9911796707
TMI Blog2016 (7) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... of CIT(Appeals) and direct the Assessing Officer to determine the addition in view of our aforesaid direction Disallowance on claim of depreciation on printers data, cable router and scanner - Held that:- Identical issue was decided by the Tribunal while deciding the appeal in A.Y. 2008-09 it is hereby directed that Assessing Officer shall allow depreciation @ 60% Disallowance of claim of depreciation on Jodhpur property - Held that:- Tribunal had decided the above issue against the assessee while adjudicating the appeal for AY 2008-09 Disallowance made u/s. 14A - Held that:- AR stated that assessee had made strategic investments, that it had sufficient own funds, that FAA had not admitted the additional grounds. DR left the issue to the discretion of the Bench. After considering the available material we are of the opinion that in the interest of justice matter should be restored back to the file of FAA for fresh adjudication. He is directed to afford a reasonable opportunity of hearing to the assessee Adjustment in relation to the travel related segment - Held that:- We hold that the TPO had wrongly rejected the comparables. Considering the peculiar facts and circumstances of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into account quantitatively, it is the claim of the assessee that the assessee will put to losses and the same is not accounted by the income fact of figures. These kind of accounting issues are outside the scope of TP principles. The discontinuance of earlier arrangement of not paying any counting fees to it's AE at Mauritius and also foregoing the corresponding service / incentive fees, does not erode the tax base if one keeps in mind the ratio of such receipts and payment made which is tilted in favour of the payment side. Moreover, the appellant has demonstrated by an Internal CUP (HSBC / Travelex) on this aspect to establish its case. The adjustment is therefore, deleted. X X X X Extracts X X X X X X X X Extracts X X X X ..... cial services segment, that name and license fee paid to the AE had been allocated to both the segments, that it had entered into an agreement for use of trade mark license with its AE namely Thomas Cook UK Ltd.(TCUK)on 29.3.2006, that TCUK was holding majority share in the assessee company and was the owner of Thomas Cook trade mark, that it had granted the assessee an exclusive and non assignable licence to incorporate the name Thomas Cook in its Corporate name and /or its trade mark in its territory. A perusal of the P&L account revealed that the assessee had incurred an expenditure of ₹ 10.01crores under the head advertisement, marketing and publicity (AMP), that the total turnover of the assessee was ₹ 253 crores, that the AMP / total turnover was in the ratio of 3.95%. Within the expenditure incurred the share of name and license fee came to 17.7%. The TPO tabulated the AMP expenses/total revenue of the comparables as under :- SN. Company Name AMP expenses/total revenue 1. International Travel House Ltd. 0.62% 2. Trade-Wings Ltd. 1.8% 3. Crown Tours Ltd. 0.09% 4. Balmer Lawrie & Co. Ltd (Travel & Tours) 0% Industry Mean AMP Expenses/total revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther mentioned that trademark license fee payment was already included in the calculation s soloed o no separate adjustment was being made. After receiving the order of the TPO, the AO added the said amount in his draft orders. 2.1. Aggrieved by the order of the AO/TPO the assessee preferred an appeal before the First Appellate Authority(FAA). Before the FAA, the assessee contended that TPO had made adjustment without giving a show cause notice, that it became aware of the adjustment directly vide TP order dt.14.1.13, that the assessee was not provided with any opportunity of submitting its arguments or contentions against the said adjustment/disallowance. It moved an application under Rule 46A of the Income tax Rules (1962) before FAA with a request to admit the additional evidences. The FAA observed that TPO had issued a show cause notice on 29.11.2011, that the transaction in question was not bench - marked, it was specifically requested to furnish the details of the transactions not included in Form CEB, that the assessee did not appear before the TPO on three to four occasions , that due opportunity was allowed to the assessee , that there was no lack of opportunity to addu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about for Asia into Africa and Europe, that the assessee would leverage on the AE to off load its surplus foreign currency notes by having them shipped at regular intervals, that the assessee had ownership interest in AE as a share holder, that CG given by it to the AE favouring HSBC qualified as shareholder activity for which a charge to AE would not be justified, that the assessee had not incurred any cost in respect of the said CG , that there was no benefit arising to AE on account of CG, that