ITO 2(1)(1), MUMBAI V. ARCHWAY INVESTMENT CO. LTD, MUMBAI

ITA 948/MUM/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8629 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 02-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Capital asset; Business expenditure; Earning of tax free income; Revenue expenditure
• Section: 14A; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NOS.8461/M/2010 & 5598/M/2011 ASSESSMENT YEARS: 2007-08 & 2008-09) ARCHWAY INVESTMENT COMPANY LIMITED, NEVILLE HOUSE, J.N. HEREDIA MARG, BALLARD ESTATE, MUMBAI-400 001 PAN: AAACA5507H / VS. ITO-2(1)(1), MUMBAI ( / APPELLANT) ( /RESPONDENT) ITA NOS.948/M/2011, 7215/M/2012 & 6013/M/2011 ASSESSMENT YEAR: 2007-08, 2007-08 & 2008-09) ITO-2(1)(1), AAYAKAR BHAVAN, R.NO.561, 5 TH FLOOR, M.K. ROAD, MUMBAI-400 020 / VS. ARCHWAY INVESTMENT CO. LTD., NEVILLE HOUSE, J.N. HEREDIA MARG, BALLARD ESTATE, MUMBAI-400 001 PAN: AAACA5507H ( / APPELLANT) ( /RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI YOGESH THAR, A.R. REVENUE BY : SHRI RAJESH KUMAR YADAV, D.R. / DATE OF HEARING : 17.01.2017 / DATE OF PRONOUNCEMENT : 10.02.2017 / O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED CROSS APPEALS FOR DIFFERENT ASSES SMENT YEARS RELATE TO THE SAME ASSESSEE. THE ISSUES INVOLVED IN ALL THE APPE ALS ARE IDENTICAL IN NATURE. ITA NOS.8461/M/2010 & 5598/M/2011 ARCHWAY INVESTMENT COMPANY LIMITED 2 HENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE BE ING DISPOSED OF BY THIS COMMON ORDER. FIRST WE TAKE UP THE APPEALS RELATIN G TO ASSESSMENT YEAR 2007- 08 BEARING ITA NO.8461/M/2010. ITA NO.8461/M/2010 2. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE A GAINST THE ORDER DATED 20.11.2009 OF THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)]. THE ASSESSEE IN THIS A PPEAL HAS AGITATED THE CONFIRMATION OF DISALLOWANCE WHICH WAS MADE BY THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) UNDER SECTION 1 4A READ WITH RULE 8D. THE AO NOTED THAT THE ASSESSEE DURING THE YEAR HAD EARN ED DIVIDEND INCOME OF RS.82,29,300/-. HOWEVER, THE ASSESSEE HAD NOT DISA LLOWED ANY EXPENDITURE FOR EARNING OF THIS TAX EXEMPT INCOME. HE ACCORDINGLY APPLIED RULE 8D AND COMPUTED THE DISALLOWANCE UNDER SECTION 14A AT RS.5 1,84,673/-, OUT OF WHICH A SUM OF RS.24,16,733/- WAS DISALLOWED AS INTEREST EXPENDITURE UNDER RULE 8D(2)(II) AND THE REMAINING SUM OF RS.27,67,940/- W AS DISALLOWED ON ACCOUNT OF ADMINISTRATIVE EXPENDITURE UNDER RULE 8D(2)(III) . BEING AGGRIEVED BY THE ABOVE DISALLOWANCE, THE ASSESSEE PREFERRED APPEAL B EFORE THE LD. CIT(A). 