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TMI Blog2021 (5) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... may not be realistic, the Assessing Officer was not correct to make disallowance under Rule 8D(2)(ii) of the Income Tax Rules and accordingly, the disallowance made under Rule 8D(2)(ii) stands deleted. So far as disallowance under Rule 8D(2)(iii) is concerned, the Assessing Officer is directed to consider only those investments for computing average value of investment which yielded exempt income during the year under consideration as per Rule 8D(2)(iii) in view of the Delhi Special Bench of the Tribunal in the case of ACIT v. Vireet Investment (P) Ltd..[ 2017 (6) TMI 1124 - ITAT DELHI] and to pass detailed order. Appeal of assessee is partly allowed for statistical purposes. - I.T.A. No.2652/Chny/2018 (Assessment Year: 2014-15) - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 was wrong, erroneous, unjustified, incorrect and not sustainable in law. 4. The CIT (Appeals) failed to appreciate that in any event the sustenance of the notional expenses as per Rule 8D of the Income Tax Rules, 1962 on various facets was wrong, erroneous, unjustified, incorrect and not sustainable in law. 5. The CIT (Appeals) failed to appreciate that having noticed the investments in shares of subsidiary/associate companies out of non interest bearing funds/internal accruals, the consequential quantification of notional expenses under Rule 8D of the Income Tax Rules, 1962 was wholly incorrect and ought to have appreciated that such investments from non in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication. 3. Facts leading the ground of disallowance of expenses under section 14A of the Income Tax Act, 1961 [ Act in short] are that the assessee gas earned a dividend income of ₹ 37,50,000/- and disallowed an amount of ₹ 1,92,500/- as expenditure to earn the exempted income. The assessee has noncurrent investments amounting to ₹ 107,03,85,843/- and current investments amounting to ₹ 285,97,20,313/- as on 31.03.2014. After recording the satisfaction on the volunteer disallowance of the assessee that it was unrealistic to state that only ₹ 1,92,500/- was made as expenses to maintain the investment amount of ₹ 393,01,06,156/-, by invoking the provisions of section 14A of the Act r.w. Rule 8D, the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was not realistic for maintaining the investments. There may not be much difference on the quantum of work for making one rupee investment or one hundred crores or maintaining the existing investments. Once the assessee has admitted the expenses for earning the exempt income and it was not explained as to how the said expenses may not be realistic, the Assessing Officer was not correct to make disallowance under Rule 8D(2)(ii) of the Income Tax Rules and accordingly, the disallowance made under Rule 8D(2)(ii) stands deleted. 6. So far as disallowance under Rule 8D(2)(iii) is concerned, the Assessing Officer is directed to consider only those investments for computing average value of investment which yielded exempt income du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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