DCIT, New Delhi V. M/s. ASF Infrastructure Pvt. Ltd., New Delhi

ITA 3964/DEL/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4289 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 3
• Next Hearing Date: 19-10-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 06-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: ASHISH CHADHA
• Keywords: Depreciation; Earning of tax free income; Question of law
• Section: 143(3); 14A; 10

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-3, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 3964 /DEL/201 6 A.Y. : 20 12 - 1 3 DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(2), R.NO. 380-B, CR BUILDING, I.P. ESTATE, NEW DELHI VS. M/S ASF INFRASTRUCTURE PVT. LTD., 11, BABAR LANE, BENGALI MARKET, NEW DELHI 110 001 PAN: AAFCA4680G) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SH. F.R. MEENA, SR. DR ASSESSEE BY : SH. VED JAIN, CA & SH. ASHISH CHADHA, CA ORDER ORDER ORDER ORDER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-I, NEW DELHI D ATED 22.4.2016 PERTAINING TO ASSESSMENT YEAR 2012-13 ON THE FOLLOW ING GROUNDS:- 1. ON THE FACT AND IN THE CIRCUMSTANCE OF THE CASE, TH E LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS. 35,03 ,719/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF EXPEN SES U/S. 14A READ WITH RULE 8D. 2 2. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THE ASSESSEE COM PANY IS ENGAGED IN THE BUSINESS OF LEASE RENTALS/ REPAIR AND MAINTENANCE. RETURN OF INCOME WAS FILED ON 29.10.2012 DECLARING AN INCOME OF RS. 14,73,800/- U NDER NORMAL PROVISIONS OF THE INCOME TAX ACT, 1961 AND BOOK PROVISIONS OF RS . 13,25,344/- U/S. 115JB. IN THIS CASE ASSESSMENT U/S 143(3) OF THE I.T. ACT WAS MADE ON 3.3.2015 DETERMINING TOTAL INCOME OF RS. 49,77,519/-. IN THE ASSESSMENT ORDER PASSED BY THE AO, AO DISALLOWED EXPENSES OF RS. 35,03,716/ - U/S. 14A AS EXPENSES PERTAINING TO EARNING EXEMPT INCOME. AGGRIEVED WITH THE SAID ADDITION/DISALLOWANCE, ASSESSEE FILED THE APPEAL BE FORE THE CIT(A), WHO IMPUGNED ORDER DATED 22.4.2016 HAS DELETED THE ADDI TION BY PARTLY ALLOWING THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED WITH THE IMPUGNED ORDER, THE REVENUE I S IN APPEAL BEFORE THE TRIBUNAL. 4. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 3 5. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS, ESPECIALLY THE ORDERS OF THE AUTHORITIES BELOW. I FIND THAT LD. FIRST APPELLATE AUTHORITY HAS ELABORATELY DISCUSSED THE ISSUE IN D ISPUTE BY CONSIDERING THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE AN D ADJUDICATED THE ISSUE IN DISPUTE AS UNDER:-. