TMI Blog2017 (8) TMI 1616X X X X Extracts X X X X X X X X Extracts X X X X ..... rise - also not in dispute that the income derived by the assessee company from the investment made in its subsidiary is otherwise taxable. When assessee has not utilized any borrowed fund for investment nor made any interest payment nor earned any dividend, there is no question of making disallowance by the AO u/s 14A read with Rule 8D of the Rules. CIT (A), by considering all these facts, has rightly deleted the addition.- Decided against Revenue. - ITA No. 5569/Del./2015 - - - Dated:- 31-8-2017 - SHRI B.P. JAIN, ACCOUNTANT MEMBER And SHRI KULDIP SINGH, JUDICIAL MEMBER For the ASSESSEE : Shri Sanjiv Kapoor, CA For the REVENUE : Shri Arun Kumar Yadav, Senior DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITAT, Special Bench, New Delhi in case of M/s. Cheminvest Ltd. ITA No.87/Del/2008 computed the disallowance as per Rule 8D as under :- S.No. Particulars Amount One half% of Average value of investment income from which does not form part of total income Investment as on 01.04.2010 1,268,845,297 Investment as on 31.03.2011 2,694,761,539 3,963,606,836 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon the order of the AO. 7. However, on the other hand, the ld. AR for the assessee to repel the arguments addressed by ld. DR contended inter alia that the AO proceeded to invoke the provisions contained u/s 14A read with Rule 8D without recording his dis-satisfaction; that investment made by the assessee in its subsidiaries is for commercial expediency and not for earning any dividend nor any dividend has been received by the assessee; and relied upon the cases of Maxopp Investment Ltd. vs. CIT (2012) 347 ITR 272 (Del.) and Godrej Boyce Manufacturing Company Ltd. vs. DCIT 394 ITR 449 (SC). 8. Undisputedly, the AO, without recording dis-satisfaction, as the working out made by the assessee that no expenses have been inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure or no expenditure, as the case may be, the Assessing Officer is to accept the claim of the assessee in so far as the quantum of disallowance under section 14A is concerned. In such eventuality, the Assessing Officer cannot embark upon a determination of the amount of expenditure for the purposes of section 14A(1). In case, the Assessing Officer is not, on the basis of the objective criteria and after giving the assessee a reasonable opportunity, satisfied with the correctness of the claim of the assessee, he shall have to reject the claim and state the reasons for doing so. Having done so, the Assessing Officer will have to determine the amount of expenditure incurred in relation to income which does not form part of the total inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture Company Ltd. (supra) and Hon ble High Court of Delhi in Maxopp Investment Ltd. (supra), we are of the considered view that the findings returned by AO that, disallowance to the tune of ₹ 99,09,017/- needs to be disallowed as per Rule 8D are not sustainable in the eyes of law as there is not an iota of reasons of dis-satisfaction recorded by AO as to computation of income made by the assessee because sub-section (2) (3) of section 14A with Rule 8D of the Rules has only prescribed a formula for determination of an expenditure to earn the income which does not form part of the total income under the Act, which can only be invoked if the AO is not satisfied with the claim of the assessee. 11. Ld. CIT (A) has thrashed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecial purpose vehicles (SPY) are for the purpose of allotment and execution of various power projects in India. SPYs so formed engaged the assessee company for providing consultancy services for the projects allotted to them. Appellant submitted that consultancy income received from the subsidiary companies are offered for tax as taxable income in the return filed by the assessee. Therefore, no disallowance u/s 14A was warranted on account of these strategic investments for the purpose of promotion of business of the assessee company. 13. Moreover, the assessee has come up with specific argument that it has not incurred any interest cost for earning exempt income but this plea of the assessee has also been brushed aside by the AO witho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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