ASIA INVESTMENTS PRIVATE LIMITED,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 2(1)(1), MUMBAI

PER BENCH

These appeals preferred by the assessee are directed against separate orders dated 20.03.2017, 12.07.2017, and 31.07.2019
passed by the Learned Commissioner of Income-tax (Appeals)–4,
Mumbai [hereinafter referred to as “the Ld. CIT(A)”] pertaining to the assessment years 2012–13, 2013–14, and 2014–15 respectively.
Since common issues in dispute are involved in all these appeals, same were heard together and are being disposed of by this consolidated order repetition of facts.
2. Firstly, we take year 2012-13. The g as under:
1. In the facts and erred in confirming following:

a. Rule 8D(2)( i.
Interest to ii.
Personnel iii.
Travelling iv.
Business v.
Rent vi.
Repairs &
vii.
Depreciat b.
Rule 8D(2
c
Rule 8D(2

ITA No for the sake of convenience e up the appeal of the assessee grounds raised by the assessee circumstances of the case and in Law, disallowance u/s 14A of the Act in (i) o TATA Capital
Rs. 10,99,16,196
l expenses
Rs. 1,75,00,000
g expenses
Rs. 1,00,95,661
Promotion expenses
Rs.5,94,168
Rs. 45,00,000
& Maintenance
Rs. 25,00,000
tion
Rs. 50,00,000
2)(ii)
Rs. 1,16,79,947
2)(iii)
Rs. 1,07,39,195
d circumstances of the case and in Law ve the Ld. CIT(A) erred in confirming disa g interest paid to Tata Capital in res gic investment in shares of group compan fficer holding appellant to be engaged circumstances of the case and in Law, W
T (A) erred in confirming disallowance of e account of Personnel expenses, Travel expenses, Rent, Repairs Maintenance an g no direct nexus of these expenses w o tax is payable and further without prej t assessing officer has himself admitted s of investment.
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and to avoid for assessment are reproduced the Ld CIT (A) respect of the w and without allowance of Rs.
spect of funds nys despite the in business of Without prejudice expenses under lling expenses, nd Depreciation with earning of judice to above, d assesse to be 4. In the facts and erred in confirming despite the fact tha investment and, wi himself admitted ass
5. Without prejudice circumstances of th appreciating the fact
8D can be made w during the year unde
6. On the facts and CIT(A) p8: 319 erred
6,00,00,000 paid to incurred for promotin for the business of th
7. On the facts and CIT(A) erred in confir
52,98,889 by treatin of the assessee.
8. On the facts and CIT(A) erred in conf
Net of depreciation repairs and mainten as capitai1expenditu
3. Briefly stated, th assessee-company investments in subsi in other corporate e assessee filed its retu income of ₹36,53,7
scrutiny, pursuant t provisions of the Inc
“the Act”) were issued
ITA No circumstances of the case and in Law, disallowance of Rs.1,16,79,947/- out o at assesse has sufficient own funds f ithout appreciating the fact that assess sesse to be engaged in business of invest e to the Grounds No 1,2 and 3 on the fa he case and in law the learned CIT(A t that no disallowance under section 14A here no exempt income was received by er consideration.
in the circumstances of the case and in la d in confirming disallowance of professio o Deep C Anand Foundation by attribu ng the interest of group companies and w he assessee.
in the circumstances of the case and in la rming disallowance of UK Branch office e ng the same as not incurred for the purpo in the circumstances of the case and in la firming disallowance of expenditure of IN of INR 15,68,873) incurred for carryi nance in the branch office cum transit ho ure.
he material facts of the case is engaged in the busines diary concerns of the “Anand” G ntities. For the year under con urn of income on 29.09.2012 d
72,580/-. The said return wa to which statutory notices und come-tax Act, 1961 (hereinafte d and duly complied with. Cons
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the Ld CIT (A) of interest paid for making the sing officer has tment acts and in the A) erred in not read with Rule y the appellant aw, the learned onal fees of INR ting it towards was not incurred aw, the learned expenses of INR ose of business aw, the learned
NR 1,41,19,857
ing out routine ouse at London e are that the ss of making
Group as well as nsideration, the declaring a total as selected for der the relevant r referred to as sequent thereto, the assessment was 29.03.2015, determin making various add assessment order.
4. On further appe assessee and upheld
5. The ground No disallowance u/s 14A
1962 (in short ‘the R are that during the earned dividend in assessee, on its ow
₹10,53,55,857/- und
Officer, however, follo in the assessment compute the disallow
5.1 The Assessing expenditure debited expenditure of ₹10,99
Tata Chemicals Ltd.
income and accordin the Rules.
ITA No completed under section 143(3
ning the total income at ₹51,19
ditions and disallowances as eal, the Ld. CIT(A) dismissed th the finding of the Assessing Off s. 1 to 5 of the appeal relate
A of the Act r.w.r. 8D of the Inc
Rules’). Facts in brief qua the i year under consideration, th ncome amounting to ₹33,64
wn accord, made a suo-motu der section 14A of the Act .
