ACIT, Non Corporate Circle 15(1), Chennai V. Sibelco India Minerals Pvt Ltd, Hyderabad

ITA 2206/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5769 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 11-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Keywords: Earning of tax free income; Source of fund; Wholly owned subsidiary
• Section: 14A

Judgement Text

, B/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL B/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A.NO.2206 /MDS./2017 ( ASSESSMENT YEAR : 2011-12 ) THE DCIT, CORPORATE CIRCLE 6(2), CHENNAI-34. VS. M/S. SIBELCO INDIA MINERALS PVT LTD ., SHRIRAM CHAMBERS, 8-2-293/K/311 & 312, KAMALAPURI COLONY, HYDERABAD 500 073. PAN AAGCS 9484 B ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR.B.SAGADEVAN, JCIT, D.R / RESPONDENT BY : NONE ! ' / DATE OF HEARING : 21.11.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 04.12.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-15, CHENN AI DATED 16.08.2017 PERTAINING TO ASSESSMENT YEAR 2011-12. ITA NO.2206/MDS/2017 2 2. AT THE TIME OF HEARING, NONE APPEARED ON BEHAL F OF THE ASSESSEE. I TOOK UP THE CASE FOR ADJUDICATION AFTER HEARING THE LD.D.R. 3. THE MAIN GRIEVANCE OF THE REVENUE IN ITS APPEAL IS THAT THE LD.CIT(A) ERRED IN DIRECTING THE AO TO EXCLUDE INVE STMENTS MADE IN SUBSIDIARY COMPANY WHILE COMPUTING DISALLOWANCE UND ER RULE 8D OR RESTRICT THE DISALLOWANCE EU/S.14A TO THE EXTENT OF INCOME EARNED DURING THE YEAR. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY IS ENGAGED IN THE BUSINESS OF MINING, PROCESSING OF IN DUSTRIAL MINERALS AND TRADING IN IMPORTED CLAY, AND IT HAD TAKEN APPR OVAL FROM FIPB UNIT, DEPARTMENT OF ECONOMIC AFFAIRS, MINISTRY OF F INANCE GOVERNMENT OF INDIA VIDE IT S APPROVAL DATED 21.02. 2008. THE ASSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12 ON 29.02.2011 DECLARING RS.NIL INCOME DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE AO SENT A QUESTIONNAIRE WHEREIN APPLICABILITY OF SEC.14A R.W.RULE 8D ON INVESTMENT OF ` 7.96 CRORES MADE IN F.Y 2008-09 WAS RAISED. IN REPONSE, AR REP LIED ON 04.03.2015 THAT THE COPY OF FDI APPROVAL WITH REGA RD TO INCREASE IN ITA NO.2206/MDS/2017 3 SHARE CAPITAL FOR ` 17.20 CRORES FOR THE PURPOSE OF INVESTMENT IN SUBSIDIARY ADARSH INDIA MINING PRIVATE LIMITED IS E NCLOSED HEREWITH. AS IT IS CLEARLY BROUGHT OUT THAT THE INVESTMENTS O F ` 7.96 CRORES IN ADARSH INDIA MINING PRIVATE LIMITED IS THROUGH INCR EASE OF SHARE CAPITAL TO THE EXTENT OF RS. 17.20 THAT THE AFTER G ETTING ALL APPROVALS FROM FIPB AND RBI, THE QUESTION OF DISALLOWANCE U/S R.W.R. 8D DOES NOT HAVE ANY MERIT. ACCORDING TO LD. ASSESSING OFFI CER,ARS EXPLANATION IS NOT ACCEPTABLE AS THERE IS INVESTMEN T MADE BY THE ASSESSEE LARGE INTEREST EXPENSES HAVE BEEN CLAIMED. ASSESSEE HAS NOT SATISFACTORILY EXPLAINED THE TOTAL EXPENDITURE RELATED TO INVESTMENT. ACCORDINGLY, THE ASSESSMENT U/S.143(3 ) OF THE ACT WAS COMPLETED ON 16.03.2015 DISALLOWING ` 39.24.837/- U/S.14A OF THE ACT. AGGRIEVED BY THE ORDER OF LD. ASSESSING OFFIC ER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). 