TMI Blog2016 (7) TMI 1275X X X X Extracts X X X X X X X X Extracts X X X X ..... te O R D E R Per A. Mohan Alankamony, AM:- This appeal is filed by the Revenue aggrieved by the order of the learned Commissioner of Income Tax (Appeals)- 1, Chennai dated 09.12.2015 in ITA No.59/CIT(A)-1/2014-15 passed under section 143(3) r.w.s. 250(6) of the Act. 2. The Revenue has raised several grounds in its appeal, however, the crux of the issue is as follows:- The learned Commissioner of Income Tax (Appeals) has erred in deleting the addition of ₹ 86,62,748/- made by the learned Assessing Officer by invoking the provisions of section 14A r.w.r 8D. 3. Brief facts of the case are that the assessee is a company engaged in the business of trading, clearing and forwarding filed its return of income for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividend and claimed exempt by the assessee during the relevant year and not otherwise. 6. In ACIT v. M. Baskaran (supra) the facts related to the assessee which had not received any exempt income. The ITAT held therein that disallowance u/s 14A could not be sustained in such circumstances. In Cheminvest Ltd v. CIT (Supra) the Hon'ble Delhi High Court held that disallowance u/s 14A envisages that there should be a actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. In other words, s.14A will not apply if no exempt income is received or receivable during the relevant previous year(para 23). 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore us by stating that the assessee had made investments only in its sister concerns out of its free funds for strategic reasons. On the earlier occasion, this Bench of the Tribunal has held the issue in favour of the assessee. The gist of the Tribunal decision in the case of Rane Holdings Ltd. Vs. ACIT in ITA No.115/Mds/2015 dated 06.01.2016 is reproduced herein below for reference:- 5. We have heard both the parties and carefully perused the materials available on record. On the identical issue as pointed out by the Ld. A.R. the Chennai bench of the Tribunal in ITA No.156/Mds/2013 vide order dated 20/08/13 for the assessment year 2009-10 has remitted back the matter to the Ld. Assessing Officer to decide the matter once again afresh b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the total investment about 98% of the investment are in subsidiary companies of the assessee and, therefore, the purpose of investment is not for earning the dividend income but having control and business purpose and consideration. The assessee has brought out a case to show that no expenditure has been incurred for maintaining the 98% of the investment made in the subsidiary companies, therefore, in the absence of any finding that any expenditure has been incurred for earning the exempt income, the disallowance made by the Assessing Officer is not justified, accordingly the same is deleted. (iv) CIT Vs. Bharti Televenture Ltd. reported in (2011) 331 ITR 0502. Where the assessee was found to be having adequate noninterest bearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... average value of investment under the provisions of Rule 8D after deleting investments made by the assessee in subsidiary company. Taking note of the above decisions and the decision of the Chennai bench of the Tribunal in ITA No.156/Mds/13 cited supra, we hereby remit the matter back to the file of Ld. Assessing Officer to examine the issue involved in this case afresh and pass appropriate order as per law and merits and in the light of the decisions cited herein above. While doing so, we also direct the Ld. Assessing Officer to consider the decision of the Tribunal in the case M/s Agile Electric Sub Assembly Pvt. Ltd. cited supra wherein it was held as follows:- 7.2 In regard to applicability of Section 14A of the Act read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable in regard to investments made for acquiring the shares of the assessee s sister concerns. Accordingly we restrain ourselves from interfering with the Order of the Ld.CIT(A) on this regard. Therefore, following the aforesaid decision of the Tribunal, we hereby direct the learned Assessing Officer to delete the addition made by invoking the provisions of section 14A r.w. Rule 8D of the Act, subject to verification that investments are made by the assessee in its sister concerns only and from its interest free funds. 8. Following the above decision of the Tribunal, we remit back the matter to the file of the learned Assessing Officer to verify whether the investments are made by the assessee out of its interest free funds in it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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