TMI Blog2021 (2) TMI 1166X X X X Extracts X X X X X X X X Extracts X X X X ..... interest cost to the assessee, as it can be treated that the assessee has withdrawn from its capital and reserves which are assessee s interest free funds for making such investment. 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. Factually there cannot be any expenditure attributable to the investment made in sister company when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Ld. AO invoked the provisions of section 14A of the Act r.w., Rule 8D of the Rules and disallowed an amount of ₹ 8,82,13,511/-. On appeal, the Ld. CIT (A) deleted the addition by observing as follows:- VIII) Ground Nos.2 and 3 in appeal relates to applying the provisions of section 14A of the Act. Facts of the case, grounds of appeal, assessment order and submissions of the appellant were perused. It is seen from the accounts of the appellant, the appellant did not claim any exemption for income derived. Hence, the provisions of section 14A of the Income Tax Act do not have any application. The appellant relied on certain judicial decisions such s: 1. Madras High Court in the case of Redington (India) Ltd., vs. Addl. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .w. Rule 8D of the Rules and determined the disallowance of expenditure at ₹ 8,82,13,511/-. The Ld. AR further argued that on appeal, the ld. CIT (A) deleted the addition by holding that since the assessee had made the entire investment out of its non-interest-bearing fund, no interest expenditure can be attributed for making the investment which is justifiable and appropriate. It was therefore pleaded that the directions of the Ld. CIT (A) to delete the addition may be upheld. 6. We have heard the rival submissions and carefully perused the materials on record. Factually for making any investment in equity shares by any entity only the following categories of expenditure will be attributable: - (i) Interest on interest bearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th 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 out of its own interest free fund. When the above facts were pointed out to the Ld. DR, he could not controvert to the same however, he relied on the order of the Ld. AO. Considering these factual aspects of the issue, We are of the view that the order of the ld. CIT (A) deleting the disallowance of expenditure made by the Ld. AO invoking the provisions of section 14A of the Act read with Rule 8D of the Rules does not call for interference. Hence, we hereby confirm the order of the Ld. CIT (A) on this issue. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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