5. DURING THE APPEAL PROCEEDINGS BEFORE THE CIT(A) , THE AR OF THE APPELLANT HAS MADE HIS SUBMISSION ON THE AFORESAID ISSUE. THE LD.A.R SUBMITTED THAT THE ASSESSEE HAD INCREASED TH E SHARE CAPITAL BY ` 1 7.20 CRORES IN FY 2008-09. THIS INCREASE WAS EXCL USIVELY FOR ITA NO.2206/MDS/2017 4 THE INVESTMENT IN ADARSH INDIA MINING PVT LTD WHICH HAS SINCE BECOME 100% SUBSIDIARY OF THE ASSESSEE. THE ASSESSE E IS ENGAGED IN MINING INDUSTRY AND IT HAD TAKEN APPROVAL FROM F IPB UNIT, DEPARTMENT OF ECONOMIC AFFAIRS, MINISTRY OF FINANCE , GOVERNMENT OF INDIA VIDE ITS APPROVAL DATED 21.02.2008 FOR INVEST ING IN THE ABOVE SAID COMPANY. IN THE SAID APPROVAL IT IS VERY CLEAR LY MENTIONED THAT THE INVESTMENT IN ADARSH INDIA MINING PRIVATE LIMIT ED IS THROUGH FRESH ISSUE OF SHARES OF SHRI VAYA GIMPEX MINING PRIVATE LIMITED BY M/S.SIBELCO BELGIUM, THE HOLDING COMPANY. THE ENTIR E BANKING FACILITIES ENJOYED BY THE ASSESSEE WHICH ARE SHOWN UNDER UNSECURED LOAN ARE BEING IN THE NATURE OF WORKING CAPITAL LIM ITS. THESE LIMITS ARE LIKE OVERDRAFT, PACKING CREDIT, BILL DISCOUNTING, E TC WHICH ARE OF SHORT TERM NATURE AND IS TO BE UTILIZED ONLY FOR THE PURP OSE OF STOCK AND BOOK DEBTS. AS IT IS CLEARLY BROUGHT OUT THAT THE I NVESTMENTS OF RS. 7.96 CRORES IN ADARSH INDIA MINING PRIVATE LIMITED IS THROUGH INCREASE OF SHARE CAPITAL TO THE EXTENT OF RS. 17.2 0 THAT TO AFTER GETTING ALL APPROVALS FROM FIPB AND RBI, THE QUESTI ON OF DISALLOWANCE U/S 14A R.W.RULE 8D DOES NOT HAVE ANY MERIT. THE AS SESSEE HAD MADE SUBMISSION AT THE TIME OF PERSONAL HEARING TO THE LEARNED AO ITA NO.2206/MDS/2017 5 VIDE LETTER DATED 02.03.2015. IN THE SAID SUBMISSIO NS THE FACTS WITH REGARD TO THE SOURCE OF FUNDS FOR INVESTMENT IN SUB SIDIARY COMPANY HAS BEEN CLEARLY BROUGHT OUT. 5.1 FURTHER, LD.A.R SUBMITTED BEFORE LD.CIT(A) THA T ADARSH INDIA MINING PRIVATE LIMITED IS A 100% SUBSIDIARY OF SIBE LCO INDIA MINERALS. THE ENTIRE PRODUCTION OF ADARSH INDIA IS EXCLUSIVEL Y PURCHASED BY SIBELCO INDIA. AS THE MINE LICENSE IS IN THE NAME O F ADARSH INDIA WHICH CANNOT BE TRANSFERRED, SIBELCO INDIA HAD BOUG HT THE COMPANY. THIS INVESTMENT BY SIBELCO INDIA IS NOT FOR THE PUR POSE OF EARNING DIVIDEND INCOME OR CAPITAL GAINS. THESE INVESTMENTS HAVE BEEN MADE TO GET QUALITY FELDSPAR AND QUARTZ MATERIALS F OR THE PURPOSE OF SIBELCO. THIS CLEARLY SUPPORTS THE FACT THAT THE AS SESSEE IS NOT INTO THE BUSINESS OF INVESTMENT AND THESE INVESTMENTS IN SUBSIDIARY COMPANY IS OUT OF BUSINESS EXPEDIENCY. HENCE