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TMI Blog2019 (3) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... made u/s.14A of the Income-tax Act read with Rule 8D of Income-tax Rules, 1962. 3. Briefly stated, the facts of the case are that the assessee earned dividend income of Rs. 4,73,95,865/- from mutual funds, which was claimed as exempt u/s.10(35) of the Act. The assessee had offered disallowance of Rs. 4,58,400/- as expenses towards earning of the exempt income. The Assessing Officer (AO) called upon the assessee to explain the reasons as to why the disallowance was not properly offered. The assessee gave certain reasons. Rejecting such contentions, the AO recorded satisfaction and proceeded to make disallowance under Rule 8D(2)(iii) at Rs. 32,12,212/-. The amount of Rs. 4,58,400/- voluntary disallowed by the AO was reduced to make the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot yielded any exempt income should have been ignored while computing the average value of investment. This contention could not be factually controverted on behalf of the Revenue. 6. The Hon'ble Delhi High Court in ACB India Ltd. vs. CIT (2015) 374 ITR 108 (Del), has held that the average value of investments, for the purposes of Rule 8D(2)(iii), should be confined to those securities in respect of which exempt income is earned and not the total investments. Similar view has been taken by the Special Bench of the Tribunal in the case of ACIT vs. Vireet Investments (P) Ltd. (2017) 165 ITD 27 (Del) (SB) holding that only those investments should be considered for computing average value of investments which yield exempt income during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness hours, employee's cost, electricity, stationery, etc. in making investment in shares/mutual fund etc. and earning exempted income cannot be ruled out". That is how he proceeded to make disallowance under the provision. Thus, it is seen that the AO has recorded proper satisfaction. 10. Now turning to the additional grounds, the thrust of the additional grounds, as pressed by the ld. AR, is on the exclusion of the investments in both shares and dividends which did not yield any exempt income. Following the view taken hereinabove for the A.Y. 2012-13, we set aside the impugned order and direct the AO to re-compute the disallowance under Rule 8D(2)(iii) by considering only such investments in calculating the average value of investments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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