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT A ND OBSERVATION OF THE ASSESSING OFFICER. IT IS CLAIMED BY THE APPE LLANT THAT IT HAS MADE INVESTMENT IN THE GROUP COMPANIES FOR STRATEGI C PURPOSES AND NOT FOR EARNING DIVIDEND INCOME, THEREFORE, SECTION 14A CANNOT BE APPLIED. THESE INVESTMENTS ARE MADE FOR ACQUIRING C ONTROLLING STAKE IN GROUP COMPANIES AND PROVIDING FINANCE TO THEM. I T IS ALSO CLAIMED BY THE APPELLANT THAT NO DIVIDEND INCOME HA S BEEN RECEIVED BY THE APPELLANT FROM THE INVESTMENTS MADE IN THE GROUP COMPANIES. THE AR OF THE APPELLANT CLAIMED THAT NO EXPENSES HAVE BEEN INCURRED DURING THE YEAR FOR MAKING INVESTMENT IN THESE COMPANIES. THE APPELLANT HAS RELIED UPON THE JUDGME NT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. HOLCIM INDI A PVT. LTD. AND MAXOPP INVESTMENT LTD. VS. CIT 347 ITR 272 WHEREIN IT IS HELD THAT IF INVESTMENT IS MADE FOR STRATEGIC PURPOSES AND NO T FOR EARNING DIVIDEND THEN PROVISIONS OF SECTION 14A CANNOT BE A PPLIED ON SUCH 4 INVESTMENTS. CONSIDERING THE FACTS OF THE CASE IT I S HELD THAT SECTION 14A CANNOT BE APPLIED ON THE INVESTMENTS MADE IN SU BSIDIARY AND JOINT VENTURE COMPANIES AND IT SHOULD BE RESTRICTED TO THE INVESTMENTS MADE IN LISTED COMPANIES. THE AO IS THE REFORE, DIRECTED TO DELETE THE ADDITION OF RS.35,03,719/-. RELIANCE IN THIS REGARD IS PLACED ON THE JUDGMENT OF HON'BLE DELHI HIGH COURT JUDGMENT IN THE CASE OF CIT VS. HOLCIM INDIA PVT. LTD. 57 TAXMA NN.COM 28 (DELHI): 'SECTION 14A OF THE INCOME-TAX ACT, 1961 - EXPENDIT URE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME ( INVESTMENT) - ASSESSMENT YEARS 2007-08 AND 2008-09- WHETHER WHERE BUSINESS OF ASSESSEE AS AN INVESTMENT COMPANY HAD B EEN SET UP AND COMMENCED AND GENUINENESS OF EXPENSES AND FACT THAT IT WAS INCURRED FOR BUSINESS ACTIVITIES WAS NOT DOUBTED BY LOWER AUTHORITIES, EXPENDITURE UNDER SECTION 14A, WAS ALL OWABLE - HELD, YES [PARA 16][LN FAVOUR OF ASSESSEE] FACTS THE ASSESSEE WAS A SUBSIDIARY OF HOLDERIND INVEST MENTS LTD., MAURITIUS, FORMED AS A HOLDING COMPANY FOR MAKING D OWNSTREAM INVESTMENTS IN CEMENT MANUFACTURING VENTURES IN IND IA. 5 FOR THE ASSESSMENT YEAR 2007-08, THE ASSESSEE CLA IMED ADMINISTRATIVE AND MISCELLANEOUS EXPENSES EXPENDITU RE WRITTEN OFF AMOUNTING TO RS. 8.75 CRORES AND FOR THE ASSESSMEN T YEAR 2008- 09, THE ASSESSEE HAD CLAIMED EXPENSES AMOUNTING TO RS. 7.02 CRORES AS PERSONAL EXPENSES, OPERATING AND OTHER EX PENSES, DEPRECIATION AND FINANCIAL EXPENSES. IN THE TWO ASSESSMENT ORDERS, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAD NOT COMMENCED BUSINESS ACTIVITIES AS T HEY HAD NOT UNDERTAKEN ANY MANUFACTURING ACTIVITY OR MADE DOWNS TREAM INVESTMENT, HE ACCORDINGLY DISALLOWED THE' ENTIRE E XPENDITURE FOR BOTH THE YEARS. THE COMMISSIONER (APPEALS), CONFIRMED THE DISALLO WANCE MADE BY THE ASSESSING OFFICER. HE HELD THAT THE BUS INESS OF THE ASSESSEE WAS EXCLUSIVELY TO ACT AS A HOLDING COMPAN Y FOR DOWNSTREAM INVESTMENT IN OLDER COMPANIES AND THE EX PENDITURE