THESE INVESTMENTS IN SUBSIDIARY ARE NOT TO BE RECKONED FOR DIS-ALLOWANCE U/S 14A R.W.R 8D. THE ASSESSEE RELIED UPON EIH ASSOCIATED HOTELS LTD VS. DCIT (ITAT CHENNAI), IN I.T.A. NO. 1503/MDS/2012, INTERG LOBE ENTERPRISES LTD VS DCIT (ITA 1362 & 1032 DELHI1TAT, ORIENTAL SU CTURA1 ENGINEERS PVT. LTD. (DEL.) (HC) 2010(2). FURTHER, BEFORE LD.CIT(A), ITA NO.2206/MDS/2017 6 LD.A.R ENCLOSED THE COPIES OF HONORABLE CIT IN THE ASSESSEES OWN CASE PERTAINING TO AY 2009-10 AND AY 2010-11 WHERE IN IDENTICAL ISSUES HAS BEEN DEALT WITH AND RELIEF GIVEN IN FAVO UR OF THE ASSESSEE. IN VIEW OF THE ABOVE, THE LD.A.R PLEADED BEFORE LD. CIT(A) TO DELETE THE ADDITION OF RS. 39,24,837/ - UNDER SECTION SECT ION 14A OF THE ACT. 5.2 THE LD.CIT(A) AFTER TAKING NOTE OF THE APPELLA NTS INVESTMENT PORTFOLIO AT RS.7.96 CRORE, THE AO APPLIED RULE 8D AND MADE DISALLOWANCE U/S.14A OF THE ACT. BEFORE THE CIT(A), THE APPELLANTS AR HAS CATEGORICALLY STATED THAT 100% OF INVESTMENT WAS MADE IN SUBSIDIARY COMPANY WHICH OUGHT TO HAVE BEEN EXCLUDE D WHILE COMPUTING THE DISALLOWANCE U/S. 14A BY RELYING ON C ERTAIN DECISIONS AND ALSO THE DECISION OF THE CIT(A)-15, CHENNAI IN THE APPELLANTS OWN CASE IN ASSESSMENT YEAR 2009-10 VIDE ITA NO. 45 8 / CIT(A)-15 / 20 13- 14 DATED 25/5/20 16. THE RELEVANT PORTION O F THE DECISION IS REPRODUCED HEREUNDER: 5.3 . . . . . . . AS IT IS CLEARLY BROUGHT OUT THAT THE INVESTMENTS OF RS 7.96 CRORES IN ADARSH INDIA MININ G PRIVATE LIMITED IS THROUGH INCREASE OF SHARE CAPITAL TO THE EXTENT OF RS. 17.20 THAT TO AFTER GETTING ALL APPROVALS FROM FIPB AND RBI, THE QUESTION OF DISALLOWANCE U/S 14A R.W.R. 8D DOES NOT HAVE ANY ME RIT. ADARSH INDIA MINING PRIVATE LIMITED IS A 100% SUBSIDIARY OF SIBE LCO INDIA MINERALS. ITA NO.2206/MDS/2017 7 THE ENTIRE PRODUCTION OF ADARSH INDIA IS EXCLUSIVEL Y PURCHASED BY SZFO INDIA AS THE MINE LICENSE IS RN THE NAME OF AD ARSH INDIA WHICH CANNOT BE TRANSFERRED, SIBELCO INDIA HAD BOUGHT THE COMPANY. THIS INVESTMENT BY THE SIBELCO INDIA IS NOT FOR THE PURP OSE OF EARNING DIVIDEND INCOME OR CAPITAL GAINS. THESE INVESTMENTS HAVE BEEN MADE TO GET QUALITY FELDSPAR AND QUARTZ MATERIALS O F THE PURPOSE OF SIBELCO .THE CLEARLY SUPPORTS THE FACT THAT THE ASS ESSEE IS NOT INTO THE BUSINESS OF INVESTMENT AND THESE INVESTMENTS IN SUB SIDIARY COMPANY IS OUT OF BUSINESS EXPEDIENCY. HENCE THESE INVESTME NTS IN SUBSIDIARY ARE NOT TO BE RECKONED FOR DISALLOWANCE U/S. 14A R. W. R. 8D, THE ASSESSEE RELIES UPON EIH ASSOCIATED HOTELS LTD. VS DCIT (ITAT CHENNAI), I. T. A. NO. 1503/MDS/2012, INGERGLOBE EN TERPRISES LTD VS DCIT (ITA 1362 & 1032 DELHI ITAT, ORIENTAL STRUCTUR AL ENGINEERS PVT. LTD. (DELHI)(HC)-2010(2)TMI21. 