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2017 (5) TMI 1045 - ITAT DELHIComputation of disallowance u/s 14A - exclusion of investments made by the assessee for working out the amount of average and investment for the purpose of computation of disallowance - Held that:- From the records it can be seen that the investment was made prior to this assessment year. Therefore, it cannot be doubted that the investment was not a genuine investment. There is no nexus between the interest paid by the assessee and investment made in these companies there was no sufficient evidence brought on record by the Assessing Officer as well while investing the dividend income and interest them merely doubting the investing because it is interest free loan cannot be under the provisions of Section 14A read with Rule 8D. Out of the existing investments, investments in M/s Munjal Kiriu Industries (P) Ltd., M/s Hero Chassis System (P) Ltd. and M/s Hero Global Design Ltd. were made in earlier years when the assessee had transferred its undertakings on slump sale basis., under which equity shares as per the approved scheme of de-merger were allotted to it. The assessee had made investments in equity shares of M/s Satyam Computers Ltd., which have been valued at ₹ 73,26,582, as on 31.03.2010 and also had made investments in Hero MVL Alternate Fuel (P) Ltd., a sister concern in the F.Y.2008-09. These investments held for yielding tax exempt dividend income. The assessee has not disallowed the expenses incurred for earning exempt income out of such investments and there is no evidence that working capital loan may not have been deployed for making such investment, therefore, the lack of satisfaction of the AO with the claim of the assessee that no expenses were incurred for earning dividend income from such investments. The AO while disallowing this has not brought on record anything to establish that the assessee had incurred any expenses while earning this exempt income and he has not given any finding in this respect. Therefore, the action of the AO in disallowing the dividend income u/s 14A read with Rule 8D is not just and proper. - Decided against revenue
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