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TMI Blog2021 (8) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... in overseas subsidiaries and income from which is taxable under Indian laws. We find that it is a well settled principles of law that dividend earned from overseas investments is taxable in Indian law, therefore, for the purpose of computing other expenses under Rule 8D(2)(iii), those investments need to be excluded. It is well settled principles of law by the decision in the case of ACIT Vs. Vireet Investments Pvt .Ltd. [ 2017 (6) TMI 1124 - ITAT DELHI] that only those investments which yielded exempt income for the year needs to be considered for computation of disallowance of other expenses. The assessee has filed working explaining computation of disallowance u/s.14A r.w. Rule 8D of the Income Tax Rules, 1962. The said computation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 1,39,49,985/-: The Commissioner of Income Tax has not justified in disallowing a sum of ₹ 1,39,49,985/-. The Appellant submits that Interest expenditure of ₹ 1,46,68,335 is incurred Business purpose. Further the Appellant submit that no fresh investment has been made during the current Financial Year and the Investments were made long and therefore the disallowance is not warranted. Based on the above submission the Appellant prays that appeal be allowed. 3. At the time of hearing, learned AR for the assessee submitted that there is a delay of 135 days in filing appeal for which necessary petition for condonation of delay along with affidavit has been filed explaining the reasons for the delay in filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... huge exempt income, however, did not make suo-moto disallowance of any expenditure in relation to said exempt income and hence, called upon the assessee to explain as to why disallowances contemplated under section 14A of the Act shall not be computed by invoking Rule 8D of the Income Tax Rules, 1962. In response, the assessee vide letter dated 22.03.2016 has submitted that it has not incurred any expenses directly relatable to exempt income and further, during the year the company has made investments only in foreign subsidiaries, the income from which is taxable under income-tax law and hence, question of disallowance of exempt income does not arise. The Assessing Officer, after considering relevant submissions of the assessee and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempt income of ₹ 1,39,49,985/-. Being aggrieved by the learned CIT(A) order, the assessee as well as Revenue are in appeal before us. 9. The learned AR for the assessee, at the time of hearing, submitted that appeal filed by the Revenue does not maintainable, because tax effect involved in said appeal is below the prescribed monetary limit fixed for filing appeal before the Tribunal, therefore, the same may be dismissed as not maintainable. As regards assessee s appeal, the AR for the assessee submitted that the learned CIT(A) has erred in restricting disallowance computed by the Assessing Officer to the extent of exempt income, without appreciating fact that out of total dividend income earned for the year, dividend inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-verify claim of the assessee in light of computation filed by the assessee. 11. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. It is stated before us that the tax effect in ITA No.1927/Chny/2018 filed by Revenue is less than ₹ 50 lakhs and therefore, the Circular No. 17 of 2019 dated 08.08.2019 issued by the Central Board of Direct Taxes (CBDT) in exercise of its power vested under section 268A(1) of the Income Tax Act, 1961 comes into play wherein, the monetary limit for filing the appeal by the Revenue before the ITAT and various High Courts as well as Apex Court are revised with an object of the reducing the tax litigation. In the said circular, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that those interest expenses are paid on loans which are borrowed for specific purposes. The assessee further claimed that while computing other expenses, the Assessing Officer has considered investments in overseas subsidiaries, income from which is taxable under the Act. The assessee further claimed that it is well principles of law that only those investments which yielded exempt income during the relevant assessment year needs to be considered for disallowance of expenses u/s.14A of the Act. 13. We have gone through arguments of the assessee in light of working of disallowances u/s.14A and find that the assessee has paid interest on certain loans which are borrowed for specific purposes. Therefore, if the assessee is able to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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