the assessee with M/s. Smit Capital Services Pvt. Ltd. We observe that all the advances are connected with the business of the assessee and none was given for non business purposes. The case of the assessee is squarely covered by the decision of “S.A. Builders vs. CIT” (2006 (12) TMI 82 - SUPREME COURT). We are not in agreement with the findings of Ld. CIT(A) that advances were given for non business purposes and nor out of commercial consideration. Consequently, the disallowance of interest amounting affirmed by the Ld. CIT(A) cannot be sustained.
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