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2022 (12) TMI 436 - AT - Income TaxSet off of current year business loss against foreign dividend income and upholding the levy of tax u/s 115BBD on gross foreign dividend income - whether the assessee would be entitled for deduction u/s 80G of the Act from the foreign dividend income forming part of Gross Total Income? - HELD THAT:- We find that the non-obstante clause is provided in section 115BBD(1) of the Act itself. Hence it would be cover both current year loss as well as brought forward business loss. We hold that the assessee would be entitled for set off of brought forward business losses against foreign dividend income. Hence the assessee would also be eligible for set off of current year loss against foreign dividend income. We hold that assessee would be entitled for set off of current year loss with the foreign dividend income, assessee would be entitled for set off of brought forward business losses and unabsorbed depreciation of earlier years with the foreign dividend income and assessee would be eligible for deduction u/s 80G of the Act from the Gross Total Income subject to the restrictions provided in that relevant section. Disallowance u/s 14A both under normal provisions of the Act as well as in the computation of book profits u/s 115JB - HELD THAT:- We find that the investments made in subsidiary companies for the purpose of holding dominant control over the same or for the purpose of strategic investments would also have to be considered for the purpose of working out the disallowance u/s 14A of the Act in the light of decisionin the case of Maxopp Investments [2018 (3) TMI 805 - SUPREME COURT] The same could be considered only in respect of those investments which had actually yielded exempt income to the assessee company during the year under consideration. Obviously, the foreign dividend income which is chargeable to tax would be outside the purview of application of provisions of section 14A. CIT(A) had merely directed the ld. AO to exclude the investments which had yielded taxable income and to include only those investments which had actually yielded exempt income. This issue is now very well settled by the decision of Hon’ble Supreme Court in the case of Maxopp referred to supra. Hence we do not find any infirmity in the order of the ld. CIT(A) giving directions to ld. AO to recompute the disallowance under normal provisions of the Act. Computation of book profits u/s 115JB - computation mechanism provided in Rule 8D(2) of the Rules cannot be imputed in clause ‘f’ of Explanation 1 to section 115JB(2) of the Act as has been held by the Special Bench of Delhi Tribunal in the case of Vireet Investments [2017 (6) TMI 1124 - ITAT DELHI] However, the actual expenses incurred by the assessee thereon would have to be considered in clause ‘f’ which has already been done by the assessee in the instant case, while computing book profits u/s 115JB of the Act. Hence the directions of the ld. CIT(A) are modified accordingly.
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