owing the findings recorded by for assessment year 2011–12
wance in accordance with Rule 8
Officer first identified out d in the profit and loss ac
9,16,196/- pertaining to the loa as directly relatable to the ear ngly disallowed the same under Asia Investments Pvt. Ltd
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3) of the Act on 9,60,630/-, after set out in the he appeal of the ficer.
to the issue of come-tax Rules, issue in dispute e assessee had ,56,570/-. The disallowance of The Assessing his predecessor
2, proceeded to 8D of the Rules.
t of the total ccount, interest an obtained from rning of exempt
Rule 8D(2)(i) of 5.2 Further, adopti assessment year 20
expenses, on an ad earning of exempt in ₹1.75 crore, travellin business promotion e repairs and main depreciation of ₹50,0
5.3 In this manner disallowance under R
+ ₹1,75,00,000 +
₹25,00,000 + ₹50,00,
5.4 Thereafter, invo
Officer observed that ₹12,53,95,654/- deb
₹10,99,16,196/- had directly relatable to interest expenditur
₹10,99,16,196) was a in the ratio of avera worked out to ₹1,16,7
ITA No ng the approach taken in the 011–12, the Assessing Office hoc basis, to be directly conn ncome. These included personn ng and conveyance expenses of expenses of ₹5,94,168/-, rent o ntenance expenses of ₹25,0
0,000/-.
r, the Assessing Officer determ
Rule 8D(2)(i) at ₹15,01,06,025/-
₹1,00,95,661 + ₹5,94,168 +
,000).
oking Rule 8D(2)(ii) of the Rules t out of the total interest/finan bited in the profit and loss acc d already been disallowed under the earning of exempt incom re of ₹1,54,79,458/-
(₹12
accordingly disallowed on a prop age investments to average tota
79,947/-.
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assessment for er held certain nected with the nel expenses of ₹1,00,95,661/-, of ₹45,00,000/-,
00,000/-, and mined the total
- (₹10,99,16,196
₹45,00,000 +
s, the Assessing nce expenses of count, a sum of Rule 8D(2)(i) as me. The balance
2,53,95,654
–
portionate basis al assets, which 5.5 Further, applyin
Officer computed di investments towards
₹1,07,39,195
5.6 Accordingly, th disallowance under ₹17,25,25,167/- (₹15
6. On further app following his finding finding of the Ld. CIT
“4. Ground expenditure interdependen
Officer, the A only earned d the Assessee
10,53,857/-
A.Y.2011-12. according to Assessing Off claim of the balance amou income. Again that the Ld. A without prope motto offered has taken un
& related par
The details of by letter dat making inves argument wa repeated in th
ITA No ng Rule 8D(2)(iii) of the Rules isallowance at 0.5% of the av s administrative expenses, whic he Assessing Officer determ r section 14A read with 5,01,06,025 + ₹1,16,79,947 + ₹1
peal, the Ld. CIT(A) upheld th g in assessment year 2011-12
T(A) is reproduced as under:
No.2, 3 & 4 are against the disa of Rs. 17,25,25,167/- and are int nt hence, taken together. According to th ssessee does not do any business activ dividend of Rs.33,64,56,517/-. Against e has suo-motto disallowed expendi u/s. 14A r.w.r.8D. The same issue
However, disallowable expenditure is the Rule 8D. Thus, after applying the R fficer has disallowed Rs. 17,25,25,167/- e Assessee of Rs. 10,53,55,857/-. Th unt of Rs.67169310/- has been added nst the disallowance of expenditure, it i
Assessing Officer has wrongly made the d erly appreciating the genuineness of expe for disallowance. According to the Ld. A.
nsecured loans & inter-corporate deposit rties which is utilized for the purpose of t f interest was already given to the Asse ted 20.10.2014, such funds have been stment in share of Group Companies.
as also there in A.Y.2011-12 and sam his year also.
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s, the Assessing verage value of ch amounted to ined the total
Rule
8D at ,07,39,195).
he disallowance
2. The relevant allowance of terconnected, he Assessing ities but has this income, iture of Rs.
was therein to be made
Rule 8D, the - against the herefore, the d to the total is contended disallowance enditure suo-
.R., company ts from Bank the business.
essing Officer n utilized for The similar me has been 4.1. I have co there was a s by Appellate under :-
"4.3 I have c rival submiss year assess interest incom
Rs.14,65,30,6
corresponding
14A r.w.r. 8D
Rs.9,08,52,58
disallowance.
23.10.2013, a Capital Ltd. O shares of Gab in shares of G
Steering and there is intere of Rs.87,42,7
exempt incom of such expen
Similarly, mo promoting the of expenditur
Assessing Off out of total ex
Officer has rig and conveyan
Assessing Off
Assessing Off directly relate disallowed u interest expen course third total disallow
Officer to the has not expla extent of Rs.
restricted to th arguments an working of d
Officer. Becau upon by the L in the light
ITA No nsidered the issue under appeal, carefull similar issue in A.Y.2011-12 and matter
Order dated 14.12.2015 in Para 4.3
considered the findings of the Assessing sion of the appellant, carefully. I find tha ee has received dividend of Rs.35, me of Rs.17,265,656/- and professio
638/-. When there is dividend, which is g expenditure has to be disallowed as D. Appellant has disallowed suo-motto a 83/- but there is no proper justificati