the transaction would not fall under the definition of IT as per the provisions of Section 92. After considering the submission of the assessee the TPO held that the assessee had wrongly classified the CG given in respect of its AE as a share holder activity, that the asessee had failed to bring any material on record to prove that the concern AE was not capable of raising loan all by itself on a stand-alone basis, that the CG was an international transactions as provided by the retrospec -tive amendment, that under the CUP method guarantee fee would be quantified through a comparison of arms length guarantee fee rates charged by unrelated third parties providing similar guarantee under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm's length price. The Transfer Pricing Officer referred to the information gathered from Allahabad Bank and the State Bank of India with respect to the rate of guarantee commission fee and accordingly determined a rate of 3%, that was liable to be charged as an arm's length rate as guarantee commission fee. On this basis, the Transfer Pricing Officer worked out an addition of ₹ 18, 05, 400/- being 3% of ₹ 6, 01, 80, 000/-. The Assessing Officer determined the income accordingly in terms of section 92CA(4) of the Act. The CIT(Appeals) has also affirmed the aforesaid action and accordingly assessee is in further appeal before us. 3.1It is noted that before the lower authorities, assessee had resisted the aforesaid action on various grounds. Firstly, the stand of the assessee was that providing of a corporate guarantee on behalf of the associated enterprise is not an 'international transaction' within the meaning of section 92B of the Act. Secondly, the claim made was that the corporate guarantee was given on behalf of a step-down subsidiary and, therefore, it was a strategic requirement of business and was a shareholder activity. Thirdly, it was pointed out that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of 3% take by the Transfer Pricing Officer to determine the arm's length rate of the international transaction of provision of corporate guarantee on behalf of the associated enterprise. Therefore, we confine ourselves to examine the veracity of the arm's length rate adopted by the income-tax authorities. In the present case, assessee company issued corporate guarantee on behalf of the it's associated enterprise which enabled it's associated enterprise to avail banking facilities from HSBC Bank in Mauritius. The Hon'ble Bombay High Court in the case of Everest Kento Cylinders Ltd.(supra)was considering a somewhat similar situation, where in the matter of guarantee commission fee the adjustment made by the income-tax authorities was based on instances of commercial banks providing guarantees. The Hon'ble Bombay High Court has explained that instances of commercial banks providing guarantees could not be compared to instances of issuance of corporate guarantee. As per Hon'ble Bombay High Court, when commercial banks issue bank guarantees, the same is quite distinct in character, than the situation where a corporate issues guarantee to the effect that, if a subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The second Ground in the appeal relates to the action of the income-tax authorities in allowing depreciation @15% on data cable and other computer peripherals as against assessee's claim of depreciation of 60%. In this context, it was a common point between the parties that the aforesaid issue is identical to the issue dealt with by the Tribunal in the assessee's own case for assessment year 2007-08 vide order in ITA Nos.858& 738/Mum/2014 dated 30/09/2015. Following the aforesaid precedent, it is hereby directed that Assessing Officer shall allow depreciation @ 60% in terms of the decision of the Tribunal dated 30/09/2015 (supra). Thus, on this aspect assessee succeeds." Respectfully following the above, Ground No.4 is allowed. 5. Ground No.5 pertains to disallowance of claim of depreciation on Jodhpur property of ₹ 1, 68, 023/-. During the course of hearing before us, the AR fairly conceded that the Tribunal had decided the above issue against the assessee while adjudicating the appeal for AY 2008-09. We find that the Tribunal has held as under : "8. The next ground is with regard to the disallowance of the claim of depreciation of ₹ 1, 86, 692/- on Jodhpur prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 12.04 crores in relation to the travel related segment. During the TP proceedings, the TPO found that the transactions relating to 'handling of inbound tourists' and 'handling of outbound tourists' and 'payment of name and license fees' (to the extent allocated to travel and related services)was appearing under the head Travel and Related Services segment, that they were aggregated for the purpose of benchmarking analysis, that for benchmarking analysis, the assessee company was selected as tested party, that the Transactional Net Margin Method (TNMM)was adopted as the most appropriate method, that the Profit Level Indicator(PLI)used was Operat - ing Profit/Total Cost (OP/TC), that the assessee had used weighted average for three years for TP Study. The OP/OC of the comparables was found as under: SN. Company Name Operating Profit/Total Cost(%) 1. Crown tours Ltd.