INCURRED WAS ON SALARIES OF EMPLOYEES OF THE ASSESS EE COMPANY AND OTHER OPERATING EXPENSES OF THE COMPANY. THE AS SESSEE HAD ALSO ADMITTED THAT THE SAID EXPENDITURE HAD BEEN IN CURRED IN ORDER TO PROTECT THEIR INVESTMENT AS WELL AS EXPLORATION OF NEW INVESTMENTS 6 WHICH GIVES RISE TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME WHICH CLEARLY SHOWED THAT IN THE ASSESSEE'S CASE TH E PROVISIONS OF SECTION 14A WERE APPLICABLE. HENCE, ENTIRE EXPENDIT URE WAS NOT ALLOWABLE IN VIEW OF SECTION 14A. THEREAFTER, THE COMMISSIONER (APPEALS) REFERRED TO THE CONTENTIONS OF THE ASSESSEE THAT THEY HAD NOT EARNE D DIVIDEND INCOME AND THEREFORE, SECTION 14A WAS NOT APPLICABL E. THE COMMISSIONER (APPEALS) DID NOT AGREE THAT AS NO EXE MPT INCOME WAS CLAIMED, NO DISALLOWANCE UNDER SECTION 14A WAS WARRANTED. ON APPEAL, THE TRIBUNAL REVERSED THE FINDING OF T HE COMMISSIONER (APPEALS) BY SPECIFICALLY NOTICING THA T THE COMMISSIONER (APPEALS) DID NOT MAKE DISALLOWANCE ON THE GROUND THAT THE ASSESSEE HAD INVESTED IN THE SHARES FOR EA RNING OF THE DIVIDENDS BUT, ON THE GROUND THAT THE ASSESSEE HAD ACQUIRED CONTROLLING INTEREST IN THE RESPECTIVE COMPANIES AN D THIS WAS THEIR LINE OF BUSINESS. THEREFORE, THE TRIBUNAL OBSERVED THAT THERE WAS A CONTRADICTION IN THE SUBMISSIONS MADE BY THE DEPART MENTAL REPRESENTATIVE THE: THE ASSESSEE HAD ACQUIRED SHETE S FOR EARNING OF DIVIDENDS AND HENCE ALLOWED THE APPEAL OF THE ASSES SEE. ON APPEAL BY REVENUE TO HIGH COURT: 7 HELD INCOME EXEMPT UNDER SECTION 10 IN, A PARTICULAR A SSESSMENT YEAR, MAY NOT HAVE BEEN EXEMPT EARLIER AND CAN BECO ME TAXABLE IN FUTURE YEARS. FURTHER, WHETHER INCOME EARNED IN A SUBSEQUENT YEAR WOULD OR WOULD NOT BE TAXABLE, MAY DEPEND UPON THE NATURE OF TRANSACTION ENTERED INTO IN THE SUBSEQUENT ASSES SMENT YEAR. FOR EXAMPLE, LONG-TERM CAPITAL GAIN ON SALE OF SHARES I S PRESENTLY NOT TAXABLE WHERE SECURITY TRANSACTION TAX HAS BEEN PAI D, BUT A PRIVATE SALE OF SNERESIN AN OFF MARKET TRANSACTION ATTRACTS CAPITAL GAINS TAX. IT IS AN UNDISPUTED POSITION THAT ASSESSEE IS AN IN VESTMENT COMPANY AND HAD INVESTED BY PURCHASING A SUBSTANTIAL NUMBER OF SHARES AND THEREBY SECURING RIGHT TO MANAGEMENT. POSSIBILITY O F SALE OF SHARES BY PRIVATE PLACEMENT ETC. CANNOT BE RULED OUT AND I S NOT AN IMPROBABILITY. DIVIDEND MAYOR MAY NOT BE DECLARED. DIVIDEND IS DECLARED BY THE COMPANY AND STRICTLY IN LEGAL SENSE , A SHAREHOLDER HAS NO CONTROL AND CANNOT INSIST ON PAYMENT OF DIVI DEND. WHEN DECLARED, IT IS SUBJECTED TO DIVIDEND DISTRIBUTION TAX.