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TMI Blog2022 (3) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment of which comes to 16,55,49,405/-, therefore, we deem it proper to restore the issue to the file of the AO with a direction to recompute the disallowance u/s 14A r.w. Rule 8D by considering the investment which has actually yielded dividend income and exclude the investments on which the assessee has not received any dividend income in view of the decision in the case of ACIT vs. Vireet Investment Pvt. Ltd., [ 2017 (6) TMI 1124 - ITAT DELHI] and case of ACB India Ltd [ 2015 (4) TMI 224 - DELHI HIGH COURT] - Grounds raised by the assessee are accordingly allowed for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... (Rs.) i) Rule 8D(2)(i) -- ii) Rule 8D(2)(ii) 31,27,619 iii) Rule 8D(2)(iii) 9,07,573 Total 40,35,192 4. It was argued that the assessee has not received dividend on certain shares and, therefore, no disallowance could be made u/s 14A in those shares on which no dividend has been received. It was further argued that the share capital and free reserves of the assessee far exceeded the investment made, the income of which is exempt and, therefore, no disallowance can be made u/s 14A of the Act. Further, it was argued that in absence of any identical or specific expenditure pointed out by the AO, disallowance is untenable. Relying on various decisions, the assessee argued before the CIT(A) that the disallowance made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipt of order accordingly." 5. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:- "1. That the learned Commissioner of Income Tax (Appeals)-36, New Delhi has erred both in law and on facts in upholding the disallowance of sum of ₹ 40,35,192/- by incorrectly invoking section 14A of the Act read with Rule 8D of the Income Tax Rules' 1962. 1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that in absence of satisfaction of statutory precondition provided in section 14A(1) of the Act, no disallowance could be validly upheld by mechanically applying Rule 8D of the Income Tax Rules '1962. 1.2 That without prejudice computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmann.com 178, he submitted that the Hon'ble Supreme Court in the said decision has held that where interest free own funds are available with the assessee exceeded their investment in tax free securities, investment would be presumed to be made out of assessee's own funds and proportionate disallowance was not warranted u/s 14A on the ground that separate accounts were not maintained by the assessee for investments and other expenditure incurred for earning tax free income. 6.1 Referring to the decision of the Hon'ble Gujarat High Court in the case of PCIT vs. Syntex Industries Ltd., reported in 82 taxmann.com 171, he submitted that the Hon'ble High Court in the said decision has held that where the assessee was already having its own sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/- and has shown investment of ₹ 88.5 crores. We find, the AO rejecting the explanations given by the assessee that no expenditure has been incurred for earning the exempt income, computed the disallowance u/s 14A r.w.r 8D at ₹ 40,35,192/- which he added to the total income of the assessee. We find, the ld.CIT(A) sustained the disallowance made by the AO, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the ld. Counsel for the assessee that the computation made by the AO under Rule 8D(2)(ii) and 8D(2)(iii) are not correct especially when the assessee has not earned dividend income on all the shares. It is his submission that the assessee has received dividend income in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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