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TMI Blog2015 (7) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... exempt, this investment should not be included in the amount of investment for the purpose of making disallowance u/s 14A of the Act. To this extent, we find force in the contentions of Learned A.R. of the assessee and direct the Assessing Officer to recompute the disallowance u/s 14A of the Act after excluding the amount of investment in foreign subsidiaries. In respect of loans, it cannot be said that no part of these loans was used for making investment in shares because overall availability of own funds is different thing and the availability of own fund at the time of making investment in share is altogether different thing and if the assessee does not establish that on the date of making investment in share, own fund was available, it has to be accepted that mixed funds were used for making investment in share and as a consequence, disallowance u/s 14A as per formula prescribed in Rule 8D has to be made. We direct the Assessing Officer to recompute the disallowance after excluding the amount of investment in foreign subsidiaries. Decided in favour of assessee for statistical purposes. - ITA No.804/LKW/2013 - - - Dated:- 17-7-2015 - SHRI SUNIL KUMAR YADAV AND SHRI A.K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Duty Drawback is covered against the assessee by the judgment of Hon'ble Apex Court rendered in the case of Liberty India (supra). Now Learned A.R. of the assessee has placed reliance on a judgment of Hon'ble Delhi High Court rendered in the case of Dharam Pal Prem Chand Ltd. (supra). In this case, the issue was regarding Excise Duty refund and not any export incentive such as Duty Drawback as in the present case. As per the facts noted by Hon'ble Delhi High Court in that case, the assessee was entitled to exemption from Excise Duty but the procedure for claiming exemption was that the assessee would first clear the goods from its bonded warehouse by paying the excise duty and, thereafter, the assessee would claim refund of excise duty on the seventh day of the succeeding month in which clearance had been made. The net result was that in the first instance, Excise Duty was paid by the assessee while clearing the goods, from the bonded warehouse which was subsequently refunded in the succeeding month. Under these facts, it was noted by the Tribunal in that case that what was paid by the assessee in consonance with the modalities provided for claiming exemption of Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r book, we find that as per this synopsis, the assessee has placed reliance on a judgment of Hon'ble apex Court rendered in the case of B. Desraj vs. CIT [2008] 301 ITR 439 and other judgment of Hon'ble Apex Court rendered in the case of Topman Exports vs. CIT [2012] 342 ITR 49 (SC). We examine the applicability of both these judgments in the present case. We find that both these judgments are in the context of allowability of deduction u/s 80HHC and not 80IB of the Act. It is observed by Hon'ble Apex Court on page No. 442 of 301 ITR that the formula of deduction prescribed in section 80HHC itself shows that the business profits includes export incentives and this formula is also indicated in the circular referred to in this case issued by the Central Board of Direct Taxes and on this basis, it was held that the words business profit in the formula prescribed u/s 80HHC would include cash compensatory allowance or Duty Drawback and therefore, the Assessing Officer should work out the deduction u/s 80HHC in accordance with the law but for the purpose of 80IB, the requirement is different and only that income, which is derived from industrial undertaking, is allowable u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereas the investment was only ₹ 186.75 lac. He also submitted that the list of investment in share is available on page 28 of the paper book, which includes investment in foreign company also i.e. ₹ 1,55,043/- in Super Tannery (U.K.) Ltd. and Safety Solutions S.R.O. ₹ 4,42,755/. He submitted that the income from foreign company is taxable and therefore, investment in these shares should not be considered for making disallowance u/s 14A of the Act. 10. Learned D. R. of the Revenue supported the orders of the authorities below. 11. We have considered the rival submissions. We find that as per page 6 of the assessment order, the Assessing Officer has added the total investment in share of ₹ 1,86,74,948/- as on 31/03/2009 for working out the disallowance. Admittedly, this investment amount includes two investments in foreign subsidiaries of ₹ 1,55,043/- and ₹ 4,42,755/- as on 31/03/2009 and since the dividend income from these two investments is not exempt, this investment should not be included in the amount of investment for the purpose of making disallowance u/s 14A of the Act. To this extent, we find force in the contentions of Learned A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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