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TMI Blog2018 (5) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 19.02.2013 for the Asst Year 2010-11. Let us take assessee's appeal first. 2. The only issue to be decided in this appeal is with regard to disallowance u/s 14A r.w.r.8D of the Rules. 3. The brief facts of this issue is that the assessee is a non banking finance company (NBFC) engaged in the business of truck hiring, renting, financing and investment in shares and securities. The assessee earned dividend income of Rs. 14,70,96,573/- and claimed the same as exempt. The ld. AO observed that the assessee had made huge investments as on 31.03.2010 and the average investments was worked out at Rs. 113,90,02,815/-. The assessee made disallowance of Rs. 5,13,033/- on account of expenses linked to exempt income u/s 14A of the Act in the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case, the Ld. CIT(Appeals) was not justified in upholding the action of the AO in applying Rule 8D on the basis of wrong finding of fact that appellant has offered disallowance u/ s 14A on adhoc basis. 3.0 That on the facts and in the circumstances of the case and without prejudice to Ground No. 1.0 & 2.0 taken here-in-above, necessary directions may be given to AO. to compute disallowance u/s 14A as per Rule 8D by excluding investments in group companies which have been made for the purpose of acquiring controlling stake and for business expediency and not for the purpose of earning exempt income. 4.0 That on the facts and in the circumstances of the case and without prejudice to Ground No. 1.0 & 2.0 taken here-in- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under normal provisions of the Act. The assessee has also disallowed the direct expenses of Rs. 1,05,692/- representing Security Transaction Tax (STT) separately in the return of income. Hence there is no need to again disallow the same u/s 14A r.w.r. 8D(2)(i) of the rules. We direct the ld. AO to delete the same accordingly. We find that the total common indirect expenses of the assessee are as under :- a) Staff cost : Rs.22,94,975/- b) Administrative expenses : Rs.29,96,994/- - Rs.52,91,969/ The assessee had given the workings for disallowing Rs. 5,13,033/- u/s 14A of the Act by identifying the staff cost paid to Mr.S.K.Rathi and taking 25% of printing and stationery as common expenses. This, in our considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act can be made while computing the book profits u/s 115JB of the Act. 6. We have heard the rival submissions. We find that the ld. AO had disallowed a sum of Rs. 58,00,706/- u/s 14A of the Act r.w.r. 8D of the rules by computing the book profit u/s 115JB of the Act. This issue is now settled by the recent Special Bench decision of Delhi Tribunal in the case of ACIT vs Vireet Investment Pvt. Ltd. 165 ITD 27 dated 16.06.2017 wherein it was held that no disallowance u/s 14A of the Act could be made by resorting to computation mechanism provided under Rule 8D of the rules. The ld. AO should make disallowance u/s 14A of the Act having regard to the books of account on some rational basis as expenditure incurred for earning exempt income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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