. As per the appellant's admission by assessee was granted loan of Rs.60 cro
Out of which Rs.15 crores was for purc briel India Ltd. and Rs.45 crores was fo
Group Companies i.e. Rs.30 crores in shar
Rs.15 crores in shares of Degremont. O est expenses of Rs.6,89,82,540/- and pro
750/-. Thus, there is direct nexus of expe me. Assessing Officer has rightly pointed nditure directly related to earning of exe st of the business expenses have been e Anand Group of Companies businss he re embedded in personnel cost is very ficer has disallowed only an amount of Rs xpenditure of Rs.2.24 crores. I find that L ightly done so. Similar is the fact related nce expenses and other expenses menti fficer. Thus, the total disallowance worke fficer to the extent of Rs.11,44,50,056/- is ed to earning the exempt income hence s nder Rule 8D, first limb. Similarly, in nditure has to be disallowed having indire limb of Rule 8D (2) (iii) is also applicab wance of expenditure worked out by th extent of Rs.15,11,02,307/- is sustainab ained as to how disallowance offered
90852583/- is correct and disallowanc his amount. Therefore, after going throug nd facts on records, I find no reason to disallowable expenditure made by th use of facts of the case, none of the dec
Ld. Authorised Representative is applicab of the above discussion, the disa
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ly. I find that was decided which is as g Officer and at during the 14,87,406/-, onal fees of s exempt the per Section an amount of ion for such letter dated ores by Tata hase of 15%
or investment res of Mando
On such loan, ocessing fees enditure with d out the fact empt income.
incurred for ence element much there.
s.1.50 crores d. Assessing d to traveling ioned by the ed out by the s found to be same is to be second limb ect nexus. Of ble. Thus the he Assessing ble. Appellant by it to the ce has to be h the written o discard the e Assessing cisions relied ble, therefore, allowance of expenditure m sustained. S
Rs.90852583
Rs.60249724
With a view t made by the A 6.1 Before us, the that the principal a managing its inve opportunities. It wa provides managemen
India Ltd., a concer
Learned Counsel ex grants loans, and p sourced through borr
6.2 It was contend dividend income, i investments, and management and s
Learned Counsel arg consistent course of d engaged in the busin funds have consisten further submitted th were acquired prim
ITA No made by the Assessing Officer of Rs.15,11
Since, assessee has suomoto disallow
3/-, the balance additional disallowanc
4/-."
to maintain judicial consistency, the disa
Assessing Officer and is hereby sustaine
Learned Counsel for the asse activity of the assessee-compan estments and exploring ne as further submitted that the nt, corporate, and support ser rn forming part of the “Anan xplained that the assessee pur provides requisite funding, whi rowings from various companies ded that the assessee’s incom nterest income, income from professional fees received support services to group c gued that the assessee is, by i dealings, a predominantly inves ness of managing and holding in ntly been utilized for business p at the shares of the “Anand” Gr marily with the object of m
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1,02,307/- is wed exp of ce comes to allowance so ed.”
essee submitted ny comprises of ew investment e assessee also rvices to Spicer nd” Group. The rchases shares, ich is generally s.
me consists of m the sale of for rendering companies. The its conduct and stment company nvestments. The purposes. It was roup companies maintaining and exercising controlling dividend income, whi
6.3 It was pointed shares, which, unlik return by way of di such systematic and has, since inception, expenditure incurred treated as business attention that a sim
Bench of the Tribun and earlier assessme
6.4 The Learned Co from the sale of inves income from such in the expenditure incu managing and realizi activities (such as ea to be apportioned i exempt income.
6.5 The Learned C business activities c heads: (i) strategic i
ITA No g interest, and not with the inte ich is merely incidental.
out that the assessee had inv ke preference shares, do not car ividend. The Learned Counsel d organized investment activity been regarded as a business a d in relation thereto has co expenditure. It was further milar view has been taken by nal in the assessee’s own case nt years.
ounsel submitted that, along w stments, the assessee has also nvestments. Accordingly, it was urred relates both to taxable ac ing investments) and to non-tax arning dividend income). Hence, in proportion to the respectiv
Counsel further submitted that could be appropriately categor nvestment activity, and (ii) tra
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ntion of earning vested in equity rry any assured submitted that of the assessee activity, and the nsistently been brought to our the Coordinate for AY 2010-11
with the receipt earned dividend contended that tivities (such as xable or exempt the same ought ve taxable and t the assessee’s rized under two ading in shares.