5.3.1 THE APPELLANT HAS INVESTED IN 100% SUBSIDIARY , I.E. ADARSH INDIA MINING PRIVATE LIMITED IT IS NOT INTO THE BUS INESS OF INVESTMENT. AS HELD BY THE HON BLE ITAT CHENNAI IN THE CASE OF EIH ASSOCIATES HOTELS LTD. VS DCIT VIDE ITA NO. 1503/MDS/2012, DAT ED 17.07.2013 THE INVESTMENTS MADE BY THE APPELLANT IN ITS SUBSID IARY ARE NOT TO BE RECKONED FOR DISALLOWANCE U/S 14A R.W.RULE 8D, THE AO IS DIRECTED TO RE-COMPUTE THE AVERAGE VALUE OF INVESTMENT UNDER TH E PROVISION OF RULE 8D AFTER DELETING INVESTMENTS MADE BY THE APPE LLANT IN SUBSIDIARY COMPANY. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 5.3 BEFORE THE CIT(A), THE APPELLANTS AR MADE A SUBMISSION THAT THERE WAS NO DIVIDEND INCOME FROM THE INVESTME NT IN THE SUBSIDIARY COMPANY AND THEREFORE, THE DISALLOWANCE ITA NO.2206/MDS/2017 8 U/S. 14A WAS NOT WARRANTED IN VIEW OF THE DECISION S OF THE JURISDICTIONAL HIGH COURT, IN THE CASES OF M/S.REDI NGTON INDIA PVT. LTD. AND CHETTINAD LOGISTICS PVT. LTD. THE HONBLE HIGH COURT OF MADRAS HAS HELD IN THOSE DECISIONS THAT IF THERE IS NO EXE MPT INCOME, DISALLOWANCE U/S. 14A IS NOT CALLED FOR AND THE REL EVANT JURISDICTIONAL HIGH COURT IS EXTRACTED HEREIN BELOW:- A) HONBLE MADRAS HIGH COURTS DECISION IN THE CASE OF REDINGTON INDIA) LTD. VS. ADDL. CIT- 3921TR 633 SECTION 14A OF THE INCOME-TAX ACT, 1961, READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962 - EXPENDITURE INCURRED IN RE LATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME (CONDITION PRECEDENT ) - ASSESSMENT YEAR 200 7-08 - WHETHER PROVISION OF SECTION 1 4A IS REL ATABLE TO EARNING OF ACTUAL INCOME AND NOT NOTIONAL OR ANTICIPATED INCOM E, HENCE, WHERE THERE IS NO EXEMPT INCOME IN A YEAR, THERE CANNOT B E A DISALLOWANCE OF EXPENDITURE IN RELATION TO AN ASSUMED INCOME - H ELD, YES [PARA 15] [IN FAVOUR OF ASSESSEE] B) CHETTINAD LOGISTICS PUT. LTD. -80 TAXMANN.CORN 2 21 (MAD.) SECTION 14A OF THE INCOME-TAX ACT, 1961, READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962 - EXPENDITURE INCURRED IN RE LATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME (GENERAL PRINCIPLE) - ASSESSMENT YEAR 2011-12 - WHETHER SECTION 1 4A CAN ONLY BE TRIGGERE D, IF ASSESSEE SEEKS TO SQUARE OFF EXPENDITURE AGAINST INCOME WHIC H DOES NOT FORM PART OF TOTAL INCOME UNDER ACT; RULE 8D ONLY PROVID ES FOR A METHOD TO DETERMINE AMOUNT OF EXPENDITURE INCURRED IN RELATIO N TO INCOME, WHICH ITA NO.2206/MDS/2017 9 DOES NOT FORM PART OF TOTAL INCOME OF ASSESSEE AND IT CANNOT GO BEYOND WHAT IS PROVIDED IN SECTION 14A - HELD YES - WHETHER WHERE NO EXEMPT INCOME I.E., DIVIDEND, WAS EARNED IN RELE VANT ASSESSMENT YEAR BY ASSESSEE, SECTION 1 4A COULD NOT BE INVOKED - HELD YES [PARA 8] [MATTER REMANDED] 5.4 FOLLOWING THE ABOVE JUDGEMENTS, THE LD.CIT(A) DIRECTED THE LD. ASSESSING OFFICER AS FOLLOWS:- A) TO VERIFY THE APPELLANTS CLAIM THAT 100% OF THE INVESTMENT WAS MADE IN SUBSIDIARY COMPANY AND IF SO, TO EXCLUD E THE SAME FROM THE COMPUTATION UNDER RULE 8D. B) TO EXAMINE THE APPELLANTS SUBMISSION THAT THERE WAS NO EXEMPT INCOME IN THE RELEVANT PREVIOUS YEAR AND THE REFORE, DISALLOWANCE U/S.14A WAS NOT WARRANTED. 