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TMI Blog2024 (2) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to the following factual finding recorded by the Hon'ble Court:- "It is apparent from the reading of the facts in the appeal that the CIT(A) formed an opinion based upon diverse reasoning having regard to the fact of each case, regarding the nature of expenditure and especially whether it was a one-time investment opportunity availed of by the assessee. This is relevant in the context of assessee's assertion that in fact no expenditure was incurred while investing in the mutual fund that yielded substantial income. As to whether in fact no expenditure was incurred or attributable at all, in these circumstances, it becomes a factual controversy requiring further hearing and scrutiny. On this aspect, therefore, the Court is of the opinion that task is better performed by the ITAT." 4. It is for the aforesaid reason that the Hon'ble High Court remitted the matter back to the ITAT for hearing and disposal afresh. 5. The appeal of the Revenue pertaining to AY 2011-12 and 2012-13 remanded by the Hon'ble Delhi High Court for fresh disposal has been dismissed by the Tribunal vide its order dated 19.11.2019 in ITA Nos. 6050,6051/Del/2015 as non maintainable because of tax effect bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee. 8. The explanation of the assessee was not acceptable to the Ld. AO who was of the view that for taking decision to invest in shares of foreign subsidiary company, the assessee must have used resources entailing some expenditure. Therefore, expenses related to exempt income are to be disallowed under section 14A r.w. Rule 8D. Accordingly, the Ld. AO disallowed Rs. 1,63,50,876/- and added it to the income of the assessee in the assessment made on 28.02.2014 under section 148/143(3) of the Act. 9. Aggrieved, the assessee appealed before the Ld. CIT(A). During appellate proceedings the assessee reiterated the submissions made before the Ld. AO that the substantial investment has been made in the financial year (FY) 2005-06 (relevant to AY 2006-07) and FY 2006-07 (relevant to AY 2007-08) and not during the AY 2008-09 under consideration out of the Investment received by the assessee under FDI route from foreign investors in FY 2005-06 and 2006-07 and the money so received was invested in the Mutual Fund. The Mutual Fund Advisors do not charge any fee. Such charges, if any are deducted from the amount of investment itself. Therefore, the assessee cannot be said to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat too not on account of commercial expediency but to circumvent the Land Ceiling Act, 1975 of the State of Haryana." 13. The Ld. DR reiterated the same arguments which were advanced in the first round. He submitted that the disallowance has correctly been made by the Ld. AO. 14. The Ld. AR submitted that admittedly, the assessee did not incur any interest expenditure, directly or indirectly, for earning exempt income. Once the Revenue has conceded this fact and is also not seeking to post facto dispute its "concurrence" before the Ld. CIT(A) on the aspect of recording of satisfaction, nothing survives for consideration in this appeal. 14.1 The Ld. AR further stated that the assessee has demonstrated which was also accepted by the Ld. AO that funds used for making the investment were not borrowed monies, but its own equity. The Ld. AO having failed to appreciate that mutual funds do not charge any fee to create an investment, his finding that assessee must have incurred some expenditure is factually incorrect, since there is no dispute that mutual funds had been purchased. In any event, this was a finding on conjectures and surmises as the Ld. AO could not identify any actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in its order dated 22.11.2017 in ITA No. 6049, 6050, 6051/Del/2015 for AY 2008-09, 2011-12 and 2012-13 had taken up the appeal of the Revenue for AY 2008-09 as the lead case. Therefore, the directions of the Hon'ble Delhi High Court contained in its order dated 25.04.2019 in ITA No. 655 of 2018 have to be considered in the light of the factual matrix of the case pertaining to AY 2008-09. 16. Before the Ld. AO, in response to show cause why disallowance under section 14A r.w. Rule 8D for expenses incurred on investment be not made, the reply of the assessee has very succinctly been stated by the Hon'ble Delhi High Court in its order dated 25.04.2019 as follows: "...during the assessment proceedings, it was contended that no expenditure was actually incurred on earning exempt income. The assessee also revealed that sums invested in mutual funds and in its subsidiary companies were initially brought in through Foreign Direct Investment (FDI) route and were awaiting use, for the purpose of township development. The assessee had to obtain several statutory and other clearances to launch this business activity. In the meanwhile, it had invested substantial amounts in mut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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