{PARA 15] WHAT IS ALSO NOTICEABLE IS THAT THE ENTIRE OR WHO LE EXPENDITURE HAS BEEN DISALLOWED AS IF THERE WAS NO EXPENDITURE 8 INCURRED BY THE ASSESSEE FOR CONDUCTING BUSINESS. T HE COMMISSIONER (APPEALS) HAS POSITIVELY HELD THAT THE BUSINESS WAS SET UP AND HAD COMMENCED. THE SAID FINDING IS ACCEPTED. THE ASSESS EE, THEREFORE, HAD TO INCUR EXPENDITURE FOR THE BUSINESS IN THE FO RM OF INVESTMENT IN SHARES OF CEMENT COMPANIES AND TO FURTHER EXPAND AN D CONSOLIDATE THEIR BUSINESS. EXPENDITURE HAD TO BE ALSO INCURRED TO PROTECT THE INVESTMENT MADE. THE GENUINENESS OF THE SAID EXPEND ITURE AND THE FACT THAT IT WAS INCURRED FOR BUSINESS ACTIVITIES W AS NOT DOUBTED BY THE ASSESSING OFFICER AND HAS ALSO NOT BEEN DOUBTED BY THE COMMISSIONER (APPEALS).[PARA 16] IF JHESE CIRCUMSTANCES, THERE IS NO MERIT IN THE PRESENT APPEALS AND THE SAME ARE DISMISSED IN IIMINE.[PARA 17]' CHEMINVEST LTD. VS. CIT 61 TAXMANN.COM 118 (DELHI) WHEREIN IT HAS HELD AS UNDER: 'SECTION 14A OF THE INCOME-TAX ACT, 1961 - EXPENDIT URE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME ( APPLICABILITY) - ASSESSMENT YEAR 2004-05 - WHETHER SECTION'14A ENVIS AGES THAT THERE SHOULD BE AN ACTUAL RECEIPT OF INCOME WHICH I S NOT INCLUDIBLE IN TOTAL INCOME; HENCE, SECTION 14A WILL NOT APPLY WHERE NO EXEMPT 9 INCOME IS RECEIVED OR RECEIVABLE DURING RELEVANT PR EVIOUS YEAR - HELD, YES [PARA 23J [IN FAVOUR OF ASSESSEE) FACTS THE ASSESSEE WAS ENGAGED IN BUSINESS OF MAKING IN VESTMENT IN SHARES AND ACCEPTING/GRANTING OF LOANS. FOR THE ASSESSMENT YEAR IN QUESTION, THE ASSESSEE FILED A RETURN OF INCOME DECLARING A LOSS OF RS. 13,84,086. THIS CASE WAS PICKED UP FOR SCRUTINY AND THE ASSE SSING OFFICER COMPLETED THE ASSESSMENT DISALLOWING RS. 97,87,570/ - OUT OF THE TOTAL EXPENDITURE INCURRED DURING THE YEAR UNDER SE CTION 14A. THE REASON RECORDED BY THE ASSESSING OFFICER FOR THIS D ISALLOWANCE WAS THAT THE BORROWED FUNDS WERE UTILIZED FOR THE PURPO SE OF PURCHASE OF SHARES FOR THE PURPOSE TO EARN DIVIDEND INCOME WHIC H WAS EXEMPTED UNDER SECTION 10(33) AND THUS, NOT FORMING A PART OF THE TOTAL INCOME, AND THEREFORE THE INTEREST PAID THERE ON HAD TO BE DISALLOWED UNDER SECTION 14A. THE COMMISSIONER (APPEALS) UPHELD THE APPLICABILI TY OF SECTION 14A BUT AGREED WITH THE CONTENTION OF THE A SSESSEE THAT ONLY 10 THE NET INTEREST AMOUNT DEBITED IN THE PROFIT AND L OSS ACCOUNT WAS REQUIRED TO BE PROPORTIONATELY DISALLOWED UNDER SEC TION 14A. IN APPEALS FILED BY BOTH THE REVENUE AND THE ASSESS EE, THE TRIBUNAL HELD THAT DISALLOWANCE UNDER SECTION 14A CAN BE MAD E EVEN IN A YEAR IN WHICH NO EXEMPT INCOME HAS BEEN EARNED OR R ECEIVED BY ASSESSEE. ON APPEAL: HELD IN THE PRESENT CASE, THE FACTUAL POSITION THAT HA S NOT BEEN DISPUTED IS THAT THE INVESTMENT BY THE ASSESSEE IN THE SHARES OF MAX INDIA LTD. IS IN THE FORM OF A STRATEGIC INVESTMENT . SINCE THE BUSINESS OF THE ASSESSEE IS OF HOLDING INVESTMENTS, THE INTE REST EXPENDITURE MUST BE HELD TO HAVE BEEN INCURRED FOR HOLDING AND MAINTAINING SUCH INVESTMENT. THE INTEREST EXPENDITURE INCURRED BY THE ASSESSEE IS IN