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TMI Blog2017 (5) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... medy has been provided in the Act. The calculation made by assessee as well as AO were made as per the formulae prescribed u/r 8D(2)(iii) @0.5% of average investments. Even on merits, we find that the investment made by the assessee during impugned AY substantially rose from 0.22 crores as on 31/03/2010 to 52.24 Crores as on 31/03/2011 and it is hard to accept that such huge investments did not entail even a single rupee of expenses in terms of manpower / administrative resources. No distinction has been made between strategic and non-strategic investments. The Ld. AR has contested that the disallowance could not be made as the assessee did not earn any dividend and secondly, the investments were strategic and placed reliance various judici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as against returned loss of ₹ 4,40,76,922/- e-filed by assessee on 30/09/2011 after making certain adjustments / disallowances including disallowance u/s 14A for ₹ 14,49,584/-. The assessee was engaged in the business of Leasing, Business Process outsourcing [BPO] and Transport Services. During assessment proceedings, it was noticed that the assessee had investment in equity shares at year-end amounting to ₹ 52.24 Crores which attracted disallowance u/s 14A. The assessee provided bifurcation of the investments in the following manner:- No. Nature Amount (Rs.) 1. Investments in Shares of unlisted company FOR-SHE Travels & Logistics Pvt. Ltd. 24,99,400/- 2. Investments in Shares of unlisted company OAIS Auto F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) vide order dated 10/03/2016 where the assessee contested not only the interest disallowance but even the suo-moto disallowance of 0.5% made by him by placing reliance on various judicial pronouncements. The Ld. CIT(A) concluded that in view of the fact that the assessee had sufficient interest free owned funds so as to cover the said investments and therefore, no disallowance u/r 8D(2)(ii) was called for. However, he sustained disallowance u/r 8D(2)(iii) by noting that the same was in accordance with the formulae prescribed by the rule and the same was in line with suo-moto disallowance made by the assessee in the return of income. Aggrieved, the assessee is in appeal before us. 3. The Ld. Counsel for Assessee contended that di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue was legal one which could be admitted at any stage. Reliance was placed on various judgments placed in the paper book to contend that no such disallowance could be made against the strategic investments. 4. We have heard the rival contentions and perused relevant material on record. We note that the additions made by the Ld. AO in the quantum order was to the extent of ₹ 14.49 Lacs, being disallowance u/r 8D(2)(ii) and the same has been deleted by Ld. CIT(A) after considering the factual matrix and various contentions of the assessee. The revenue has not challenged the same and hence the same has already attained finality. The only dispute is with regard to disallowance u/r 8D(2)(iii) made suo-moto by the assessee in the return o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic investments. The Ld. AR has contested that the disallowance could not be made as the assessee did not earn any dividend and secondly, the investments were strategic and placed reliance various judicial pronouncements in this regard placed in the paper book. However, we have already noted that Rule 8D(2)(iii) uses the expression 'shall not form' which shows that the factum of actual receipt of dividend is not material so as to attract this disallowance. Regarding judicial pronouncements relied upon by Ld. AR, we find that this issue in the case of REI Agro Ltd. Vs DCIT [ITAT Kolkatta 35 taxmann.com 404], was restored back to the file of AO. The case before Hon'ble Delhi High Court in ACB India Ltd V ACIT [374 ITR 108] dealt with a situati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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