Placing reliance on t
Maxopp Investment
(SC), it was submitte
Act can be made o earning exempt inco proportion to the taxa
6.6 The Learned Co the Assessing Office regard to the correctn assessee under sect satisfaction, the invo was contended, is v ground alone, the en under Rule 8D de disallowance offered b
6.7 With respect to portion of the expend directly incurred for same under Rule 8
submitted that the A proximate nexus be dividend income. It w personnel cost, trav
ITA No the judgment of the Hon’ble Su t Ltd vs CIT (2018) 91 taxm ed that disallowance under sec nly to the extent of expenditu ome, and such allocation mu able and non-taxable income of ounsel for the assessee further er has not recorded any dissa ness of the suo-motu disallowan tion 14A of the Act. In the a ocation of Rule 8D by the Asse void ab-initio. It was submitte tire computation made by the A eserves to be deleted, and by the assessee ought to be acc o the Assessing Officer’s actio diture debited to the profit and r earning exempt income and 8D(2)(i) of the Rules, the Le
Assessing Officer has failed to d etween such expenditure and was urged that the expenses i velling and conveyance, busin
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upreme Court in mann.com 154
ction 14A of the ure relatable to ust be made in the assessee.
submitted that atisfaction with nce made by the bsence of such essing Officer, it d that, on this Assessing Officer the suo-motu epted.
on of treating a loss account as disallowing the earned Counsel demonstrate any the earning of in the nature of ness promotion, depreciation, etc., w assessee’s business and the dividend inc operations. According was not justified in attributable to the ea
6.8 With reference counsel for the asse total finance cost o under consideration.
Particulars
Interest on Term Loan
TATA Capital
HDFC Bank (Car Loan)
Yes Bank
Kotak Mahindra Prime

