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TMI Blog2016 (11) TMI 654X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings the AO noted that the assessee, in its computation of income, has claimed dividend income of Rs. 4,44,237/- as exempt. However, no expenses has been claimed against the said exempted income. He, therefore, asked the assessee to justify the same and asked him to explain as to why the provisions of section 14A r.w. Rule 8D of the I.T. Act and I.T. Rule should not be invoked. 3. The assessee submitted that the said provision has already taken into consideration by the assessee and the assessee has suomotu disallowed Rs. 85,823/- u/s.14A of the I.T. Act. The relevant submission of the assessee before the AO reads as under : "Your Honour has asked our company to show cause as to why the addition of Rs. 13,27,400/- u/s.14A r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not exempt. The assessee made elaborate submissions. However, the CIT(A) was also not satisfied with the submission made by the assessee and upheld the action of the AO by observing as under : "5.3 I have carefully considered the facts of the case & law apparent from the records. The appellant has received dividend of Rs. 4,44,237/-. The appellant itself has disallowed Rs. 85,823/- u/s.14A. The appellant has claimed that appellant has made investment of Rs. 25,33,44,800/- in Kalyani Mauritius Pvt. Ltd. and divided from this investment is not exempt. During the assessment proceedings appellant did not submit details of dividend received and AO invoked rule 8D. The contention of the appellant that investment in Kalyani Mauritius Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case and in law, "1.1 The learned CIT(A) erred in confirming disallowance u/s.14A r. w. Rule 8D at Rs. 13,27,400/- as against Rs. 85,823/- as worked out by the Appellant Company while computing Total Income as per Regular Provisions as well as Book Profits u/s 115JB of the Act. 1.2 The learned CIT(A) erred in not specifically deleting the disallowance of Rs. 12,41,577/- made by the ld. A.O. u/s. 14A over and above the disallowance offered by the assessee of Rs. 85,823/- when he himself has accepted that the investment made by the assessee company in Kalyani Mauritius Pvt. Ltd. was to be excluded while computing the disallowance u/s. 14A r.w.r 8D since the difference between the amount of disallowance offered by the assessee and worke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition of domestic company indicates that it applies only to Indian company and it is not applied to a foreign company. Therefore, disallowance u/s.14A is uncalled for. In any case the dividend income from the foreign company is taxable. Referring to page 18 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the investment of Rs. 25,73,17,371/- as per schedule 7. Referring to schedule 7, a copy of which is placed at page 22 of the paper book he submitted that the said investment includes an amount of Rs. 25,23,44,800/- being 37,85,000 shares of Euro one each in Kalyani Mauritius Pvt. Ltd., a joint venture company set up in the Republic of Mauritius. Referring to page 42 of the paper book he drew th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mauritius company. Referring to the order of the CIT(A) the Ld. Counsel for the assessee drew the attention of the Bench to para 5.3 of the order and submitted that the Ld.CIT(A) while allowing ground of appeal No.1.2 taken before him in the first para has however deviated from the same in the subsequent para and thereby dismissed the ground of appeal No.1.1. He submitted that this action of the CIT(A) is self contradictory. He submitted that the CIT(A) has held that investment made in the company incorporated outside India the dividend income of which is taxable in India should not be considered for calculation of Rule 8D. However, in the subsequent paras he has upheld the action of the AO in making disallowance of Rs. 12,41,577/- on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corporated outside India the dividend income of which is taxable in India should not be considered for calculation of Rule8D, however, has upheld the action of the AO in making disallowance of Rs. 12,41,577/- on the ground that assessee did not furnish details of dividend received and AO was not satisfied with the claim of expenses for the exempt dividend income. 11. I find the order of the CIT(A) is self contradictory. While in one part of the order he holds that no disallowance is called for under Rule 8D since the investment made in the company is incorporated outside India and dividend there from is taxable in India, however, at the same time he holds that the computation done by the AO is correct. The assessee has successfully demonst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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