3. THE LD. CIT(A) UPHELD THE DISALLOWANCE SO MADE B Y THE AO. THE ASSESSEE, THUS, HAS COME IN APPEAL BEFORE US ON THI S ISSUE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES. THE LD. A.R. OF THE ASSESSEE HAS SUBM ITTED THAT RULE 8D OF THE I.T. RULES 1962 IS NOT APPLICABLE FOR THE YEAR UNDER CON SIDERATION. WE FIND FORCE IN THE ABOVE CONTENTION OF THE LD. A.R. 5. IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. LTD. (SUPRA) THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT RULE 8D R.W .S. 14A(2) IS NOT ARBITRARY OR UNREASONABLE BUT CAN BE APPLIED ONLY I F THE ASSESSEE'S METHOD IS NOT SATISFACTORY. IT HAS BEEN FURTHER HELD THAT RULE 8D IS NOT RETROSPECTIVE AND ITA NOS.8461/M/2010 & 5598/M/2011 ARCHWAY INVESTMENT COMPANY LIMITED 3 APPLIES FROM A.Y. 2008-09 ONWARDS. FOR THE YEARS FO R WHICH RULE 8D IS NOT APPLICABLE AND IN THE EVENT OF THAT THE AO IS NOT S ATISFIED WITH THE EXPLANATION/WORKING GIVEN BY THE ASSESSEE, DISALLOW ANCE UNDER SECTION 14A HAS TO BE MADE ON A REASONABLE BASIS. ALMOST SIMILA R VIEW HAS BEEN EXPRESSED BY HON'BLE DELHI HIGH COURT IN THE CASE OF 'MAXOPP INVESTMENT LTD. & OTHERS' VS. CIT (247 ITR 162). 6. IT MAY BE FURTHER OBSERVED THAT IT IS NOT A CASE WHERE NO EXEMPT INCOME WAS RECEIVED BY THE ASSESSEE DESPITE MAKING INVESTM ENTS FOR EARNING EXEMPT INCOME. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE EXEMPT INCOME EARNED BY THE ASSESSEE WAS VERY LESS OR NOT IN PROPORTION TO THE INVESTMENTS MADE BY THE ASSESSEE FOR THIS PURPOSE. UNDER SUCH CIRCUMSTA NCES THE DIFFERENT CO- ORDINATE BENCHES OF THIS TRIBUNAL HAVE OBSERVED THA T IN SUCH CASES CERTAIN PERCENTAGE OF EXEMPT INCOME CAN CONSTITUTE A REASON ABLE ESTIMATE FOR MAKING DISALLOWANCE FOR THE YEARS EARLIER TO ASSESSMENT YE AR 2008-09. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. 'GODREJ AG ROVET LTD.' (ITA NO.934/2011) DECIDED ON 08.01.13 HAS UPHELD THE ORD ER OF THE TRIBUNAL DIRECTING THE AO TO RESTRICT THE DISALLOWANCE TO TH E EXTENT OF 2% OF THE TOTAL EXEMPT INCOME EARNED BY THE ASSESSEE. 7. AT THIS STAGE, THE LD. A.R. HAS BROUGHT OUR ATTE NTION TO THE ORDER OF THE TRIBUNAL DATED 09.03.16 IN THE OWN CASE OF THE ASSE SSEE FOR A.Y. 2006-07 WHEREIN THE TRIBUNAL HAS RESTRICTED THE DISALLOWANC E UNDER SECTION 14A IN SIMILAR CIRCUMSTANCES TO THE EXTENT OF 5% OF THE EX EMPT INCOME EARNED BY THE ASSESSEE FOR THAT ASSESSMENT YEAR UNDER CONSIDERATI ON. FOLLOWING THE SAME YARDSTICK, WE RESTRICT THE DISALLOWANCE UNDER SECTI ON 14A TO THE EXTENT OF 5% OF THE EXEMPT INCOME FOR THIS YEAR ALSO. THE APPEA L OF THE ASSESSEE IS THEREFORE TREATED AS PARTLY ALLOWED. 8. NOW COMING TO THE APPEAL OF THE REVENUE BEARING ITA NO.948/M/2011 FOR A.Y. 2007-08. ITA NOS.8461/M/2010 & 5598/M/2011 ARCHWAY INVESTMENT COMPANY LIMITED 4 ITA NO.948/M/2011 9. THIS IS A CROSS APPEAL BY THE REVENUE FOR A.Y. 2 007-08 ITSELF. THE REVENUE IN THIS APPEAL HAS AGITATED THE ACTION OF T HE LD. CIT(A) IN ALLOWING THE INTEREST OF RS.33.39 LAKHS AS EXPENDITURE WHICH WAS DISALLOWED BY THE AO HOLDING THAT THE SAME WAS NOT A REVENUE