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2021 (2) TMI 776 - ITAT KOLKATADisallowance u/s 14A r.w.r 8D - Whether investments which yielded dividend income should be considered for the purpose of Rule 8D? - HELD THAT:- We note that for the relevant assessment year i.e. AY 2015-16 the settled law in respect of computing disallowance under Rule 8D(2)(iii) was the decision of this Tribunal in REI Agro Ltd. [2013 (9) TMI 156 - ITAT KOLKATA] There is an amendment in law which happened by the passage of the Finance Act, 2016 which is applicable for AY 2017-18 onwards, so the amended provision of section 14A read with Rule 8D of the Rules would be not be applicable for this relevant AY, so the direction by the Ld. CIT(A) for AY 2015-16, is legally untenable Law applicable on this issue will be as laid in REI Agro Ltd. (supra) wherein this Tribunal has directed that only investments which yielded dividend income should be considered for the purpose of computing of disallowance under Rule 8D(2)(iii) of the Rule. Therefore, the directions given by the ld. CIT(A) with regard to three specific investments made in mutual fund to AO to consider the monthly average of such dividend bearing investment have not the sanction of law, since it may, if applicable only from AY 2017-18 and not before that, therefore, we modify the order of the Tribunal and direct the AO to consider the disallowance made under Rule 8D(2)(iii) should be restricted to the average of the opening and closing value of those investments appearing as on 01.04.2014 and 31.03.2015 which actually yielded dividend income during the relevant FY.
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