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Shri Jigar P. Shah, Versus Assistant Commissioner of Income Tax – 21 (1) , Mumbai

2016 (2) TMI 910 - ITAT MUMBAI

Addition under section 14A - Held that:- Recently the Hon’ble Delhi High Court in the case of “Eicher Goodearth Ltd. vs. CIT” (2015 (5) TMI 685 - DELHI HIGH COURT) has held that if the expenditure is incurred for the purpose of promotion of business-more specifically to retain control or as part of his strategic investment of the assessee company, such expenses by way of interest out go would have to be treated as allowable under section 36(1)(iii) of the Act.

We direct the AO to veri .....

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> O R D E R Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 19.05.2014 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2010-11. 2. The sole issue raised by the assessee through his grounds of appeal is relating to the confirmation of addition under section 14A of ₹ 2,46,650/-. At the outset, the Ld. A.R. of the ass .....

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nts made by the assessee were not for the purpose of earning of exempt income but the same were relating to the business strategy of the assessee. He, therefore, has contended that while making out the disallowance under section 14A read with rule 8D of the Income Tax Rules, the strategic investments made in the group concerns should not be considered and be excluded while calculating the disallowance under rule 8D. 3. So far the contention of the Ld. AR that no disallowance is attrac .....

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been heard and perused the records. The A.O. has made the disallowance u/s 14A r.w. Rule 8-D at 0.5% of administrative expenses. There was no disallowance on account of interest while working out the disallowance u/s 14A of the Income Tax Act, 1961. It was argued by the learned A.R. that the assessee has investments in companies which are its group companies where the assessee holds substantial stake. The Id. A.R. submits that strategic investments, per se do not require any day today monitorin .....

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. Sule - ITA No. 3684/M/05 iv) EIH Associated Hotels vs. DCIT - ITA No. 1503/Mad/12 v) Interglobe Enterprises Ltd. vs. DCIT - ITA No. 1362 & 1032/De1/13 vi) JM Financial Limited vs. ACIT - ITA No. 4521/M/12 vii) CIT vs. Oriental Structural Engineers P. Ltd. - ITA 605 of 2012(HC) viii) ACIT vs. Oriental Structural Engineers P. Ltd. ITA No. 4245/De1/2011 ix) Garware Wall Ropes Ltd. vs. ACIT - ITA No. 5408/M/2012 In vi .....

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