(CTL) 6.83 2. Tamarind Tours Pvt. Ltd.(TTPL) 4.7 3. Balmer & Lawrie & Co. Ltd.(BLCL)* 2.77 4. Trade-Wings Ltd.-Travel & Tour 17.41 Average 7.86 *(Travel & Tour Segment) In pursuance of the directions of the TPO, the assessee vide its submissions, dated 21 .06.2013, submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,56,26,992/- Operating profit (E)=A-D Rs.15,38,53,008/- OP/OC (F)=E/D 11.51% OP/OC of Comparable (G) 45.06% Arms Length Profit (H)=G*D Rs.60,18,33,52,260/- Arms' Length Income (I)=D+H Rs.1,93,74,60,51,460/- Difference (J)=I-A Rs.44,79,80,51,460/- Adjustment Proposed Rs.12,04,28,660 Following the order of the TPO the AO included the said adjustment in the draft order. 7.1. Aggrieved by the order of the TPO/AO, the assessee filed objections before the DRP. Before the DRP, the assessee argued that its operating margin of was 10.96%, that the benchmarking analysis carried out by it yielded a set of four comparables with a mean margin of 7.68%, that the TPO rejected three comparables without providing any opportunity to it, that he accepted Travel and Tour Segment(TTS) of one of the comparables, that the three rejected compara - bles(except the TTPL) were a part of the benchmarking set used in the TP documents for the years prior to assessment year 2010-11, that there had been no adjustments on that issue in those years, that consistency in the comparables and its functional profiles had not been questioned extract for the year under consideration, that the TPO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at as per the OECD guidelines one single suitable comparable was better than the multiple mismatch the comparables, that the case of TWL was to be treated as the sole and appropriate comparable entity for the TP purposes. 7.2. Before us, the AR argued that that the TPO had used inappropriate selection criteria, that the assessee had substantiated functional comparability of the comparables vide its submission, dt.24. 12. 2013, that despite the availability of more comparables segment the TPO selected only one comparable solely for the purpose of making TP adjustment, that the TPO had not accepted the economic analysis undertaken by the assessee in accordance with the Act, that he had rejected the data for the earlier year, that he did not allow 5% raise benefit to the assessee, that the updated operating margin of the assessee was 10.06%, that the updated mean margin of four comparables was 7.86%, that the value of IT.s. entered into by the assessee with its AE.s was at arm's length, that adjustment of bad debts in finalising the PLI and ALP was against the provisions of the Act. He referred to point No.5 of the balance sheet abstract and its general business profile of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of 4.39% of the comparables, that the updated margin was found to be within the +- 5% range, that while making the adjustment the TPO had rejected three comparables namely CTL, TTPL and BLCL, that after rejecting the three comparables he had recomputed the operating margin of balance one comparable i.e. TWL@ 45.06%, that while making the adjustment the TPO reduced bad debt expenses from operating cost on the ground that same was abnormal in nature, that he increased the margin of the comparable to 45.06% and benchmarked the same against assessee's operating margin of 11.52% after reducing bad debt expenses of the assessee, that he made an adjustment of ₹ 12.08 Crores, that the DRP confirmed the rejection of comparables and dismissed other arguments. We are aware that the principles of res-judicata do not apply to the income tax proceedings. But, the rule of consistency applies. Without assigning valid reason for rejecting the earlier years' stand, the TPO should not have rejected the comparables that were found valid comparables in previous years. Without bringing on record the salient features of the year under consideration as compared to the facts of the earlier years, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... margins of comparable companies by considering the provision for bad and doubtful debts and bad debts as non-operative expenditure. 41. We place reliance on the decision of ITAT Delhi Bench in the case of Sony India Pvt. Ltd. vs. DCIT, ITA No. 1189/Del/2005, 819/Del/2007 and 820/Del/2007. The relevant portion is extracted below: "106.2 Thus, creation of unpaid liability and its write back is a normal incident of a business operation which is carried everywhere in accounts to have true picture of profits of the relevant period. Having regard to statutory provisions, it cannot be said that provisions or writing back of liability is not part of operating profit or would not be taken into consideration for computing the same. We can therefore make a general observation that all business enterprises are making and writing back liabilities as a normal incident of operating business. Therefore on facts we do not see any justification for excluding provisions written back in the profit and loss account as not forming part of the operating profit of the taxpayer. Accordingly claim of the taxpayer is accepted. 