TMI Blog2016 (2) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Petitioner: Mr.R.Vijayaraghavan,Advocate For the Respondent : Mr.B.Lakshminaryanan,JCIT, D.R ORDER PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: These two appeals in ITA Nos.2169/Mds/2015 2170/Mds/2015 are filed by the assessee, aggrieved by the separate orders of the Ld. CIT-I, Chennai in New No.ITA144/CIT(A)-1/13-14 in New No.ITA.88/CIT(A)-1/09-10 both the orders dated 27.08.2015 passed U/s. 143(3) r.w.s.254 u/s.143(3) r.w.s.147 of the Act for the assessment years 2004-05 2005-06 respectively and the other two appeals in ITA Nos.2171/Mds/2015 No.2172/Mds/2015 are filed by the Revenue, aggrieved by the order of the learned CIT(A) in No.ITA.88/CIT(A)-1/09-10 (supra) No.ITA.37/CIT(A)-1/10-11 both the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in its subsidiary company for the assessment year 2004-05, 2005-06 and 2006-07. Since the investment was made in equity share capital and share application money the learned Assessing Officer opined that provisions of section 14A will be applicable and accordingly invoked the same for all the three assessment years. The learned CIT(A) upheld the view of the learned Assessing Officer in all the three assessment years. 5. At the outset, learned AR submit ted before us that all the investments were made in sister company of the assessee and therefore section 14A of the Act will not be applicable in the case of the assessee. 6. Learned DR, on the other hand, relied on the orders of the Revenue. 7. We have heard both the parties and car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- When assessee has prima facie brought out case that no expenditure has been incurred for earning income, which does not form part of total income, then in absence of any finding that expenditure has been incurred for earning exempt income provisions 14A cannot be applied.. ii) Integlobe Enterprieses Ltd., Vs. DCIT repoted in (2014) 40 CCH 0022(Del. Trib.) held as follows:- No disallowance of interest is required to be made under rule 8D(i) 8D(ii) where no direct or indirect interest expenditure was incurred for making investments. Where the assessee had utilized interest free funds for making fresh investments and that too into its subsidiaries, which was not for the purpose of earning exempt income and which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... free funds of its own which were generated in the course of the relevant financial year, apart from substantial shareholders fund, presumption stands established that the investments in sister concerns were made by the assessee out of interest free funds and therefore no part of interest on borrowings can be disallowed on the basis that the investments were made out of interest bearing funds. (vi) EIH Associated Hotels Ltd Vs. DCIT reported in 2013-TIOL-796- ITAT-MAD . The investments made by the assessee in the subsidiary company are not on account of investment for earning capital gains or dividend income. Such investments have been made by the assessee to promote subsidiary company into the hotel industry. The assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in the subsidiary company are not on account of investment for earning capital gains or dividend income. Such investments have been made by the assessee to promote subsidiary company into the hotel industry. A perusal of the order of the CIT(Appeals) shows that out of total investment of ₹ 64,18,19,775/-, ₹ 63,31,25,715/- is invested in wholly owned subsidiary. This fact supports the case of the assessee that the assessee is not into the business of investment and the investments made by the assessee are on account of business expediency. Any dividend earned by the assessee from investment in subsidiary company is purely incidental. Therefore, the investments made by the assessee in its subsidiary are not to be reckoned for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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