TMI Blog2019 (9) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, DCIT, Circle 10 (1), New Delhi (hereinafter referred to as the Revenue ) by filing the present appeal sought to set aside the impugned order dated 07.05.2015 passed by the Commissioner of Income-tax (Appeals)-15, New Delhi qua the assessment year 2002-03 on the grounds inter alia that :- On the facts and circumstances of the case, whether the CIT (A)-15 has erred in restricting the disallowance from ₹ 2,69,64,423/- to ₹ 25,28,619/-. 2. Briefly stated the facts necessary for adjudication of the issue at hand are : Assessing Officer (AO) noticed that the assessee company has earned dividend income of ₹ 76,75,881/- from its equity investments in M/s. Gillette India Ltd.. AO further noticed that the assessee company is actually doing the work of establishing Gillette business in India. AO proceeded to hold that though the assessee may be in the business of making investment but since investments are resulting only in dividend income and not in any business income, the expenditure for making such investment and sustaining such investment should be allowed as deduction under section 57 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as detailed in the preceding para and apportioned the same in the ratio of 1 : 2.04 and made disallowance of ₹ 2,69,64,423/-. It is also not in dispute that during AY 2001-02, similar disallowance by applying same formula was made in assessee s own case which was followed in the year under assessment. It is also not in dispute that the assessee has earned dividend income of ₹ 76,75,881/- from its equity investment in M/s. Gillette India Ltd.. It is also not in dispute that the entire investment of the assessee company is old investment and no fresh investment has been made during the year under assessment. It is also not in dispute that while making disallowance u/s 14A, the assessee company has followed the decision rendered by the Tribunal in assessee s own case for AY 2005-06 and thereby suo motu made the disallowance of ₹ 25,28,000/-. 6. Ld. DR for the Revenue challenging the impugned order contended that this case should be remanded back to the AO to decide afresh by taking into consideration surrounding facts and circumstances which may exhibit the expenses attributable to earning of the interest free income by following the decision rendered by the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of administrative expenses as appearing in P L a/c as reproduced supra in para 1.6. It is clear from the said chart that the appellant has not considered expenses like rates taxes, insurance, travelling, repairs maintenance, freight, loss on sale of fixed assets, common service expenses and misc. expenses while working out expense attributable to earning of dividend income. On the face of it, these expenses do not appear to have any relation with earning of dividend income. However, the AO has worked out disallowance after considering all these expenses which is against the provisions contained in section 14A. Regarding interest expenses of ₹ 22,65,719, the appellant has simply contended that investment were made out of interest free funds and therefore this interest component can not be considered for working out disallowance. The appellant has however not substantiated its argument by furnishing any evidence to that effect. Admittedly the appellant is not in business of making investments and therefore if it were having any surplus funds, then it would have utilized it in more prudent way to reduce its interest liability instead of making investment where from earning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of appellant's sister concern M/s Gillette Diversified Operations Pvt. Ltd. in A Y 2005-06 by Ld. CIT(A)- XXIX, Delhi. In view of the above, the disallowance u/s 14A of the Act is restricted at ₹ 25,28,619/-. The appellant gets the consequential relief. The ground of appeal is, thus, partly allowed. 9. Even otherwise, no fresh investment has been made by the assessee company during the year under assessment. When the disallowance has been computed by the ld. CIT (A) by following the formula approved by the coordinate Bench of the Tribunal in assessee s company group case for AY 2005-06 in the similar set of facts and circumstances, no interference is required in the findings returned by ld.CIT (A). 10. Coordinate Bench of the Tribunal in assessee s company group cases (supra) decided the issue in controversy by returning following findings :- 20. The ld AR submitted before us that while working out the disallowance u/s 14A of the Act the assessee has not disallowed any expenditure on account of interest because of the reason that no interest expenditure have been incurred for making an investment in the investment yielding tax free income. He su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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