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TMI Blog2019 (11) TMI 1432X X X X Extracts X X X X X X X X Extracts X X X X ..... ary companies is to be excluded. Contention of the Ld. D.R. that in view of the language employed in Rule 8D(2)(iii) of Income-tax Rules, 1962 does not and shall not , even the investment which has potential to earn profit in the subsequent year also has to be considered for disallowance. This Tribunal is of the considered opinion that in view of the decision of Special Bench of Delhi Bench in the case of Vireet Investment (P.) Ltd . [ 2017 (6) TMI 1124 - ITAT DELHI] what is to be considered is only the investments which result in exempted income during the year under consideration. AO has to find out the investment which yielded exempted income during the year under consideration. Accordingly, the orders of both the authorities b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in subsidiary companies, the provisions of Section 14A would be applicable. Referring to Rule 8D(2)(iii) of Income-tax Rules, 1962 as it stood at the relevant point of time, the Ld. D.R. submitted that the expenditure incurred by the assessee in earning exempted income irrespective of the fact whether the investment resulted in income or not, has to be disallowed in view of the language employed in Rule 8D(2)(iii). According to the Ld. D.R., income from which does not or shall not form part of the total income indicates that not only the income earned by the assessee during the current year but, the investment has potential to earn money in future has also to be considered for disallowance. The Ld. D.R. placed his reliance on the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to consider this issue and found that unless there is an exempted income earned by the assessee, there cannot be any disallowance. According to the Ld. counsel, the Special Bench has specifically considered the word does not and shall not which occur in provisions of Rule 8D(2)(iii). Therefore, according to the Ld. counsel, it may not be correct to say that all the investments have to be subject matter of disallowance under Section 14A of the Act. 4. We have considered the rival submissions on either side and perused the relevant material available on record. From the order of assessment, it appears that the assessee has earned ₹ 3,08,46,380/- as dividend income and claimed the same as exempted income under Section 10(35) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court was followed by this Tribunal in M/s Real Talent Engineering Pvt. Ltd. (supra). In view of the above, this Tribunal finds no merit in the contention of the Ld. D.R. 6. In view of the decision of Special Bench in Vireet Investment (P.) Ltd. (supra), the decision of Hyderabad Bench in Bellwether Microfinance Fund Pvt. Ltd. (supra) may not be applicable to the facts of the case. Therefore, the Assessing Officer has to find out the investment which yielded exempted income during the year under consideration. Accordingly, the orders of both the authorities below are set aside and the entire issue of disallowance made under Section 14A of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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