TMI Blog2018 (7) TMI 1994X X X X Extracts X X X X X X X X Extracts X X X X ..... did not yield any dividend were not excluded while calculating the disallowance? - HELD THAT:- AO has included those investments which yielded no exempt income during the year for the purpose of calculation of disallowance under Rule 8D(2)(iii) which in our opinion is wrong and against the ratio laid down by the Delhi Special Bench in the case of ACIT vs. Vireet Investments Pvt. Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] as decided that investments not yielding any income during the year have to be excluded for the calculation of average investments and only thereafter the 0.5% has to be applied. We, therefore, respectfully following the special bench decision, direct the AO to work out the disallowance by excluding the investments which yiel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving a direction to the Assessing Officer to obtain necessary evidences, in respect of ground no. 1 above, when the said evidences were already on the record of the lower authorities. 3. Both the lower authorities erred in applying Section 14A in respect of investments held by the appellant, when the income received thereon is not tax-free income. 4. The appellant submits the learned Commissioner (Appeals) erred in confirming the disallowance of ₹ 62,87,653/- under Section 14A read with Rule 8D(2)(iii). 5. The appellant submits that both the lower authorities erred in not excluding investments on which no dividend was received while computing the above disallowance. 6. The learned Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently the expenses claimed by the assessee were disallowed. 5. In the appellate proceedings, the Ld. CIT(A) partly allowed the appeal of the assessee by observing and holding as under: 3.2. I have considered the findings of the Assessing Officer as well as rival submission of the Appellant, carefully. According to the clarification of the Assessee, it has incurred Electricity charges, Security charges, House Keeping charges and Salary to the Sweeper and ex-gratia to the contractual staff to the extent of ₹ 8,12,870/- for Elphinstone Bldg. and ₹ 7,99,129/- for Colaba Property. It is pertinent to mention that this issue has been decided by my Ld. Predecessor in the Appellant's own case in A.Y.2009-10 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into separate agreement for providing certain service for which separate payment is made by the tenants, whereas assessee has included this payment for services also in the rent and offered the some as rent for taxation, therefore, before arriving at annual value the amount received by the assessee on account of other services is to be excluded from the rent received. But assessee has further told that the entire amount received from these tenants on account of other services has not been spent and, therefore, proportionate amount spent for these two tenants out of the total claim of ₹ 1,60,239/- only is to be reduced after calculating the same, for which the assessee will furnish the detail before the A.O. in result, the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o disregarding the fact that the investments which did not yield any dividend were not excluded while calculating the disallowance. 11. The facts in brief are that the assessee received dividend income to the tune of ₹ 8,48,87,567/- and made a suo-moto disallowance of ₹ 12,79,280/-. The AO observed that since the working is not in accordance with the provision of section 14A read with rule 8D and accordingly invoked the provisions of section 14A read with Rule 8D directing the assessee to furnish a working of disallowance under these provisions. 12. The assessee submitted before the AO that disallowance be restricted to 20% of expenses which comes to ₹ 12,79,280/- and is in accordance with the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the year has to be excluded while calculating the average investments and only then disallowance has to be worked out. The Ld. A.R. prayed before the Bench that the AO be directed to compute the disallowance under Rule 8D(2)(iii) by not taking into account the investments which yielded no dividend during the year the details whereof are given at page No.64 of the paper book. 15. The Ld. D.R., on the other hand, relied on the order of authorities below. 16. After carefully considering the rival submissions of both the parties and perusing the material on record, we find that the AO has included those investments which yielded no exempt income during the year for the purpose of calculation of disallowance under Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X
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