TMI Blog2019 (1) TMI 1796X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to some reasonable proportion of actual dividend received and such disallowance cannot in any case, exceed exempt dividend income earned during the relevant year , this proposition is based on the decision Joint Investments P. Ltd. vs CIT [2015 (3) TMI 155 - DELHI HIGH COURT] as holds the field and while respectfully following the same, we find that the disallowance shall not exceed the exempt income. Set aside the issue and remand the matter to the file of the learned AO to work out the disallowance by calculating the average investment under Rule 8D(2)(ii)/(iii) by taking only those investments which have actually yielded the dividend income during the relevant year and if it exceeds the exempt income, then restrict the same to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jain , Advocate, MsTejasvi Jain, Advocate For the Respondent : Smt. Sulekha Verma, CIT DR ORDER PER K. NARASIMHA CHARY, JM Challenging the order dated 23/12/2013 in appeal No. 407/11-12 passed by the learned Commissioner of Income Tax (Appeals)-XVIII, New Delhi ( Ld. CIT(A) ), assessee preferred this appeal. 2. Brief facts of the case for the disposal of this appeal are that M.s Religare Enterprises Ltd. (assessee) is a holding company of Religare Group of companies and their business is to provide support and strategic directions to its wholly owned subsidiaries, in the capacity of a holding company. For the Asstt. year 2009-10, they have filed their return of income on 30.9.2009 declaring a total taxable income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are incapable of yielding tax free income. The assessee further challenged that the disallowance of audit fee was also bad under law and the learned CIT(A) should have directly credited the tax deducted at source and allowed the set off of brought forward losses and unabsorbed depreciation. However, by way of additional grounds, assessee raised the question that the disallowance u/s 14A of the Act was bad for including strategic/business investment of the assessee; that the disallowance u/s 14A of the Act should have been computed only qua the investment which yielded exempt income during the relevant previous year and in any case, the disallowance u/s 14A cannot exceed the dividend income actually earned by the assessee. 5. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year should be considered, we are convinced with this argument and in fact, the Hon ble jurisdictional High Court in ACB India Ltd. (supra) held that the learned AO is required by the mandate of Rule 8D(2)(i) to (iii) detailed in the methodology to be adopted; and the learned AO cannot adopt the average value of the total investment instead of the average value of investment of which income is not part of a total income i.e. value of tax exempt investment. In view of this binding precedent, we find that the learned AO had to consider only those investments which have actually yielded the tax exempt income during the relevant year and not the total investment. 8. On the aspect of the contention of the assessee that the disallowance shou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was payment of TDS on the payments made to the auditor and lsodisallowance u/s 40A(ia) while computing the taxable income. Learned CIT(A), therefore, felt that it is an afterthought and refused to accept the same. 11. On this aspect, we do not find any reason to interfere with the findings of learned CIT(A) and it is not substantiated before us as to how the findings of the learned CIT(A) are incorrect. We, therefore, uphold the findings of the learned CIT(A). 12. In so far as the short credit of TDS amount is concerned, learned CIT(A) recorded that the assessee submitted an application for rectification and it was still pending. In such circumstances, learned CIT(A) directed the AO to allow the claim after proper verification. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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