EXPENDITURE . THE AO NOTED THAT THE ASSESSEE HAS BEEN ENGAGED IN THE BUSINESS OF BORROW ING AND LENDING OF FUNDS ON INTEREST APART FROM ITS INVESTMENT ACTIVITY. HE FURTHER NOTED THAT THE AMOUNT OF INTEREST PAID DURING THE YEAR WAS MORE THAN THE AMOUNT OF INTEREST RECEIVED. HE FURTHER OBSERVED THAT A COMPANY WHICH IS ENGAGED IN THE ACTIVITY OF BORROWING AND LENDING OF FUNDS WAS SUPPOSED TO RECE IVE INTEREST AT A HIGHER RATE THAN THE INTEREST PAID. HE THEREFORE OBSERVED THAT THE BORROWED FUNDS MUST HAVE BEEN USED FOR INVESTMENT PURPOSES, THE INCOME FROM WHICH HAS BEEN CLAIMED AS SHORT TERM CAPITAL GAIN/LONG TERM CAPITA L GAIN; HE THEREFORE HELD THAT THE EXCESS PAYMENT OF INTEREST MADE BY THE ASSESSEE WAS NOT AN ALLOWABLE BUSINESS EXPENDITURE AND ACCORDINGLY DISALLOWED A S UM OF RS.33,39,258/-. BEING AGGRIEVED BY THE ABOVE DISALLOWANCE MADE BY T HE AO, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). 10. THE LD. CIT(A) NOTED THAT THE ASSESSEE HAD USED THE BORROWED FUNDS NOT ONLY FOR FURTHER LENDING BUT ALSO FOR INVESTMENT IN SECURITIES WHICH YIELDED EXEMPT INCOME. HE FURTHER OBSERVED THAT SINCE THE DISALLOWANCE UNDER SECTION 14A OF A SUM OF RS.51,84,673/- HAS ALREADY BEEN MAD E BY THE AO, HENCE NO FURTHER DISALLOWANCE WAS CALLED FOR UNDER SECTION 3 7(1). HE ACCORDINGLY DELETED THE DISALLOWANCE MADE BY THE AO ON THIS ISS UE. BEING AGGRIEVED BY THE ABOVE ORDER OF THE LD. CIT(A), THE REVENUE HAS COME IN APPEAL BEFORE US. 11. ADMITTEDLY, THE ASSESSEE IS AN INVESTMENT COMPA NY AND IS ALSO ENGAGED IN BORROWING AND LENDING BUSINESS WHEREBY THE ASSES SEE COMPANY BORROWS FUNDS AT LOWER RATE OF INTEREST AND LENDS THE SAME AT HIGHER RATE OF INTEREST. THE LD. AR HAS BROUGHT OUR ATTENTION TO THE DECISION OF THE HONBLE BOMBAY HIGH ITA NOS.8461/M/2010 & 5598/M/2011 ARCHWAY INVESTMENT COMPANY LIMITED 5 COURT IN THE CASE OF CIT VS. SRISHTI SECURITIES (P. ) LTD. (2009) 183 TAXMAN 159 (BOMBAY) WHEREIN THE HONBLE BOMBAY HIGH COURT, WHI LE RELYING UPON VARIOUS CASE LAWS, HAS HELD THAT IF THE CAPITAL HAS BEEN BORROWED FOR THE PURPOSE OF BUSINESS OR PROFESSION OF THE ASSESSEE C OMPANY THEN THE INTEREST PAID ON THE BORROWED FUNDS IS AN ALLOWABLE EXPENDIT URE. IT HAS BEEN FURTHER HELD THAT IN CASE OF AN INVESTMENT COMPANY, THE AMO UNT BORROWED MAY BE UTILISED FOR THE PURPOSE OF ACQUISITION OF STOCK IN TRADE OR FOR THE PURPOSE OF ACQUISITION OF CAPITAL ASSETS. THE RATIO OF THE AB OVE DECISION OF THE HONBLE BOMBAY HIGH COURT SQUARELY APPLIES IN THE CASE OF T HE ASSESSEE. EVEN OTHERWISE AS OBSERVED ABOVE, WE HAVE ALREADY DIRECT ED FOR DISALLOWANCE UNDER SECTION 14A AT THE RATE OF 5% OF THE DIVIDEND INCOM E EARNED. THE SAID DISALLOWANCE MADE UNDER SECTION 14A WILL ALSO TAKE CARE OF THE INTEREST EXPENDITURE INCURRED BY THE ASSESSEE ON INVESTMENTS RELATABLE TO EARNING OF EXEMPT INCOME. UNDER THE CIRCUMSTANCES, NO FURTHER DISALLOWANCE IS ATTRACTED IN THIS CASE. 12. WE THEREFORE DO NOT FIND ANY MERIT IN THE APPEA L OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. 