107. The next item relates to balances written back. In our considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he TPO and the DRP that reporting of results on GP/NP basis by the assessee/ comparables was an evidence of diversity is beyond our comprehensionespecially when the assessee had filed reconciliation about the it(Pg.348 of the PB.)Whether the Reporting system of profit margins resulted in transferring of the legitimate taxes from India to the AE has not been dealt or answered by both the authorities while rejecting the comparables. Secondly, two of the comparables were rejected on the basis of area of operations. But, if we closely look at the function profile of the comparables, one thing is clear that they are in the same business that of the assessee and there exists functional similarities between the assessee and the comparable selected by it. As, all the comparables selected by it were in the same line of business and they were face same risks, so, the TPO was not justified in rejecting the three and cherry picking one. Comparables selected by the assessee should not be rejected in a casual and light manner. Now we would like to discuss all the three comparables rejected by the TPO. We find that one of the reason for rejecting CTL was foreign exchange earning, that it had ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r appeal. After considering the submissions of the assessee, the TPO held that the assessee was spending much more than industry Everest in promoting and building brand TCUK, that the brand Thomas Cook did not belong to the assessee, that it was paying a hefty sum per and for the use of brand through trademark license agreement dated 29/03/2006, that it was incurring expenses for promoting brand name of TCUK, that the argument of the assessee that AE had not be benefited was misplaced, that the AE got more licence fee and more business that the assessee was entitled to use the Thomas Cook brand only in the territory where it was already building and promoting it.He found that one of the comparables selected by the assessee namely TWL had incurred expenditure at the rate of 1.8% for AMP for the year under consideration. Therefore, he restricted the AMP expenses to 1.8% of the revenue, as shown in the case of TWL. 8.1. Aggrieved by the order of the AO/TPO the assessee filed objections before the DRP. Before it the assessee argued that the TPO had computed notional benefit arising to TCUK in respect of a completely domestic transaction entered into by the assessee with third parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t acceptable, that the assessee was not owner of the brands and was merely a user and beneficiary of the brand, that the assessee was providing a valuable service to the AE, that the TPO had rightly made the adjustment 8.2. Before us, the AR made the arguments that are recorded at paragraph no.2.2. of the order and that have been noted in the last paragraph at paragraph 8.1. The DR supported the order of the DRP and filed written submissions also. In his submissions, the DR argued that up to the date of decision in the case of Maruti Suzuki(dated 11/12/2015), the benefit of the decision was not available to the authorities below-TPO, A. O, CIT(A), DRP-that in the light of the earlier decisions and particularly LG's case(140 ITD 41)the TPOs and other authorities proceeded in a manner following the Bright Line Test, that in certain cases, references could also have been made to the agreements between the parties i.e., Indian entity and foreign AEs., that in some cases, Bright Line Test had been followed and the expenditure on AMP has been sliced into two portions, that the non-routine expenditure in excess of BLT was considered separately as an IT and bench -marked accordingly f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name and licence fee to TCUK, that the TPO held that the assessee was spending much more than Industry average in promoting and building brand of TCUK, that he made an adjustment of ₹ 8.09 crores and ₹ 8.31 crores for the AY.s.2009-10 and AY.2010-11 towards AMP expendi - ture, that the assessee had filed additional evidences before the FAA, that the FAA did not admit the evidences referring to the provisions of Rule 46A of the Rules, that he upheld the order of the TPO, that for the AY.2010-11 the assessee had filed objections before the DRP, that the adjustment made by the TPO were confirmed the DRP, that the adjustment was made/confirmed by the TPO/DRP because both of them were of the opinion that by incurring expenditure in India the assessee was benefitting a brand name of TCUK. 8.3.1. First