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Hindustan Platinum Pvt. Ltd. Versus The Asstt. Commissioner of Income Tax- (OSD)

2015 (10) TMI 1418 - ITAT MUMBAI

Disallowance u/s 14A read with Rule 8D - Held that:- Since the assessee has made investment in a Wholly Owned Subsidiary Overseas - Epsilon Limited, Mauritius, the dividend income of which was liable to be taxed in India, the A.O. was not justified in taking such investment for computing disallowance to be made under Rule 8D. The same should not be taken into account while computing the disallowance under Rule 8D(2)(iii) of the I.T. Rules. Accordingly we direct the A.O. to exclude such strategic .....

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s during the years from such redemption proceed only new purchases of investments have been made. It appears that no borrowings had been used for investing in Mutual funds from which income not forming part of total income have been earned. Therefore the interest cost which had been used by ACIT - (OSD) should be excluded while applying Rule 8D. In view of the above discussion, we restore the matter back to the file of A.O. for re-working the amount of disallowance to be made u/s 14A of the Act. .....

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ming of disallowance of ₹ 27,71,693/- made by the A.O u/s 14A read with Rule 8D. 3. Rival contentions have been heard and perused the records. The facts in brief are that the assessee is engaged in the business of refining and manufacturing of platinum group metals etc. and generation of Wind Power. While making addition of ₹ 27,71,693/- the A.O. has taken into consideration indirect expenses debited to P & L account of ₹ 8,63,16,407/- & average investments of ₹ 2 .....

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e facts. As per section 14A(2), the Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, having regard to the accounts of the assesse, if the Assessing Officer is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. As per the ld. A.R. assessee had sufficient internal accruals for making such investm .....

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horities and contended that the A.O. has rightly applied Rule 8D as per decision of Hon'ble jurisdictional High Court in the case of Godrej & Boyce Mfg. Co. Ltd. 328 ITR 81. 5. We have considered the rival contention and found that as per schedule 6' of balance sheet assessee was having Long Term (Unquoted) Investments in Wholly Owned Subsidiary Overseas- Epsilon Limited-Mauritius. As per Rule 8D only those investments should have been considered for the purpose of calculation of Ave .....

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