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2021 (3) TMI 663 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - assessee filed detailed submissions and contested that no objective satisfaction were recorded by the Assessing Officer for invoking Rule 8D of the Rules - assessee also contested that the investment was made in the sister concern for holding/controlling stake and not for earning any income from out of the investment - HELD THAT - We find that the issue of the strategic investment in group concern has already been adjudicated by the Hon ble Supreme Court in the case of Maxopp Investment Ltd. Ors. Vs. CIT, 2018 (3) TMI 805 - SUPREME COURT . The Hon ble High Court held that such strategic investment is also subject to the disallowance under Section 14A of the Act . We find that the objection of the assessee on the absence of dissatisfaction for invoking Rule 8D of the Rules, have already been dealt with by the learned CIT(A). The learned CIT(A) has referred the decision of India Bulls Financial Services Ltd. 2016 (11) TMI 1369 - DELHI HIGH COURT wherein it has held that if the Assessing Officer has carried out elaborated analysis out of the facts and the issue but did not expressly record his dissatisfaction, would not per se justify that he has not recorded cogent reason for his dissatisfaction . In our opinion, the learned CIT(A) has dealt with all the objections of the assessee, therefore, we do not find any infirmity in the same. Accordingly, we uphold the findings of the learned CIT(A) on the issue in dispute. The grounds of appeal of the assessee are accordingly dismissed.
Issues:
1. Disallowance under Section 14A of the Income Tax Act 2. Invocation of Rule 8D for disallowance computation 3. Justification of disallowance by the Assessing Officer Issue 1: Disallowance under Section 14A of the Income Tax Act The appellant contested the disallowance of ?2,105,899 under Section 14A by the Assessing Officer, which was higher than the ?17,500 self-disallowed by the appellant. The appellant argued that investments were strategic and not for earning dividend income. However, the CIT(A) upheld the disallowance, citing the Supreme Court's decision in Rajendra Prasad Moody and CBDT Circular No. 5/2014, emphasizing the mandatory application of Rule 8D. The CIT(A) rejected the appellant's claim of lack of objective satisfaction by the Assessing Officer, referring to the India Bulls Financial Services Ltd. case. The Tribunal found no infirmity in the CIT(A)'s decision and dismissed the appeal. Issue 2: Invocation of Rule 8D for disallowance computation The Assessing Officer invoked Rule 8D for disallowance computation, resulting in a total disallowance of ?2,105,899. The appellant argued against the invocation of Rule 8D, stating the investments were for strategic purposes in sister concerns. The Tribunal referred to the Maxopp Investment Ltd. case, where strategic investments were subject to disallowance under Section 14A. The Tribunal upheld the CIT(A)'s decision, emphasizing the principle of apportionment under Section 14A for expenses related to non-taxable income. Issue 3: Justification of disallowance by the Assessing Officer The Assessing Officer disallowed ?2,105,899 under Section 14A, rejecting the appellant's self-disallowed amount of ?17,500. The appellant contested the lack of objective satisfaction by the Assessing Officer for invoking Rule 8D. The CIT(A) justified the disallowance based on the analysis of exempt income, expenses, and investments, citing legal provisions and the CBDT Circular. The Tribunal upheld the CIT(A)'s decision, stating that the Assessing Officer was justified in applying Rule 8D due to dissatisfaction with the appellant's self-disallowed amount. The Tribunal found the CIT(A) had addressed all objections raised by the appellant and upheld the disallowance. ---
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