5.5 HENCE, THE LD.CIT(A) DIRECTED THE LD. ASSESSI NG OFFICER TO EITHER DELETE THE DISALLOWANCE U/S. 14A OR TO REST RICT THE DISALLOWANCE U/S.14A BASED ON THE ABOVE DIRECTION. LD.CIT(A) DE CIDED THE CASE IN FAVOUR OF THE ASSESSEE. AGAINST THE ORDER OF LD.CIT (A), NOW THE REVENUE IS IN APPEAL BEFORE US. 6. I HAVE HEARD THE ARGUMENT OF LD.D.R AND PERUSE D THE MATERIAL ON RECORD. IN MY OPINION, IF THE ASSESSEE ADVANCED NON- ITA NO.2206/MDS/2017 10 INTEREST BEARING FUNDS TO THE SUBSIDIARY COMPANY, T HEN THERE CANNOT BE ANY DISALLOWANCE U/S.14A R.W.RULE 8D AS P ER THE DECISION OF THIS TRIBUNAL IN THE CASE OF EIH ASSOC IATED HOTELS LTD VS. DCIT REPORTED IN 2013- TIOL-796-ITAT-MAD WHEREIN HELD THAT:- . THE INVESTMENTS MADE BY THE ASSESSEE IN THE SUB SIDIARY COMPANY ARE NOT ON ACCOUNT OF INVESTMENT FOR EARNING CAPITA L GAINS OR DIVIDEND INCOME. SUCH INVESTMENTS HAVE BEEN MADE BY THE ASSE SSEE TO PROMOTE SUBSIDIARY COMPANY INTO THE HOTEL INDUSTRY. THE ASS ESSEE IS NOT INTO THE BUSINESS OF INVESTMENT AND THE INVESTMENTS MADE BY THE ASSESSEE ARE ON ACCOUNT OF BUSINESS EXPEDIENCY. ANY DIVIDEND EAR NED BY THE ASSESSEE FROM INVESTMENT IN SUBSIDIARY COMPANY IS P URELY INCIDENTAL. THEREFORE THE INVESTMENT MADE BY THE ASSESSEE IN IT S SUBSIDIARY IS NOT TO BE RECKONED FOR DISALLOWANCE U/S.14A R.W.R.8D. THE ASSESSING OFFICER IS DIRECTED TO RE-COMPUTE THE AVERAGE VALUE OF INVESTM ENT UNDER THE PROVISIONS OF RULE 8D AFTER DELETING INVESTMENTS MA DE BY THE ASSESSEE IN SUBSIDIARY COMPANY. TAKING NOTE OF THE ABOVE DECISIONS AND THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN ITA NO.156/MDS/13 CITED SU PRA, WE HEREBY REMIT THE MATTER BACK TO THE FILE OF LD. ASSESSING OFFIC ER TO EXAMINE THE ISSUE INVOLVED IN THIS CASE AFRESH AND PASS APPROPRIATE O RDER AS PER LAW AND MERITS AND IN THE LIGHT OF THE DECISIONS CITED HERE IN ABOVE. WHILE DOING SO, WE ALSO DIRECT THE LD. ASSESSING OFFICER TO CONSIDE R THE DECISION OF THE TRIBUNAL IN THE CASE M/S AGILE ELECTRIC SUB ASSEMBL Y PVT. LTD. CITED SUPRA WHEREIN IT WAS HELD AS FOLLOWS:- 7.2 IN REGARD TO APPLICABILITY OF SECTION 14A OF THE ACT READ WITH RULE 8D ALSO; THE ABOVE VIEW WILL BE APPLICABLE. MOREOVER I N THE CASE EIH ASSOCIATED HOTELS LTD V. DCIT REPORTED IN 2013 (9) TMI 604 IN ITA NO.1503, 1624/MDS/2012 DATED 17TH JULY, 2013, IT HA S BEEN HELD BY THE CHENNAI BENCH OF THE TRIBUNAL AS FOLLOWS:- DISALLOWANCE U/S. 14A RW RULE 8D CIT UPHELD DISA LLOWANCE HELD THAT INVESTMENTS MADE BY THE ASSESSEE IN THE SUBS IDIARY COMPANY ARE NOT ON ACCOUNT OF INVESTMENT FOR EARNING CAPITAL GA INS OR DIVIDEND INCOME. SUCH