TMI Blog2021 (2) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... can be treated that the assessee has withdrawn from its capital and reserves which are assessee's interest free funds for making such investment. For making investment in its own company there cannot be any cost attributable with respect to direct and indirect expenses towards the process of decision making, due diligence, managerial expenditure, and portfolio management expenditure because no such cost can arise for making investment in one's own entity. Only meagre expenses can be attributable with respect to clerical and stationary expenses which is negligible and that is deserved to be ignored. Therefore, factually there cannot be any expenditure attributable to the investment made in sister company when the investment is ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed U/s. 143(3) r.w.s 250(6) of the Act for the AYs 2012-13, 2013-14 and 2014-15. 2. The assessee has raised five identical grounds in its appeals and the crux of the issue is that the Ld. CIT (A) has upheld the order of the Ld. AO who invoked the provisions of section 14A of the Act r.w. Rule 8D of the Rules and disallowed expenditure of ₹ 8,13,694/-, ₹ 13,25,953/- and ₹ 13,32,135/- for the AY: 2012-13, 2013-14 and 2014-15 respectively. 3. The brief facts of the case are that the assessee is a private Limited Company engaged in the business of Computer Software filed its return of income on 29/9/2012, 26/11/2013 and 28/11/2014 declaring its total income for the AY 2012-13, 2013-14 and 2014-15 respectively. Therea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to negotiate with the owners of the company which had employed him in the USA. The reason to take over the company in the USA was since Adaequare Inc used to subcontract all its work to M/s. Adaequare Info Private Limited (AIPL). In order to acquire M/s. Adaequare Inc. USA, Mr. P. Pavan floated M/s. AIPL Holdings Inc as a Special Purpose Vehicle to ensure takeover of M/s. Adaequare Inc. USA. M/s. Adaequare Info Private Limited invested USD 5,32,000 (₹ 2,07,58,000/-) to hold 70% in the shares of AIPL holdings Inc in the FY 2007-08, apart from the 30% equity shares held by Mr. P. Pavan. Further, the company had invested this amount out of its accumulated profits amounting to ₹ 2,36,91,192/-. AIPL Holdings Inc in-turn acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to exempt income. Accordingly, the Assessing Officer made disallowance U/s. 14A. On verification, it is noticed that as per the Balance Sheet and P L Account, the appellant has. Long Term Borrowings ₹ 53,01,361 (2012-13) ₹ 1,38,18,744 (AY 2013-14) and ₹ 1,22,52,160 (AY 2014-15) Other current liabilities of ₹ 1,20,90,960 (AY 2012-13), ₹ 1,37,67,625 (AY 2013-14) and ₹ 51,73,392 (AY 2014-15) Short term loans and advances to the tune of ₹ 1,48,95,660 (AY 2012-13, ₹ 31,53,989 (2013-14) and ₹ 58,73,749 (AY 2014-15) The company has 'Long Term loans and advances' amounting to ₹ 1,02,87,433 (2012-13), ₹ 3,09,72,516 (2013-14). Trade payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates/directs the outflows of the company. In the case where the appellant is paying the interest of ₹ 13,70,159 (AY 2012-13), ₹ 18,25,847 (AY 2013-14) and ₹ 24,90,058(AY 2014-15), it is obvious that appellant does not have that kind of money. Hence, I find that the Assessing Officer has correctly applied U/s. 14A. As the calculation has been made under Rule 8D, the addition is upheld. 4. At the outset, the Ld. AR submitted that the assessee had made the entire investment in its subsidiary companies out of its non-interest bearing funds because the assessee's equity share and accumulated profit were more than the investment made in the subsidiary companies. Therefore, neither any interest cost could be attributed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame because, there is no interest cost to the assessee as it can be treated that the assessee has withdrawn from its capital and reserves which are assessee's interest free funds for making such investment. Further, for making investment in its own company there cannot be any cost attributable with respect to direct and indirect expenses towards the process of decision making, due diligence, managerial expenditure, and portfolio management expenditure because no such cost can arise for making investment in one's own entity. Further, only meagre expenses can be attributable with respect to clerical and stationary expenses which is negligible and that is deserved to be ignored. Therefore, factually there cannot be any expenditure attr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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