13. THERE IS ANOTHER APPEAL OF THE REVENUE FOR A.Y. 2007-08 BEARING ITA NO.7215/M/2012. ITA NO.7215/M/2012 14. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE RE VENUE AGAINST THE ORDER DATED 20.09.2012 OF THE LD. CIT(A) IN RELATION TO T HE ORDER PASSED BY THE AO UNDER SECTION 154 OF THE ACT. THE AO NOTED THAT TH ERE WAS A MISTAKE IN COMPUTATION/CALCULATION OF THE INTEREST EXPENDITURE WHILE MAKING DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D(2)(II). HE ACC ORDINGLY MODIFIED THE ORDER INCREASING THE AMOUNT OF DISALLOWANCE OF INTEREST E XPENDITURE. 15. IN APPEAL, THE LD. CIT(A) SET ASIDE THE ORDER O F THE AO OBSERVING THAT SUCH A COURSE MADE BY THE AO UNDER SECTION 154 OF T HE ACT WAS NOT ITA NOS.8461/M/2010 & 5598/M/2011 ARCHWAY INVESTMENT COMPANY LIMITED 6 MAINTAINABLE AND THAT THERE WAS FORCE IN THE CONTEN TION OF THE ASSESSEE THAT THE DISALLOWANCE OF INTEREST SHOULD BE MADE WITH REFERE NCE TO NET INTEREST ONLY. 16. THE ISSUE INVOLVED IN THIS APPEAL IS REGARDING THE COMPUTATION OF DISALLOWANCE UNDER RULE 8D. AS OBSERVED ABOVE WHIL E DECIDING THE APPEAL OF THE ASSESSEE BEARING ITA NO.8461/M/10, WE HAVE ALRE ADY RESTRICTED THE OVERALL DISALLOWANCE UNDER SECTION 14A TO THE EXTENT OF 5% OF THE EXEMPT INCOME WHICH ALSO INCLUDES THE INTEREST DISALLOWANCE, IF A NY, THAT IS TO BE MADE IN THE CASE IN HAND. THEREFORE, IN VIEW OF THE ABOVE, THI S APPEAL OF THE REVENUE HAS BECOME INFRUCTUOUS AND THE SAME IS ACCORDINGLY DISM ISSED. 17. NOW COMING TO THE CROSS APPEALS FOR A.Y. 2008-0 9. ITA NO.6013/M/2011 (REVENUES APPEAL) & ITA NO.5598 /M/2011 (ASSESSEES APPEAL) 18. THE ISSUES RAISED IN THE ABOVE STATED APPEALS A RE IDENTICAL AS RAISED IN APPEALS RELATING TO A.Y. 2007-08. THE ASSESSEE HAS AGITATED THE DISALLOWANCE MADE BY THE AO UNDER SECTION 14A OF THE ACT WHEREAS THE REVENUE HAS COME IN APPEAL AGITATING THE ACTION OF THE LD. CIT(A) IN ALLOWING THE INTEREST EXPENDITURE INCURRED BY THE ASSESSEE ON THE INVESTM ENTS MADE. 19. AS DISCUSSED ABOVE, THE ASSESSEE IS AN INVESTME NT AND FINANCE COMPANY. IT HAD MADE STRATEGIC INVESTMENTS. THE LD. A.R. HA S STATED THAT MORE THAN 90% OF THE INVESTMENTS OF THE ASSESSEE WERE STRATEGIC I NVESTMENTS MADE IN SUBSIDIARIES AND ASSOCIATED COMPANIES. HE, IN THIS RESPECT, HAS INVITED OUR ATTENTION TO PAGE 6 OF THE PAPER BOOK WHICH IS AN A UDIT REPORT OF THE CHARTERED ACCOUNTANT REGARDING THE INVESTMENTS MADE AND IN PA RA 5 OF THE SAID DOCUMENT IT HAS BEEN STATED THAT THE AGGREGATE COST OF INVES TMENTS MADE IN GROUP/HOLDING/SUBSIDIARY COMPANIES WAS NOT LESS THA N 90% OF THE COST OF THE TOTAL ASSETS OF THE COMPANY AT ANY