TMI Blog2016 (6) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... estments and exclude the strategic investments while calculating the disallowance under rule 8D for the purpose of section 14A of the Income Tax Act. Hence, the matter is referred back to the AO to decide it afresh. Apportionment of expenses in relation to the share transaction activity by treating the same as speculative activity of the assessee under the provisions of explanation to section 73 - Held that:- Interest of justice will be well served, if opportunity is granted to the assessee to agitate the said ground before the Ld. CIT(A) and the Ld. CIT(A) decide the said ground on merits. We accordingly restore this issue to the file of the Ld. CIT(A) with a direction to decide this issue afresh - ITA Nos.6236/M/2013 & 182/M/2013 - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble Bombay High Court in the case of Kotak Securities Ltd. 340 ITR 333 wherein the Hon'ble Bombay High Court has held that the payment made to stock exchange was for managerial services that constitutes fees for technical services under section 194J of the Act and that TDS is required to be deducted on such payments and that non deduction of TDS on such payments attracted disallowance under section 40(a)(ia) of the Act. The Ld. A.R. of the assessee, however, has relied upon the decision of the Hon'ble Supreme Court in the case of CIT vs. Kotak Securities Ltd. in civil appeal No.3141 of 2016 Others vide order dated 29.03.16 and has contended that the decision of the Hon'ble Bombay High Court (supra) has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. In view of our findings given vide ground No.1, the appeal of the assessee is treated as allowed. 5. Now coming to the appeal i.e. ITA No.182/M/2013 for A.Y. 2009-10. ITA No.182/M/2013 for A.Y. 2009-10 6. The assessee in this appeal has taken two grounds of appeal. First ground is relating to the disallowance under section 14A read with rule 8D and the second ground is relating to the disallowance of ₹ 15,00,000/- on account of apportionment of expenses in relation to the delivery based share transaction activity by way of deeming such activity as speculation activity in terms of provisions of explanation to section 73 of the Act. 7. Apart from that the assessee has taken an additional ground pleading that the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the investments so made were old investments and that no new investments were made during the year. He, therefore, has submitted that the strategic investments 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. 11. So far as the contention of the Ld. AR that no disallowance is attracted in relation to strategic investments made in the sister concerns/group companies where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 view of the above judicial pronouncements, the ld. A.R. prayed that the A.O. be directed to exclude the investments made in foreign subsidiaries and investment made in companies which are strategic in nature while computing the disallowance u/s 14A of the Act in respect of administrative expenses. 4. On the other hand, the ld. D.R. relied on the orders of lower authorities. 5. We have considered the rival contentions, careful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent purposes or with the object of earning of dividend/tax exempt income, but the same, in the light of above referred to Judicial decisions can safely be said to be related to the business activity of the assessee and no disallowance, therefore, is attracted on such an income u/s 14A of the Act. 13. In view of the above decisions and respectfully following the same, we direct the AO to verify the claim of the assessee regarding the strategic investments and exclude the strategic investments while calculating the disallowance under rule 8D for the purpose of section 14A of the Income Tax Act. Hence, the matter is referred back to the AO to decide it afresh. Ground No.2 14. The Ld. A.R., at the outset, has stated that the ground No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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