of all, we would like to mention that as on today the legal position is as clear as crystal with regard to AMP expenses. The Hon'ble Delhi High Court has dealt the issue in depth and has arrived at the conclusion that in absence of any agreement for sharing AMP expenses it cannot be held that AMP expenditure was an IT. Probable incidental benefit to the AE would not make such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Sections 92B to 92F, the pre-requisite for commencing the TP exercise is to show the existence of an international transaction. The next step is to determine the price of such transaction. The third step would be to determine the ALP by applying one of the five price discovery methods specified in Section 92C. The fourth step would be to compare the price of the transaction that is shown to exist with that of the ALP and make the TP adjustment by substituting the ALP for the contract price. 55. Section 928 defines 'international transaction' as under: "Meaning of international transaction. 928.(1) For the purposes of this section and sections 92, 92C, 92D and 92E , "international transaction" means a transaction between two or more associated enterprises, either or both of whom are non1261 residents; in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other transaction having a bearing on the profits, income, losses or assets of such enterprises, and shall include a mutual agreement or arrangement between two or more associated enterprises for the allocation or apportio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 58. In Maruti Suzuki India Ltd. (supra), one of the submissions of the Revenue was: "The mere fact that the service or benefit has been provided by one party to the other would by itself constitute a transaction irrespective of whether the consideration for the same has been paid or remains payable or there is a mutual agreement to not charge any compensation for the service or benefit. "This was negatived by the Court by pointing out; "Even if the word 'transaction' is given its widest connotation, and need not involve any transfer of money or a written agreement as suggested by the Revenue, and even if resort is had to Section 92F (v), which defines 'transaction' to include 'arrangement', 'understanding' or 'action in concert', 'whether formal or in writing', it is still incumbent on the Revenue to show the existence of an 'understanding' or an 'arrangement' or 'action in concert' between MSIL and SMC as regards AMP spend for brand promotion. In other words, for both the 'means', part and the 'includes' part of Section 928 (1) what has to be definitely shown is the existence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to be made by deducing from the difference between the 'excessive' AMP expenditure incurred by the Assessee and the AMP expenditure of a comparable entity that an international transaction exists and then proceeding to make the adjustment of the difference in order to determine the value of such AMP expenditure incurred , for the AE. In any event, after the decision in Sony Ericsson (supre), -- the question of applying the BLT to determine the existence-of an-international transaction involving AMP expenditure does not arise. 61. There is merit in the contention of the Assessee that a distinction is required to be drawn between a 'function' and a 'transaction' and that every expenditure forming part of the function, cannot be construed as a 'transaction'. Further, the- Revenue's attempt at re-characterising the AMP expenditure incurred as a transaction by itself when it has neither been identified as such by the Assessee or legislatively recognised in the Explanation to Section 92 B runs counter to legal position explained in CIT vs. EKL Appliances Ltd. (supra) which required a TPO "to examine the 'international transaction' as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction and thereafter ask whether it is an ALP. If the answer to that is in the negative the TP adjustment should follow. The objective of Chapter X is to make adjustments to the price of an international transaction which the AEs involved may seek to shift from one jurisdiction to another. An 'assumed' price cannot form the reason for making an ALP adjustment. " 71- Since a quantitative adjustment is not permissible for the purposes of a TP adjust - ment under Chapter X, equally it cannot be permitted in respect of AMP expenses either. As already noticed hereinbetore, what the Revenue has sought to do in the present. case is to resort to a quantitative adjustment by first determining whether the AMP spend of the Assessee on- application of the BLT, is excessive, thereby evidenc - ing the existence of an international transaction involving the AE. The quantitative determination forms the very basis for the entire TP exercise in the present case. 74. The problem with the Revenue's approach is that it wants every instance of an AMP spend by an Indian entity which happens to use the brand of a foreign AE to be presumed to involve an international transaction. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the apprehension of tax avoidance." 64. In the absence of any machinery provision, bringing an imagined transaction to tax is not possible. The decisions in CIT v. B. C. Srinivasa Setty (1981) 128 ITR 294 (SC) and PNB Finance Ltd. v, CIT (2008) 307 ITR 75 (SC) make this position explicit. Therefore, where the existence of an international transaction involving AMP expense with an ascertainable price is- unable to be shown to exist, even if such price is nil, Chapter X provisions cannot be invoked to undertake a TP adjustment exercise. 65. As already mentioned, merely because there is an incidental benefit to the foreign AE, it cannot be said that the AMP expenses incurred by the Indian entity was for promoting the brand of the foreign AE. As mentioned-in- Sassoon -J David-(supra)- "the--fact that- somebody other than the Assessee is also benefitted by the expenditure should not come in the way of an expenditure being 'allowed by way of a deduction under Section 10 (2) (xv) of the Act (Indian Income Tax Act, 1922) if it satisfies otherwise the tests laid down by the law". With reference to the submissions of the DR, we would like mention that first of all the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), assessee submitted that in case of exports to non-AEs i.e., unrelated parties, assessee incurred losses as compared to the parties to the AE (TCMOL), therefore, it is a revenue loss. Further, he pointed out that with regard to exports to the AEs, assessee was not subject to any counting fees charged by AEs, unlike third parties (HSBC / Travelex). Normally, counting fees paid is often more than an incentive receipt. If the both service fees and counting fees were taken, it would lead to loss of income to the assessee. The assessee relied on various TP Guidelines of Organization for Economic Cooperation and Development (OECD) in favour of such counting principle and submitted that ALP principle need not be invoked in such circumstances. CIT (A) considered the same and allowed the claim of the assessee and deleted the adjustment as seen from para 2.10 of the impugned order. 5. During the proceedings before us, Ld DR relied on the order of the AO and the TPO and submitted that every transaction has to be independently benchmarked. However, there is no specific submission by the Ld DR to counter the reasoning given by the CIT (A) while granting the relief to the assessee. 6. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also foregoing the corresponding service / incentive fees, does not erode the tax base if one keeps in mind the ratio of such receipts and payment made which is tilted in favour of the payment side. Moreover, the appellant has demonstrated by an Internal CUP (HSBC / Travelex) on this aspect to establish its case. The adjustment of ₹ 7, 46, 243/- so made is therefore, deleted." 7. Considering the above, we are of the opinion that the order of the CIT (A) does not call for any interference. Accordingly, ground no.1 raised by the Revenue is dismissed. Following the above we decide ground no.4 in favour of the assessee. 11. Next ground is regarding disallowance of claim on Jodhpur property. Following our order for the earlier year, (para No.5, pg.9-10)ground No.5 is decided against the assessee. 12. Last Ground of appeal deals with disallowance u/s. 14A r.w.r. 8D of the Rules of ₹ 96.20 lakhs. During the year the assessee. During the assessment proceedings, the AO found that the assessee had received dividend income of ₹ 11.01 lakhs on mutual funds and same was claimed exempt, that it had not allocated any expenditure towards the earning of the exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disallowance at the rate of 2% of the exempt income, that in those years Rule 8D was not applicable, that provisions of the Rule were applicable for the year under consideration. Finally, the DRP appellate the disallowance made by the AO. 12.1. Before us, the AR stated that strategic investment could not be considered for 14A disallowance, that almost all the investment(Rs.192.54 crores), was made in domestic(Rs.184.99 crores)or overseas subsidiaries(Rs.7.54 crores), that the AO and the DRP had not considered the above issue while making/ confirming the disallowance. DR left the issue to the discretion of the bench. 12.2. After hearing both the sides we are of the opinion that matter should be restored back to the file of the AO for fresh adjudication. The Hon'ble High Courts have laid down the principle that strategic investment should be excluded from the list of investments, while computing the disallowance u/s. 14Ar.w.r 8D of the Rules. As this vital issue has not been considered by the lower authoriries, so, we are of the opinion that the AO should decide the issue afresh after affording reasonable opportunity to the assessee. Sixth ground is decided in favour of the asses ..... 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