Interest on Working c
Yes Bank

Interest on Inter-Corp
Deposits
Anand & Anand P. Ltd.
Anfilco Limited
Dytek India Ltd.

Interest on Finance L
Kotak Mahindra Prime

Particulars
ITA No were essentially incurred in the of managing and monitoring i come was merely incidental to gly, it was contended that the A n holding that such expenses arning of exempt dividend incom to disallowance u/R 8D(2)(ii) o essee before us filed a detailed f Rs.12,53,95,654/- for the a :
AY 2012-13
Amount (Rs.) Amount (Rs.) n

10,99,16,196

)
5,55,870

-

Ltd (Car Loan) -
11,04,72,066 v capital

61,409
61,409

porate

.
21,22,138

1,26,50,697

89,344
1,48,62,179

Lease

Ltd
-
-

AY 2012-13
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e course of the its investments, o such business
Assessing Officer s were directly me.
f Rules, the Ld.
d break up, the assessment year

Processing fees
TATA Capital
Corporate guarantee fe
Victor Gaskets India Li
Anfilco Ltd

Total Finance Cost (as statements)
6.9 The Learned C
Assessing Officer had under Rule 8D(2)(i) interest expenditure treating the same as income, which he is interest expenditure loan availed from HD
Yes Bank pertained payments of ₹21,2
₹1,26,50,697/– to An represented interest related to any investm
6.10 The Learned Co total finance cost of account, the intere disallowed, the bala
ITA No Amount (Rs.)
Amount (Rs.
A - ees:

imited
-

-
- per financial

12,53,95,65
Counsel for the assessee subm d already disallowed a sum of ₹
of the Income-tax Rules, 19
incurred on a loan obtained fro directly attributable to the earn not justified. He further point of ₹5,55,870/– was directly r
DFC Bank, while interest of ₹6
to working capital facilities. Li
22,138/– to Anand
&
Ana nfilco Ltd., and ₹89,344/– to D t on inter-corporate deposits ment yielding exempt income.
ounsel accordingly contended
₹12,53,95,654/– debited to the est to Tata Capital having ance interest amount of ₹1,16,
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.)
4
mitted that the ₹10,99,16,196/–
962, being the om Tata Capital, ning of dividend ted out that the related to a car
1,409/– paid to ikewise, interest and Pvt. Ltd.,
Dytek India Ltd.
and were not that out of the e profit and loss already been ,79,947/– stood duly identified as bei not connected with Hence, the Assessing said balance interest total assets while co the Rules.
6.11 The Learned C
Officer was also not of 0.5% of the averag expenses under Rul administrative and separately.
6.12. The Learned C attention to the order the assessment year to the said decision assessee-company w and that the Assessin
₹1,75,00,000/– with such expenditure an Counsel contended t under Rule 8D(2)(i) o
ITA No ing incurred for specific busines any investment generating e g Officer was not justified in a expenditure in the ratio of tota omputing disallowance under R
Counsel further submitted that justified in making an addition ge value of investments towards e 8D(2)(iii), when disallowance related expenses had alread
Counsel for the assessee furth r of the Tribunal in the assesse
2011–12 in ITA No. 916/Mum/
, it was submitted that the p ere engaged in multifarious bus ng Officer had made an ad-hoc hout establishing any specific nd the earning of exempt incom that an ad hoc disallowance is of the Income-tax Rules, 1962,
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ss purposes and exempt income.
apportioning the al investments to Rule 8D(2)(ii) of t the Assessing nal disallowance s administrative e on account of dy been made her invited our ee’s own case for /2016. Referring personnel of the siness activities, disallowance of nexus between me. The Learned s impermissible unless a direct and proximate conne incurred and the earn
6.13 With regard to Learned Counsel sub the top management business, including companies and fina and conventions, and It was further expla management person trends, exploring ne investor requirement
6.14 As regards rent properties taken on company’s
U.K.
corresponding repair such rented premise maintenance.
6.15 The Learned Co
2010–11, in ITA No.
only under Rule 8D(2
Further, placing reli
Bench of the Tribuna
ITA No ection is demonstrated between ning of exempt income.
the disallowance of travelling bmitted that such expenses w t of the company in the ordina attending meetings with prosp nciers, participating in semina d rendering management and ad ined that foreign travel undert nnel was aimed at studying w business opportunities, and s.
t, it was submitted that the sam n lease for business purposes office-cum-transit house, a s and maintenance expenses we es, being incurred for their prop ounsel pointed out that in the a 5829/Mum/2015 disallowance
2)(ii) and 8D(2)(iii), and not und iance on the decision of the al in ACIT v. Vireet Investment (P
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the expenditure g expenses, the ere incurred by ary course of its pective investee ars, gatherings, dvisory services.
taken by senior global market d understanding me pertained to , including the and that the ere incidental to per upkeep and assessment year had been made der sub-rule (i) .
Hon’ble Special
P) Ltd. [(2017) 82