INVESTMENTS HAVE BEEN MADE BY THE ASSE SSEE TO PROMOTE ITA NO.2206/MDS/2017 11 SUBSIDIARY COMPANY INTO THE HOTEL INDUSTRY. A PERUS AL OF THE ORDER OF THE CIT(APPEALS) SHOWS THAT OUT OF TOTAL INVESTMENT OF RS.64,18,19,775/-, RS.63,31,25,715/- IS INVESTED IN WHOLLY OWNED SUBSI DIARY. THIS FACT SUPPORTS THE CASE OF THE ASSESSEE THAT THE ASSESSEE IS NOT INTO THE BUSINESS OF INVESTMENT AND THE INVESTMENTS MADE BY THE ASSESSEE ARE ON ACCOUNT OF BUSINESS EXPEDIENCY. ANY DIVIDEND EAR NED BY THE ASSESSEE FROM INVESTMENT IN SUBSIDIARY COMPANY IS P URELY INCIDENTAL. THEREFORE, THE INVESTMENTS MADE BY THE ASSESSEE IN ITS SUBSIDIARY ARE NOT TO BE RECKONED FOR DISALLOWANCE U/S. 14A R.W.R. 8D. THE ASSESSING OFFICER IS DIRECTED TO RE-COMPUTE THE AVERAGE VALUE OF INVESTMENT UNDER THE PROVISIONS OF RULE 8D AFTER DELETING INVESTMENT S MADE BY THE ASSESSEE IN SUBSIDIARY COMPANY DECIDED IN FAVOUR OF ASSESSEE. FOR THE ABOVE SAID REASONS, WE HEREBY HOLD THAT IN THE CASE OF THE ASSESSEE THE PROVISIONS OF SECTION 14A READ WITH RULE 8D WIL L NOT BE APPLICABLE IN REGARD TO INVESTMENTS MADE FOR ACQUIRING THE SHARES OF THE ASSESSEES SISTER CONCERNS. ACCORDINGLY WE RESTRAIN OURSELVES FROM INTERFERING WITH THE ORDER OF THE LD.CIT(A) ON THIS REGARD. THEREFORE, FOLLOWING THE AFORESAID DECISION OF THE TRIBUNAL, WE HEREBY DIRECT THE LEARNED ASSESSING OFFICER TO DELETE THE ADDITION MADE BY INVOKING THE PROVISIONS OF SECTION 14A R.W. RULE 8D OF THE ACT, SUBJECT TO VERIFICATION THAT INVESTMENTS ARE MADE BY THE ASSES SEE IN ITS SISTER CONCERNS ONLY AND FROM ITS INTEREST FREE FUNDS. 8. FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, WE REMIT BACK THE MATTER TO THE FILE OF THE LEARNED ASSESSING OFFICER TO VER IFY WHETHER THE INVESTMENTS ARE MADE BY THE ASSESSEE OUT OF ITS INT EREST FREE FUNDS IN ITS SISTER CONCERN FOR STRATEGIC REASONS AND IF FOUND S O DELETE THE ADDITION AND IF FOUND OTHERWISE, PASS APPROPRIATE ORDERS AS PER MERIT & LAW . 6.1 FURTHER, WHEN THE ASSESSEE HAS NO EXEMPTED INC OME, THE PROVISIONS OF THE SECTION 14A R.W.RULE 8D CANNOT BE INVOKED AS ALREADY HELD BY JURISDICTIONAL HIGH COURT IN THE CA SE OF REDINGTON (INDIA) LTD. CITED SUPRA AND ALSO SIMILAR VIEW WAS TAKEN BY JURISDICTIONAL HIGH COURT IN THE CASE OF CHETTINADU LOGISTICS CITED SUPRA. ACCORDINGLY, THIS ISSUE IS REMITTED TO THE F ILE OF LD. ASSESSING ITA NO.2206/MDS/2017 12 OFFICER TO EXAMINE THE ISSUE IN THE LIGHT OF THE AB OVE CITED JUDGEMENTS OF JURISDICTIONAL HIGH COURT AND TO DECIDE AFRESH A FTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 04 TH DECEMBER, 2017. SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 04 TH DECEMBER, 2017 . K S SUNDARAM. ' ( )!*+ ,+%! / COPY TO: 1 . / APPELLANT 3. ' ' -! () / CIT(A) 5. +0 1 )!)23 / DR 2. / RESPONDENT 4. ' ' -! / CIT 6. 1 45 6 / GF