9911796707
TMI Blog2018 (4) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... essee does not declare dividend which could be claimed as an exempt income nor any other exempt income arises from the said growth funds, and hence question of applicability of Section 14A does not arise - Held that:- It is critical and important for the AO to go through the scheme of issue of IDFC Cash fund - Super Inst Plan C – Growth fund which was issued by IDFC , in which the assessee has claimed to have invested 72.64 crores, and then to arrive at conclusion whether the assessee is entitled to receive any exempt income from said growth fund issued by IDFC as per terms of the scheme . Thus after evaluation of terms and conditions of the scheme to arrive at conclusion as to applicability of Section 14A r.w.r. 8D2(iii) of the 1962 Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciate the fact that the appellant is having Investment in Subsidiary Companies and the same should not be considered for computing disallowance u/s I4A as such Investments are strategic in nature and are not for the purpose of earning Dividend Income. 1.02 The Learned CIT(A) failed to appreciate the appellant is having Investment in Growth Plan of Mutual Fund and the same should not be considered for computing disallowance u/s 14A as the same do not generate any tax free Income. 1.03 The Learned CIT(A) has failed to appreciate the submission made by the appellant during the course of appeal proceedings. 1.04 The Learned CIT(A) has failed to appreciate the fact that considering its business operations, the appellant had computed su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with the formula AxB/C, where A. Total interest expenditure minus direct interest expenditure on such income. 472,024/- (A) Average of such investment on the first and last day of previous year = 983,755,018/- __________ (B) C. Average of total assets on the first and last day of previous year = 1,750,851,645/- __________ (C) A x B/C 265,217 0.05% of the „B‟ above 4,918,775 Total disallowance u/s. 14A r.w.r 8D 5,183,992 As the assessee has already allocated expenses of ₹ 776,949/- towards earning exempt income, therefore, the balance expenses to the tune of ₹ 4,407,043/- are disallowed by invoking the provisions of section 14A r.w.r.8D of the Act". 4. Aggrieved by the aforesaid assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed v. CIT reported in (2018) 91 taxmann.com 154(SC) which decided the issue against the assessee and in favour of Revenue. The Ld DR also submitted that this issue is to be decided against the assessee because of the decision of Hon‟ble Supreme Court in the case of Maxopp Investment Limited(supra) . Thus, after hearing both the parties and keeping in view ratio of decision of Hon‟ble Supreme Court in the case of Maxopp Investment Limited(supra) , we hold that Section 14A of the 1961 Act is applicable even if the assessee had made strategic investments in subsidiary companies and the same cannot be excluded , hence the appeal of the assessee on this ground no 1.01 stood dismissed and decided against the assessee. The assessee fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnologies Ltd v DCIT The Ld. DR relied upon the appellate order of the CIT-A. 6. We have considered rival contentions and perused the material on record. The controversy before us is now restricted to the consideration of investment in growth fund in IDFC Cash fund - Super Inst Plan C - Growth to the tune of ₹ 72.64 crores, for the purposes of working out disallowance of expenditure u/s. 14A of the 1961 Act r.w.r. 8D2 (iii) of the 1962 Rules in relation to earning of exempt income , we have gone through order of the tribunal as is relied upon by the assessee and in the lead order of the Everest Kanto Cylinder Ltd.(supra) , the tribunal came to the finding that investments in growth fund is to be excluded for computing disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck to the file of AO for deciding afresh the quantum of disallowance keeping in view our above observations." Thus , under these circumstances it is critical and important for the AO to go through the scheme of issue of IDFC Cash fund - Super Inst Plan C - Growth fund which was issued by IDFC , in which the assessee has claimed to have invested ₹ 72.64 crores, and then to arrive at conclusion whether the assessee is entitled to receive any exempt income from said growth fund issued by IDFC as per terms of the scheme . Thus after evaluation of terms and conditions of the scheme to arrive at conclusion as to applicability of Section 14A r.w.r. 8D2(iii) of the 1962 Rules . The assessee is directed to file the entire scheme of issue of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