POINT OF TIME TH ROUGHOUT THE RELEVANT ACCOUNTING PERIOD/YEAR. ITA NOS.8461/M/2010 & 5598/M/2011 ARCHWAY INVESTMENT COMPANY LIMITED 7 20. AS DISCUSSED ABOVE IN THE LIGHT OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT CIT VS. SRISHTI SECURITIES (P.) LTD. ( SUPRA) THE HONBLE BOMBAY HIGH COURT HAS HELD THAT IF THE CAPITAL HAS BEEN BO RROWED FOR THE PURPOSE OF BUSINESS OR PROFESSION OF THE ASSESSEE COMPANY THEN THE INTEREST PAID ON THE BORROWED FUNDS IS AN ALLOWABLE EXPENDITURE. IT HAS BEEN FURTHER HELD THAT IN CASE OF AN INVESTMENT COMPANY THE AMOUNT BORROWED M AY BE UTILISED FOR THE PURPOSE OF ACQUISITION OF STOCK IN TRADE OR FOR THE PURPOSE OF ACQUISITION OF CAPITAL ASSETS. THE RATIO OF THE ABOVE DECISION OF THE HONBLE BOMBAY HIGH COURT SQUARELY APPLIES IN THE CASE OF THE ASSESSEE. 21. FURTHER, THE LD. COUNSEL FOR THE ASSESSEE HAS B ROUGHT OUR ATTENTION TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF CIT, PANAJI, GOA VS. PHIL CORPN. LTD. (2011) 202 TAXMAN 368 WHEREIN THE HONBLE BOMBAY HIGH COURT HAS HELD THAT WHERE THE INVESTMENT IN SH ARES OF SISTER/SUBSIDIARY COMPANY IS MADE TO HAVE CONTROL OVER THAT COMPANY A ND FURTHER THAT SUCH AN INVESTMENT WAS ACCORDINGLY PART OF THE BUSINESS OF THE ASSESSEE, IN THAT EVENT THE ASSESSEE IS ENTITLED TO DEDUCTION OF INTEREST P AID ON THE BORROWED AMOUNT UNDER SECTION 36(1)(III) OF THE ACT. WE, FURTHER F IND THAT RECENTLY THE HONBLE DELHI HIGH COURT IN THE CASE OF EICHER GOODEARTH L TD. VS. CIT (2015) 60 TAXMAN.COM 268 (DEL.) HAS HELD THAT IF THE EXPENDIT URE IS INCURRED FOR THE PURPOSE OF PROMOTION OF BUSINESS-MORE SPECIFICALLY TO RETAIN CONTROL OR AS PART OF HIS STRATEGIC INVESTMENT OF THE ASSESSEE COMPANY , SUCH EXPENSES BY WAY OF INTEREST OUT GO WOULD HAVE TO BE TREATED AS ALLOWAB LE UNDER SECTION 36(1)(III) OF THE ACT. 22. IN VIEW OF THE VARIOUS CASE LAWS AS DISCUSSED A BOVE, THE INTEREST EXPENDITURE INCURRED BY THE ASSESSEE FOR THE PURPOS E OF STRATEGIC INVESTMENT AS THE INVESTMENT BEING THE BUSINESS OF THE ASSESSEE I S AN ALLOWABLE EXPENDITURE UNDER SECTION 36(1)(III) OF THE INCOME TAX ACT. ITA NOS.8461/M/2010 & 5598/M/2011 ARCHWAY INVESTMENT COMPANY LIMITED 8 SO FAR AS THE DISALLOWANCE UNDER SECTION 14A IS CON CERNED, NO DOUBT THE ASSESSMENT YEAR UNDER CONSIDERATION IS A.Y. 2008-09 AND THE RULE 8D IS APPLICABLE FOR THE YEAR UNDER CONSIDERATION. HOWEV ER, IN THE LIGHT OF THE DECISIONS REFERRED TO ABOVE, THE EXPENDITURE INCURR ED BY THE ASSESSEE IN RELATION TO STRATEGIC INVESTMENTS IS HELD TO BE AN ALLOWABLE BUSINESS EXPENDITURE. THE SAME THEREFORE CANNOT BE HELD TO BE FOR INVESTMENT PURPOSES OR WITH THE OBJECT OF EARNING OF DIVIDEND/TAX EXEMPT INCOME, BUT THE S AME, IN THE LIGHT OF ABOVE REFERRED TO JUDICIAL DECISIONS CAN SAFELY BE SAID T O BE RELATED TO THE BUSINESS ACTIVITY OF THE ASSESSEE