taxmann.com 415
computing the disallo only those investmen during the relevant y
6.16 The Learned Co
Bench of the Tribu assessment year 20
following the finding
ITR(T) 313 (Delhi-Tri the average value of i income during the ye
7. On the contrar relied on the order of 8. We have caref perused the material that the assessee ha in addition to other volition, has made under section 14A relying upon the ap assessment for asse the disallowance by i
(hereinafter “the Rule
ITA No (Delhi) (SB)], it was submit owance under Rule 8D(2)(ii) and nts which have actually yielded year should be taken into consid ounsel further submitted that unal, in the assessee’s own
010–11, had accepted this c of ACIT Vs Vireet Investments ( ib)(SB) directed to restrict the investments which had actually ear.
ry, the Ld. Departmental Repr f the lower authorities.
fully considered the rival su l placed on record. The undispu as earned dividend income of ₹
r taxable income. The assess a suo-motu disallowance of ₹
of the Act. The Assessing O pproach adopted by his pred essment year 2011–12, proceed nvoking Rule 8D of the Income- es”).
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ted that while d Rule 8D(2)(iii), exempt income deration.
the Coordinate n case for the contention and P) Ltd (2017) 58
disallowance to y yielded exempt resentative (DR) ubmissions and uted facts reveal
33,64,56,570/-, ee, on its own
₹10,53,55,857/-
Officer, however, decessor in the ded to compute
-tax Rules, 1962

"2. On the fac learned CIT expenditure u
Without preju
Assessing Off has already section 14A of Without preju
Assessing Off advanced to K therefore, if a disallowance
KCA holdings
9.18 We accordingly treating portions of p as directly relatable t the requisite proxim expenses under Rule under Rule 8D(2)(iii), is contrary to the s discussion, and havi
Hon’ble Supreme Co grounds No. 2 and Rule 8D(2)(i) is there permissible under Ru assessee raised in G allowed.
ITA No cts and in the circumstances of the case
T(A) erred in confirming disallowanc undersection 37(1) to the tune of INR 4,36, udice to the above, the CIT(A) erred in n fficer to allow the above interest as the been considered in disallowance wor f the Income Tax Act.
udice to the above, the CIT(A) erred in n fficer that out of the total loans and adv
KCA Holdings Ltd. was at a lower rate at all any disallowance of interest is to has to be restricted to the adva s Ltd."
hold that the Assessing Offic personnel and other administrat to earning exempt income witho mate nexus. The ad hoc allo e 8D(2)(i), coupled with a furth
, amounts to an impermissible statutory framework. In view o ing regard to the principles la ourt in Maxopp Investment Ltd.
3 merit acceptance. The disa fore deleted, leaving only such a ule 8D(2)(iii). Accordingly, the co
Grounds No. 2 and 3 of the Asia Investments Pvt. Ltd
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and in law, the ce of interest
,649/- not directing the above interest rked out under not directing the vances, amount of interest and be made, such ance given to er has erred in tive expenditure out establishing ocation of such her disallowance duplication and of the foregoing aid down by the , the assessee’s allowance under attribution as is ontention of the appeal stands

