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TMI Blog2017 (12) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... o verify the contention of the assessee that only HO is involved in making investments and other divisions/factories have no role to play in making, controlling, managing and/or monitoring investments. The onus is on the assessee to prove its contentions to get relief. We order accordingly. Only those investments should be considered for inclusion for computing average investments for computing disallowance u/s 14A r.w.r. 8D(2)(iii) which have actually yielded exempt income during year under consideration - Held that:- We direct the AO to decide this issue in the light of decision of Special Bench in the case of Vireet Investment Private Limited (2017 (6) TMI 1124 - ITAT DELHI) wherein only those instruments/securities which yielded exempt income during the previous year relevant to the impugned assessment year shall be considered for computing disallowance u/s 14A r.w.r. 8D. The Special Bench in para 11.16 held that only those investments are to be considered for computing average value of investment which yielded exempt income during the year. We are bound by decision of Special Bench and Respectfully following the same, we direct the AO to compute disallowance u/s 14A r.w.r. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook profits for determining minimum alternate tax (MAT). The assessee has raised grounds of appeal in memo of appeal challenging disallowance u/s 14A as well additional grounds of appeal are raised before the Income Tax Appellate Tribunal(hereinafter called as the tribunal ) challenging computation of book profits u/s 115JB for computing disallowance under MAT provisions, The Revenue is aggrieved by the relief granted by learned CIT(A) vide his appellate order in deleting disallowance to the tune of ₹ 46,92,218/- u/r 8D(2)(ii) and 8D(2)(iii) of Income-tax Rules, 1962 r.w.s. 14A. 3. The assessee is engaged in the business of manufacturing and export of dyes and dye intermediates and other chemicals. The assessee has received dividend income of ₹ 1,60,62,485/- which was claimed exempt. The assessee has voluntarily disallowed ₹ 37,55,126/- u/r 8D(2)(iii) r.w.s. 14A. The assessee claimed that no disallowance u/r 8D(2)(ii) r.w.s. 14A is warranted as the assessee has borrowed funds for export business vide bank loan of ₹ 4.64 crores for export credit facility on which interest was paid which was debited to Profit and Loss Account. The assessee submitted that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes of computing average investment for computing disallowance u/r 8D(2)(iii) r.w.s. 14A, as the same were subject to tax u/s 45 on capital gains. The learned CIT(A) ordered that investment in partnership firm amounting to ₹ 3,08,53,421/- subject to verification shall be included for the purposes of computing average investment for computing disallowance u/s 14A r.w.s. 8D(2)(iii) and directions were issued to the AO to compute disallowance, vide appellate orders dated 30-10-2015 passed by learned CIT(A). 5. Aggrieved, both assessee and Revenue have come in appeal before the tribunal. Heard both the rival parties, perused the orders of authorities below, order of the tribunal in assessee‟s own case for preceding year and other material on record. The assessee is engaged in the business of manufacturing and export of dyes and dye intermediates and other chemicals. The whole controversy revolves around computation of disallowance u/s 14A of the 1961 Act. The assessee having earned dividend income of ₹ 1,60,62,485/- had claimed the same to be an exempt income . The assessee has suo motu offered disallowance u/s 14A of ₹ 37,55,126/- u/r 8D(2)(iii). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but doors of justice was shut by learned CIT(A) as no revised return was filed by the assessee. It is claimed that since the assessee never raised this issue in preceding year i.e. 2010-11, the ITAT had no occasion to deal with the same but the assessee did raise this issue in earlier years i.e. 2007-08 to 2009-10, wherein ITAT had set aside the matter to the AO for necessary verifications. The learned counsel for assessee will rely on judgment of Hon‟ble Bombay High Court in the case of CIT v. Pruthvi Brokers and Shareholders Private Limited (2012) 349 ITR 0336(Bom HC) and CIT v. B G Shirke Construction Technology Private Limited (2017) 395 ITR 0371(Bom HC) to contend that even if revised return of income was not filed but the appellate authorities can always look into these grounds agitated before them. We find merit in the contention of the assessee but the claim raised by the assessee need verification and the matter is restored to the file of the AO to verify the HO expenses incurred which are to be taken cognisance for making disallowance u/r 8D(2)(iii). The AO shall also verify the contention of the assessee that I only HO is involved in making investments and other d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... average value of investment which yielded exempt income during the year. We are bound by decision of Special Bench and Respectfully following the same, we direct the AO to compute disallowance u/s 14A r.w.r. 8D(2)(iii) in accordance with the ratio of law laid down by Special Bench ITAT, Delhi in the case of Vireet Investment Private Limited(supra). We order accordingly. The next contention is w.r.t. computation of book profits u/s 115JB vis-a-vis disallowance u/s 14A . The issue is now decided by Special Bench, Delhi ITAT in the case of Vireet Investment Private Limited (supra) . Both the parties fairly agreed that issue is covered by decision of Special Bench of ITAT, Delhi in the case of Vireet Investment Private Limited(supra). The AO is directed to decide the issue in the light of ratio of decision of Special Bench in the case of Vireet Investment Private Limited(supra). We order accordingly. The last grievance under these appeal is of the assessee as to whether the disallowance u/s 14A can fall below disallowance suo motu voluntarily made by the assessee in the return of income filed with the Revenue. The assessee has claimed that if his several contentions are favour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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