9911796707
TMI Blog2017 (1) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... sted Company shall be company in which the public are substantially interested.If one were to carefully consider the totality of the provision as contained in section 2(18)(B), it is abundantly clear that the stipulation of “Wholly owned subsidiary” applies only to the Holding Company and not to the company in which the shares are held. Section 2(18)(B) has also made a further distinction between subsidiary companies which are in the nature of Manufacturing Companies and Nonmanufacturing companies in order to qualify as a subsidiary it is sufficient that only 40% of the shares be held by the Holding Company whereas in the Non-manufacturing section it has to be not less than 50% - Decided in favour of assessee Disallowance made under rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of the IT Act and thus erred in holding that the subsidiary company Double Dot Finance Ltd is a company in which public are substantially interested and thereby deemed dividend has not arisen in the hands of the assessee. 3. Facts of the case in brief are, during the course of assessment proceedings, the AO observed that the assessee company has borrowed a sum of ₹ 27 lakhs from its subsidiary company namely Double Dot Finance Ltd (DFL). The AO found that the paid up share capital of DFL is ₹ 17,51,26,600/- consisting of 17512660 equity shares of ₹ 10 each out of which the assessee company held 1,04,77,727 shares which works out to 59.8% of the paid up share capital of DFL. Further, accumulated profits as on 31.3.2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese facts the issue is to be treated as covered in favour of appellant in AY 2011-12. Accordingly the AO is directed to delete the above amount added u/ s 2(22)(e) of the LT. Act, 1961. In the result, this ground of appeal is Allowed. 4. Before us the ld.AR submitted that the issue raised in the present appeal is covered in favour of the assessee in its own case by the decision of Co-ordinate Bench of the Tribunal in ITA No.1546/Mum/2012 dated 18.7.2014 for the assessment year 2008-09 and in ITA No.6955/Mum/2013 for the assessment year 2010-11, dated 1.5.2015.The ld. AR submitted before us that in view of the aforesaid decision of the Co-ordinate Bench of the Tribunal in assessee s favour, the appeal filed by the revenue deserves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to earlier are both Companies in which the public are substantially interested. v. This view is roe than amply reinforced by the cases cited by the appellant and discussed earlier in the order. vi. It is not envisaged by law that only wholly owned subsidiary of a Listed Company shall be company in which the public are substantially interested. vii. If one were to carefully consider the totality of the provision as contained in section 2(18)(B), it is abundantly clear that the stipulation of Wholly owned subsidiary applies only to the Holding Company and not to the company in which the shares are held. viii. Section 2(18)(B) has also made a further distinction between subsidiary companies which are in the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of the Assessee. The FAA deleted the disallowance as made under rule 8D(2)(iii) of ₹ 15,59,189/- while sustaining the assessment under rule 8D(2)(ii) by observing and holding as under : Since the appellant has not made any suo-motto disallowance, therefore, keeping in view of the above discussions, disallowance made by the AO u/s.14A r.w. Rule8D(2)(ii) is upheld. As regards disallowance under Rule 8D(2) (iii) the AO has made disallowance of ₹ 15,59,189/-, the appellant has filed copy of from Hon'ble IT AT in its own case for AY 2009-10 ITA no.5179/Mum/2011-12 order dated 14/8/2014 wherein the Hon ble ITAT vide para 8 9 has decided the issue in favour of the appellant. Therefore, as of now, respectfully follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to disallowance under section 14A, is administrative expenses which has been made after taking 0.5% of the average investment value, as envisaged in rule 8D. The learned counsel has pointed out that the major investment is on account of equity shares in subsidiary company which too was devolved on demerger of the said company in the earlier years. Insofar as the mutual fund are concerned, as on 31st March 2009, the mutual funds were not appearing in the Balance Sheet. Thus, no effort was made or any time was consumed for making any analysis of the investment which has resulted into exempt income of ₹ 26,310, by way of dividend. The assessee has already disallowed the sum of ₹ 1,200 on account of demat charges which is sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