RELATION TO SUCH INVESTMENTS WHICH GIVES RISE TO INCOME WHICH DOES NOT FORM PART OF TOTAL INCOME. [PARA 18] IN LIGHT OF THE CLEAR EXPOSITION OF THE LAW IN CI T V. HOLCIM INDIA (P.) LTD. [20151 57 TAXMANN. COM 28 (DELHI) AND IN VIEW OF THE ADMITTED FACTUAL POSITION IN THIS CASE THAT THE ASS ESSEE HAS MADE 11 STRATEGIC INVESTMENT IN SHARES OF MAX INDIA LTD.; T HAT NO EXEMPTED INCOME WAS EARNED BY THE ASSESSEE IN THE RELEVANT ASSESSMENT YEAR AND SINCE THE GENUINENESS OF THE EXPENDITURE I NCURRED BY THE ASSESSEE IS NOT IN DOUBT, THE QUESTION FRAMED IS RE QUIRED TO BE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE . {PARA 19]. IN THE CONTEXT OF THE FACTS ENUMERATED THE QUESTION FRAMED WAS ANSWERED BY HOLDING THAT THE EXPRESSION 'DOES N OT FORM PART OF THE TOTAL INCOME' IN SECTION 14A ENVISAGES THAT THE RE SHOULD BE AN ACTUAL RECEIPT OF INCOME, WHICH IS NOT INCLUDIBLE I N THE TOTAL INCOME, DURING THE RELEVANT PREVIOUS YEAR FOR THE PURPOSE O F DISALLOWING ANY EXPENDITURE INCURRED IN RELATION TO THE SAID INCOME . IN OTHER WORDS, SECTION 14A WILL NOT APPLY IF NO EXEMPT INCOME IS R ECEIVED OR RECEIVABLE DURING THE RELEVANT PREVIOUS YEW. [PARA 23] CONSEQUENTLY, THE IMPUGNED ORDER OF THE TRIBUNAL IS SET ASIDE AND THE APPEAL IS ALLOWED IN THE ABOVE TERMS. THIS COURT SHOULD NOT BE UNDERSTOOD TO HAVE EXPRESSED ANY OPINION ON THE ISSUE OF WHETHER FOR THE ASSESSMENT YEAR IN QUESTION THE INT EREST EXPENDITURE INCURRED BY THE ASSESSEE WOULD BE ALLOWABLE AS BUSI NESS EXPENDITURE UNDER SECTION 36 (1 )(III). [PARA 24]' 12 THE APPELLANT HAS ALSO RELIED UPON THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. SHIVAM MOTORS PVT. LTD. WHEREIN IT HAS HELD AS UNDER: 'AS REGARDS THE SECOND QUESTION, SECTION 14A OF THE ACT PROVIDES THAT FOR THE PURPOSES OF COMPUTING THE TOTAL INCOME UNDER THE CHAPTER, NO DEDUCTION SHALL BE ALLOWED IN RESPECT O F EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO INCOME WHIC H DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT. HENCE, WHAT SECTION 14A PROVIDES IS THAT IF THERE IS ANY INCOME WHICH DOES NOT FORM PART OF THE INCOME UNDER THE ACT, THE EXPENDITURE WHICH IS INCURRED FOR EARNING THE INCOME IS NOT AN ALLOWABLE DEDUCTION. F OR THE YEAR IN QUESTION, THE FINDING OF FACT IS THAT THE ASSESSEE HAD NOT EARNED ANY TAX FREE INCOME. HENCE, IN THE ABSENCE OF ANY TAX F REE INCOME, THE CORRESPONDING EXPENDITURE COULD NOT BE WORKED OUT F OR DISALLOWANCE. THE VIEW OF THE CIT(A), WHICH HAS BEE N AFFIRMED BY THE TRIBUNAL, HENCE DOES NOT GIVE RISE TO ANY SUBST ANTIAL QUESTION OF LAW. HENCE, THE DELETION OF THE DISALLOWANCE OF RS. 2,03, 752/- MADE BY THE ASSESSING OFFICER WAS IN ORDER'. 