TMI Blog2022 (7) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue to the file of ld. CIT(A). Ld. CIT (A) is directed to pass a detailed order considering all facts of assessee s argument and case laws referred. Needless to add, assessee should be granted adequate opportunity of being heard - Appeal of the assessee is allowed for statistical purposes. - ITA No.471/Del./2018 - - - Dated:- 5-7-2022 - SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER And MS. ASTHA CHANDRA , JUDICIAL MEMBER ASSESSEE BY : SHRI R. SIVARAMAN , ADVOCATE REVENUE BY : MS. ANUPAMA SINGLA , SENIOR DR ORDER PER SHAMIM YAHYA , ACCOUNTANT MEMBER : This appeal by the assessee is directed against the order of the ld. CIT (Appeals)-35, New Delhi dated 05.10.2017 pertaining to assessment year 2014-15. 2. The grounds of appeal raised by the assessee read as under :- 1. The order of the CIT(A) dated 05.10.2017 is contrary to law and facts of the case. 2. The CIT(A) erred in confirming the disallowance u/s.36(i)(iii) of Rs.3,35,30,367/-. 3. The CIT(A) erred in not appreciating the fact that the entire finance cost related to the appellant's business activities. 4. The CIT(A) erred in not appreciating the fact that the invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investments 31.03.2014 01.04.2013 Source of funds Indian Subsidiaries Ennore Coke Limited 65,85,58,438 65,85,58,438 Out of capital Wellman Coke ( India) Limited 2,52,52,659 2,52,52,659 Out of capital Asia Coke Limited 4,99,400 4,99,400 Borrowed funds Aditya Coke Products Pvt Limited 44,50,00,000 - Transfer from share application money Mahala Coke Products Pvt Limited 6,00,00,000 - Transfer from share application money Ennore Coke Limited 1,00,00,00,000 - Conversion of loans and advances Foreign Subsidiaries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em Investments Vs CIT ( 234 Taxmann 761)- Annexure 7 b. CIT Vs Correctech Energy Pot Ltd (372 ITR 97)- Annexure 8 The above case laws squarely applies to our case. For the assessment year 2011-12, the Assessing Officer has made disallowance u/s.14A r.to.Rule 8D of Rs.2,03,27,420/-. The break up of this amount is given below: Rule 8D2(ii) Rs. 1,77,24,516/- Rule 802(iii) Rs. 26,05,935/- Total Rs.2,03,27,420/- The CIT(A) in his order in ITA No.211j14-15/CIT(A) dated 23.09.2015 has deleted the addition of Rs.2,00,83,808/- out of the addition of Rs.2,03,27,420/-. We are submitting herewith copy of the CIT(A)'s order for your kind perusal. (Annexure 9) For the above reasons, we request you not to make any disallowance u/s.l4A r.w. Rule 8D. 4. AO rejected the assessee s plea that share application money does not quantify for disallowance u/s 14A. He also rejected assessee s submission that investment made as strategic investment in subsidiary can help the case of the assessee. He also rejected the plea that no dividend income has been earned so disallowance u/s 14A cannot be done. In this regard, he referred to the CBDT Circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 97 Average value of investment including share application money 0.5% of above (274,96,10,497 + 174,93,10,497/2)*0.5% Rule 8D(2)(iii) The value of investments taken here are all domestic investments 1,12,47,302 including share application money as this is pertaining to holding cost other than interest. ** Total disallowance (Aggregate of (i), (ii) (iii) 4,55,27,479 4,55,27,479 Amount to be disallowed * Only the interest expenses of the total financial cost has been considered and the stamping handling charges, commission, bank charges have been excluded. The working of the above disallowance will change in case the assessee gets relief on ALP adjustment. ** The value of domestic investments for the purpose of holding and maintenance cost for calculating disallowance u/s 37(1) is taken as total, whereas for the purpose of interest only rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 10(34), 10(34A), etc., and as the dividend from domestic companies has been specifically made exempt u/s 10(34) of the Income Tax Act. Therefore, the investments made in shares and securities and the dividend yield from the same being mpt from tax because of specific provision of the Act would not attract the head of income from other sources. The department, therefore cannot invoke the provision of section 56(1) under the head of income from other sources in the case of such investments and the assessee has also been thus snatched away from the deduction of relevant interest u/s 57 of the Act accordingly. Therefore, the assessee in case of the domestic investments in shares and securities cannot claim deduction of such interest u/s 36(1)(iii) and also is not allowed deduction of such interest u/s 57 or u/s 48 (which anyway does not provide interest deduction. The general and administrative expenses claimed u/s 37(1) and incurred by the assessee to the extent relatable to investment is also be disallowed invoking the same arguments as stated above as being not allowable u/s 57 or u/s 48 as the case may be. While passing the assessment order for A.Y. 2012-13 the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 14A and if the same is not upheld then the disallowance would lie u/s 36(1)(iii) and u/s 37(1). It is seen that the appellant has added an interest of Rs. 14,86,32,823/- on account of advance to foreign subsidiary. The assessment order has been perused in detail and it is noted that the AO has correctly worked out the value of domestic Investments for the purpose of holding and maintenance cost for calculating disallowance u/s 37(1) which is taken as total, whereas for the purpose of interest only relatable to borrowed funds and mixed funds have been considered. The submission filed by the appellant and case laws cited have been perused and arguments are not found to be tenable. I find no reason to interfere with the AO's order on the addition made u/s. 36(1)(iii) and u/s. 37(1). Appeal on these issues are dismissed. 10. Against the above order, assessee is in appeal before the ITAT. We have heard both the parties and perused the records. 11. We note that assessee has made elaborate submissions and relied upon several case laws before ld. CIT (A). Ld. CIT(A) did not deal with them and has passed rather laconic order. It is settled law that even administrative order h ..... 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