AND NO DISALLOWANCE, THERE FORE, IS ATTRACTED ON SUCH AN INCOME U/S 14A OF THE ACT. FURTHER, THE HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. INDIA ADVANTAGE SECURITIES LTD. I N ITA NO.1131 OF 2013 VIDE ORDER DATED 17.03.2015 HAS UPHELD THE FINDING OF THE TRIBUNAL HOLDING THAT WHILE MAKING THE DISALLOWANCE UNDER RULE 8D, THE SH ARES HELD AS STOCK IN TRADE SHOULD NOT BE CONSIDERED, ONLY THE SHARES TAKEN AS INVESTMENT IN THE ACCOUNT BE CONSIDERED FOR COMPUTATION OF DISALLOWANCE OF EXPEN DITURE UNDER RULE 8D. 23. SO THE PROPOSITION LAID DOWN BY THE HONBLE BOM BAY HIGH COURT IN THE CASE OF INDIA ADVANTAGE SECURITIES LTD. (SUPRA) I S THAT ANY EXPENDITURE WHICH IS HELD TO BE RELATING TO THE BUSINESS ACTIVITIES O F THE ASSESSEE AND NOT FOR THE PURPOSE OF EARNING OF EXEMPT INCOME AND THE EXEMPT DIVIDEND INCOME, IF ANY, IS INCIDENTAL TO SUCH BUSINESS ACTIVITY OF THE ASSE SSEE, THEN NO DISALLOWANCE UNDER SECTION 14A IN RELATION TO SUCH INVESTMENT I S ATTRACTED. THEREFORE, IN THE LIGHT OF ABOVE CASE LAWS, IN OUR VIEW, NO INTEREST DISALLOWANCE EVEN UNDER SECTION 14A READ WITH RULE 8D2(II) IN RELATION TO T HE INVESTMENTS MADE BY THE ASSESSEE BEING RELATING TO ITS BUSINESS ACTIVITY IS ATTRACTED. OUR ABOVE DECISION IS IN LINE WITH THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. M/S. JAYNEER CAPITAL PVT. LTD. ITA NO.71 11/M/2014 VIDE ORDER DATED 13.07.2016 WHEREIN THE TRIBUNAL HAS FURTHER R ELIED UPON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF ORIENTAL S TRUCTURAL ENGINEERS (P) LTD., 35 TAXMANN.COM 201; ORDER OF CHENNAI BENCH OF TRIBUNAL IN THE CASE OF ITA NOS.8461/M/2010 & 5598/M/2011 ARCHWAY INVESTMENT COMPANY LIMITED 9 EIH ASSOCIATED HOTELS LTD. (ITA NO.1503/MDS/2012 DA TED 17.7.2013); ORDER OF MUMBAI BENCH OF TRIBUNAL IN THE CASE OF M/S. JM FINANCIAL LTD. (ITA NO.4521/MUM/2012 DATED 26.3.2014); AND, ORDER OF DE LHI BENCH OF TRIBUNAL IN THE CASE OF INTERGLOBE ENTERPRISES LTD. (ITA NO S.1362 & 1032/DEL/2013 DATED 4.4.2014). SIMILAR PROPOSITION CAN BE APPLIE D IN CASE OF DISALLOWANCE OF ADMINISTRATIVE EXPENDITURE UNDER RULE 8D2(III) ALSO . WE ACCORDINGLY DIRECT THE AO TO EXCLUDE THE STRATEGIC INVESTMENTS MADE IN GRO UP/ASSOCIATE COMPANIES FOR THE PURPOSE OF COMPUTATION OF DISALLOWANCE UNDE R SECTION 14A READ WITH RULE 8D. 24. IN VIEW OF THIS, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.02.2017. SD/- SD/- ( / RAJENDRA) ( / SANJAY GARG) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI / DATED 10.02.2017 * KISHORE /COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED TO TOTO TO : :: : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - 4. / CIT 5. / THE DR CONCERNED BENCH , 6. / GUARD FILE. / // / BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) / ITAT, MUMBAI / ITAT, MUMBAI / ITAT, MUMBAI / ITAT, MUMBAI