13 COMMISSIONER OF INCOME-TAX V. ORIENTAL STRUCTURAL E NGINEERS (P.) LTD. [ 2013 ] 35 TAXMANN.COM 210 (DELHI) HIGH COURT OF D ELHI IT APPEAL NO. 605 OF 2012 'SECTION 14A OF THE INCOME-TAX ACT, 1961 - EXPENDIT URE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME [ LNTEREST1 - ASSESSMENT YEAR 2008-09 - COMMISSIONER (APPEALS) FO UND THAT ONLY A PART OF INTEREST WAS PAID ON FUNDS THAT WAS UTILIZED FOR MAKING INVESTMENTS ON WHICH EXEMPTED INCOME WAS REC EIVABLE, WHILE MAJOR VESTMENT WAS MADE IN SUBSIDIARY COMPANY TO FORM SPECIAL PURPOSE VEHICLE TO OBTAIN NHAI CONTRACT - FURTHER, TRIBUNAL HELD THAT EXPENSES WHICH HAD BEEN CLAIMED BY ASSESS EE WERE NOT TOWARDS EXEMPTED INCOME - WHETHER IN VIEW OF FACTUA L FINDING RECORDED BY TRIBUNAL, DISALLOWANCE WAS TO BE LIMITE D - HELD, YES [PARA 31 [IN FAVOUR OF ASSESSEE]' THE FACTS OF THE ABOVE CITED JUDGMENTS ARE IDENTICA L TO THE FACTS OF THE APPELLANT'S CASE. THEREFORE, THE RATIO OF THE ABOVE JUDGMENTS IS SQUARELY APPLICABLE IN THE CASE OF APP ELLANT. HENCE, INVESTMENT MADE IN THE GROUP COMPANIES FOR STRATEGI C PURPOSES , CANNOT BE CONSIDERED FOR DISALLOWANCE U/S 14A OF TH E I.T. ACT. HENCE, THE DISALLOWANCE OF RS.35,03,719/- IS DELETE D. 14 5.1 ON GOING THROUGH THE AFORESAID FINDING OF THE L D. CIT(A) , I FIND THAT IT HAS BEEN CLAIMED BY THE ASSESSEE THAT IT HAS MADE INVES TMENT IN THE GROUP COMPANIES FOR STRATEGIC PURPOSES AND NOT FOR EARNIN G DIVIDEND INCOME, THEREFORE, SECTION 14A CANNOT BE APPLIED. THESE INV ESTMENTS ARE MADE FOR ACQUIRING CONTROLLING STAKE IN GROUP COMPANIES AND PROVIDING FINANCE TO THEM. I FURTHER FIND THAT IT IS ALSO CLAIMED BY THE ASSESSE E THAT NO DIVIDEND INCOME HAS BEEN RECEIVED BY THE ASSESSEE FROM THE INVESTMENTS MADE IN THE GROUP COMPANIES. IN THIS CASE NO EXPENSES HAVE BEEN INCUR RED DURING THE YEAR FOR MAKING INVESTMENT IN THESE COMPANIES. HENCE, LD. CI T(A) HAS RIGHTLY FOLLOWED VARIOUS JUDGMENTS INCLUDING THE JUDGMENT OF THE HO N'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. HOLCIM INDIA PVT. LTD. AND MAXOPP I NVESTMENT LTD. VS. CIT 347 ITR 272 WHEREIN IT HAS BEEN HELD THAT IF INVESTMEN T IS MADE FOR STRATEGIC PURPOSES AND NOT FOR EARNING DIVIDEND THEN PROVISIO NS OF SECTION 14A CANNOT BE APPLIED ON SUCH INVESTMENTS. THEREFORE, CONSIDERING THE FACTS OF THE CASE IT WAS HELD BY THE LD. CIT(A) THAT SECTION 14A CANNOT BE A PPLIED ON THE INVESTMENTS MADE IN SUBSIDIARY AND JOINT VENTURE COMPANIES AND IT SHOULD BE RESTRICTED TO THE INVESTMENTS MADE IN LISTED COMPANIES. ACCORDINGLY, LD. CIT(A) HAS RIGHTLY DIRECTED THE AO TO DELETE THE ADDITION OF RS.35,03, 719/-, WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, HENCE, I UPHOLD THE OR DER OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE. 15 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13/12/2016. SD/- [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 13/12/2016 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES