TMI Blog2016 (3) TMI 1329X X X X Extracts X X X X X X X X Extracts X X X X ..... grieved by the order of the learned Commissioner of Income Tax (Appeals)- 6, Chennai dated 10.03.2015 in ITA No.179/CIT(A)-6/2013- 14 passed under section 143(3) r.w.s. 250(6) of the Act. 2. The assessee has raised several grounds, however the crux of the issue is that the learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance made by the learned Assessing Officer of ₹ 3,79,87,050/- being the expenditure attributable for earning exempt income by invoking the provisions of section 14A read with rule 8D. 3. Brief facts of the case are that the assessee company is engaged in the business of telecommunication, networking, computer systems, software sales services filed its e-return of income on 25.09.2010 for the assessment year 2010-11 declaring total income of ₹ 9,14,95,650/- and computed book profit of ₹ 16,78,95,019/- under section 115JB of the Act. The case was selected for scrutiny and the assessment was completed under section 143(3) of the Act on 18.03.2013. During the course of assessment proceedings, it was noticed by the learned Assessing Officer from the balance sheet of the assessee company that it had made investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14A r.w.r.8D, is as per the law and justified. Therefore the disallowance of expenses, by the Assessing Officer, u/s.14A r.w.r.8D, is justified and confirmed. The assessee fails in its appeals in this regard. 5. At the outset, learned Authorized Representative argued before us stating that the entire investments in equity shares are made in the subsidiary company of the assessee and therefore it cannot be said that any expenditure is incurred for making such investments. Further, it was pointed out that the assessee company has own funds in the form of reserves surplus exceeding the amount of investment made in its subsidiary companies and therefore to that extent of investment the assessee has interest free funds. It was therefore contended that provisions of section 14A r.w.rule 8D are not applicable in the case of the assessee. 6. The learned Departmental Representative vehemently opposed to the submissions of the learned Authorized Representative and argued in support of the orders of the Revenue. 7. We have heard both the parties and carefully perused the materials available on record. It is apparent from the facts of the case that the assessee has invested the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 was for strategic purposes only, no disallowance of interest was required to be made under Rule 8D(i) 8D(ii) and strategic investment has to be excluded for purpose of arriving at disallowance under Rule 8D(iii). iii) M/s.JM Financial Ltd., Vs. ACIT reported in 2014-TIOL- 202-ITAT-MUM held as follows: the department has not disputed this fact out 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 maintaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rule 8D also; the above view will be applicable. Moreover in the case EIH Associated Hotels Ltd v. DCIT reported in 2013 (9) TMI 604 in ITA No.1503, 1624/Mds/2012 dated 17th July, 2013, it has been held by the Chennai Bench of the Tribunal as follows:- Disallowance U/s. 14A rw Rule 8D CIT upheld disallowance Held that 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. 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 divide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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