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TMI Blog2017 (4) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... funds. It is ordered accordingly. - I.T. A. No.3044/Mds/2016 - - - Dated:- 10-4-2017 - SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER Appellant by : Shri Mukesh Kumar.M, CA Respondent by : Shri A.V. Sreekanth, JCIT ORDER Per A. Mohan Alankamony, AM:- This appeal by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-15, Chennai dated 31.08.2016 in ITA No.128/CIT(A)/2015-16 for the assessment year 2012-13 passed U/s.250(6) r.w.s 143(3) of the Act. 2. The assessee has raised several grounds in its appeal, however the crux of the issue is that the Ld. CIT(A) has erred in invoking the provisions of Section 14A read with Rule 8D of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld exempt income. Therefore the Ld. AO invoked the provisions of Section 14A and Rule 8D of the Rules and made addition which was subsequently confirmed by the Ld. CIT(A). At the outset, the Ld. AR submitted before us that, the entire investments, for strategically reasons, was made in subsidiary companies and it was sourced from interest free funds. The Ld. AR further argued that on several occasions, the Chennai bench of the Tribunal has held that if such investments are made in sister /subsidiary companies, the provisions of Section 14A cannot be invoked. He therefore pleaded that the addition made by invoking the provisions of Section 14A of the Act, may be deleted. The Ld. DR though opposed to the submission of the Ld. AR could not su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 20/08/13 for the assessment year 2009-10 has remitted back the matter to the Ld. Assessing Officer to decide the matter once again afresh based on the findings whether the assessee had actually incurred any expenditure in earning the dividend income. The relevant portion of the order is extracted herein below for reference:- Further, on the identical issue various Benches of the Tribunal and the Hon'ble Bombay High Court have held as follows:- i) Garware wall Ropes Ltd., Vs. ACIT reported in (2014) 65 SOT 086 (Mum.) held as follows:- When assessee has prima facie brought out case that no expenditure has been incurred for earning income, which does not form part of total income, then in absence of any finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly the same is deleted. (iv) CIT Vs. Bharti Televenture Ltd. reported in (2011) 331 ITR 0502. Where the assessee was found to be having adequate non- interest bearing fund by way of share capital and reserves and there was no nexus between the borrowals of assessee and the advances given, no disallowance for interest was called for. (v) CIT Vs. Reliance Utilities Power Ltd., reported in (2009) 313 ITR 0340(Bom.) has held as follows:- Tribunal having recorded a clear finding that the assessee possessed sufficient interest-free funds of its own which were generated in the course of the relevant financial year, apart from substantial shareholders fund, presumption stands established that the investments in sister ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal in the case M/s Agile Electric Sub Assembly Pvt. Ltd. cited supra wherein it was held as follows:- ' 7.2 In regard to applicability of Section 14A of the Act read with Rule 8D also; the above view will be applicable. Moreover in the case EIH Associated Hotels Ltd v. DCIT reported in 2013 (9) TMI 604 in ITA No.1503, 1624/Mds/2012 dated 17th July, 2013, it has been held by the Chennai Bench of the Tribunal as follows:- Disallowance U/s. 14A rw Rule 8D - CIT upheld disallowance - Held that - investments made by the assessee in the subsidiary company are not on account of investment for earning capital gains or dividend income. Such investments have been made by the assessee to promote subsidiary company into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be applicable and learned Assessing Officer shall compute the disallowance under section 14A read with rules 8D in accordance with law. 6.1 Accordingly we hereby remit back the matter to the file of the Ld. AO to consider the issue afresh in the light of the above order of the Tribunal and pass appropriate order in accordance with merits and law. We also make it clear that for the investments made in mutual funds, provisions of Section 14A read with Rule 8D will be applicable since the assessee would incur some expenditure at least for the decision making process as to in which mutual fund the investment has to be made and at what point of time exit from such funds. It is ordered accordingly. Accordingly in this case of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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