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TMI Blog2018 (5) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... essee in respect of excluding the investments made in domestic companies which has yielded dividend income under rule 8 D(2) (ii). Coming to the 2nd part of the argument in respect of interest expenditure that is attributed under R 8D (2) (iii) is concerned, it is observed from the financial statements placed in the paper book that assessee does not have bifurcations of interest in the profit and loss account. As the entire interest is kept in a common pool, it is very difficult to bifurcate interest expenditure that is attributable to earning of exempt income. It is observed that assessee during the year has taken loans and advances to the tune of 59.96 crores. Further in Schedule 18 to the profit and loss account assessee is paying intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii. That on the facts and in the circumstances of the case, the learned CIT(A) has erred in upholding the action of A.O. in applying Rule 8D automatically without the A.O first giving cogent reasons for rejecting the assessee's claim in this regard. iii. That on the facts and in the circumstances of the case, the learned CIT(A) has erred in upholding the disallowance to the extent of ₹ 8,45,28,000/- under Section 14A of the Income tax Act, 1961 without appreciating the assessee's submissions that the assessee has made the exempt income investments from the assessee's own surplus funds. iv. That the appellant craves leave to reserve to itself the right to add, alter and/or vary any ground(s) at or before the time of hearing. 2. Br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present its claim." 2.1. Thereafter assessee preferred an application under section 254 (2) of the Act for rectification of certain mistake apparent from record. This Tribunal while deciding the application observed and held as under: "2………………. it was also submitted that assessee had also contested the sustenance of addition on the ground that the investments yielding exempt income were in the nature of strategic investments made for the purposes of business and not with the intent to earned dividend income and were therefore not to be considered for the purposes of making disallowance under section 14 A. 3. At the time of hearing, Ld.AR submitted that the tribunal had recorded the arguments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has its own funds in the form of reserves and surplus as well as share capital. 2.4. On the contrary Ld.Sr.DR submitted that the issue regarding investments by way of strategic investments now stands covered with the decision of Hon'ble Supreme Court in the case of Maxopp Investments Ltd vs. CIT reported in (2018) 91 taxman.com 154. He placed reliance upon paragraph 40 of the decision wherein Hon'ble Supreme Court has categorically held as under: " 40. ………………………………… It is to be kept in mind that in those cases where shares are held as stock in trade it becomes a business activity of the assessee to deal in those shares as business prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest under Rule 8D (2) (iii) is concerned, this issue has been set aside by this Tribunal to Ld.AO to be calculated by giving proper opportunity to assessee vide order dated 30/11/16. This issue according to him has not been recalled by order dated 08/08/2017. 3. We have perused the submissions advanced by both the sides in the light of the records placed before us. 3.1. Ld. counsel submitted that dividend income earned from domestic companies to an extent of ₹ 8,41,48,000/-has been claimed exempt under section 10(34) of the Act. He further submitted that these dividends have been earned from strategic investments made by assessee. This issue now stands settled against assessee by the decision of Hon'ble Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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