TMI Blog2022 (2) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 1962. Hon'ble Delhi High Court in the case of ACB India Ltd. vs. ACIT [ 2015 (4) TMI 224 - DELHI HIGH COURT ] has held that for the purpose of provisions of section 14A, instead of taking into account the total investment, the investment attributable to dividend was required to be adopted and, thereafter, the disallowance was to be arrived at. We, therefore, deem it proper to restore the issue to the file of the AO with a direction to recompute the disallowance u/s. 14A r.w.r. 8D by considering the investments which has actually yielded dividend income and decide the issue as per fact and law, after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion: The singular issue in the appeal is with reference to disallowance of ₹ 12,51,461/- of invoking section 14A r.w.r. 8D. The computation given by the AO for the purpose of disallowance is as under:- Total loss declared by the assessee 3,30,19,180 Addition/disallowances (as discussed above) 1. Disallowance u/sl4A of the Act - 12,51,461 12,51,461 Total loss 3,17,67,719 Rounded off 3,17,67,720 4.2 The appellant has stated that while making the disallowance the opening balance of investment has been taken a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er seen that the mechanism and the rule 8D does not envisage such a situation specifically. In fact there is certainly an anomaly which provides for no disallowance in accordance with 8D(2)(iii) if there is a hoisting period of 2nd of April to 30th of March of any financial year. The same has been amended and in fact in any subsequent years this problem of investment only being held during the year would also be utilized in computation of the disallowance. There is no direct case wherein it is stated or held that the disallowance could not be made where exempt income was received by the appellant on the asset per se was not existing at the end of the year. The specific assets which yielded exempt income were not there at the end of the fisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any be allowed. 6. The ld. Counsel for the assessee referring to the decision of the Hon'ble Supreme Court in the case of Godrej Boyce Manufacturing Co. Ltd., reported in 394 ITR 449, submitted that the provisions of section 14A would apply to dividend income on which tax is payable u/s. 115O of the IT Act. He submitted that the assessee, in the instant case, has given reasons as to why the provisions of section 14A r.w.r. 8D should not be applied. Therefore, the order of the CIT(A) being not in accordance with the law, should be set aside and the grounds raised by the assessee should be allowed. 7. Alternatively, the ld. Counsel for the assessee submitted that the assessee has received dividend income in respect of only one s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecial Bench of the Tribunal in the case of ACIT vs. Vireet Investment Pvt. Ltd., reported in 165 ITD 27 (Delhi SB) has held that only the investments that has yielded exempt income during the year has to be considered for computing the average value of investment u/s. 14A r.w.r. 8D of the Income-tax Rules, 1962. 10. We find, the Hon'ble Delhi High Court in the case of ACB India Ltd. vs. ACIT, reported in 374 ITR 108 has held that for the purpose of provisions of section 14A, instead of taking into account the total investment, the investment attributable to dividend was required to be adopted and, thereafter, the disallowance was to be arrived at. We, therefore, deem it proper to restore the issue to the file of the AO with a directi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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