Similarly, he to Anand & A Ltd. and inte interest at an 9.21 We note that in upheld a similar dis factual matrix in the Here, the assessee establishing that th purposes wholly un assets. In the absenc by the Revenue, and proportionate disallo permissible only wh investments yielding unable to sustain the ₹1,16,79,947/- made
Ground No. 4 of the a 9.22 As regards Grou
Assessing Officer fa
Hon’ble Special Benc
(supra). The grievanc disallowance under R
ITA No submitted that interest of Rs.2
Anand P. Ltd. of Rs.1,26,50,697/
erest of Rs.89,344/- Dytek India nother corporate deposits.
n assessment year 2011–12, th sallowance under Rule 8D(2)(ii e present year stands materially e has furnished specific, ve he borrowings in question we nconnected with investment ce of any contrary evidence bro d having regard to the settled owance of interest under Ru here the nexus between borrow exempt income cannot be seg e disallowance. Accordingly, the e under Rule 8D(2)(ii) is directe assessee’s appeal, therefore, sta und No. 5, the assessee has con ailed to apply the law as enu ch of the Tribunal in Vireet Inve ce of the assessee is that, while
Rule 8D(2)(iii), the Assessing Offi
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21,22,138/- paid
/- paid to Anfilco a Ltd. related to he Tribunal had i). However, the y distinguished.
erifiable details ere utilised for in tax-exempt ought on record principle that a ule 8D(2)(ii) is wed funds and gregated, we are disallowance of ed to be deleted.
ands allowed.
ntended that the unciated by the estment (P.) Ltd.
e computing the ficer adopted the value of the entire computation to thos income during the re departure from the ra holds that only incom the purposes of Rule has been consistent assessee’s own case f
9.23 In light of the f ratio of the Special B to re-compute the di account only such in income during the re
5 of the assessee’s ap
9.24 For the sake of c have already deleted
14A on the ground t mandatory satisfacti findings now rendere on a without-prejudic
10. Ground No. 6
disallowance of prof
Deep C Anand Found
ITA No investment portfolio, without se investments which actually elevant previous year. This appr atio of Vireet Investment (P.) Ltd me-yielding investments are to b e 8D(2)(iii). We also note that th tly followed by the Coordinate for assessment year 2010–11. foregoing discussion, and apply
Bench decision, we direct the A isallowance under Rule 8D(2)(iii nvestments as have actually ge elevant previous year. According ppeal is allowed for statistical pu clarity, we reiterate that earlier d the entire disallowance made that the Assessing Officer faile on as required under the said ed in relation to Rule 8D are, t ce basis.
6 of the assessee’s appeal p fessional fees amounting to ₹6
dation.
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restricting the yielded exempt roach is in clear d. (supra), which be considered for he said principle e Bench in the ying the binding
Assessing Officer i) by taking into enerated exempt gly, Ground No.
urposes.
in this order we e under section ed to record the d provision. The herefore, purely pertains to the 6 crores paid to 10.1 The brief backgr relying upon the assessment year 201
already made payme capacity. According made to him in a di
Foundation—was no the assessee was deduction only for corporate structure ( related charges), the expenditure had been for managing the affa not allowable.
10.2 The assessee, h were paid for high
Foundation in suppo submitted that su exclusively for the finding no detailed adopting the reason disallowed the enti concurring with thi ground that the asse
ITA No round of the issue is that the As findings recorded by his p
1–12, observed that the assesse ents to Shri Deep C. Anand in to the Assessing Officer, a fu ifferent capacity—as trustee of ot warranted. Proceeding on th merely an investment compa expenses necessary for the (such as audit fees, statutory d
Assessing Officer concluded tha n incurred not for the assessee airs of group companies, and th however, contended that the p
-level consultancy services re ort of its strategic investment op ch expenditure was incurre purpose of business. The As documentation of the services ning applied in assessment ire payment of ₹6 crores. T is view, sustained the disallo essee had failed to establish bus
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ssessing Officer, predecessor for ee-company had n his individual urther payment f Deep C Anand he premise that any entitled to upkeep of its dues, and ROC- at the impugned
’s business, but hus treated it as professional fees endered by the perations. It was ed wholly and sessing Officer, s rendered and year 2011–12,
The Ld. CIT(A), owance on the siness necessity or demonstrate an consultancy services.
10.3 Before us, the L the order of the Tribu year 2011–12, wherei
10.4. We have caref examined the reco undisputed, is that and managing strat frequently in collabo controlling interests been recognized by wherein it was observ
“3. The asse business of a Anand Group managements
Anand Group leader in man flagship comp formed to ma group has es collaborations investment he
Group and h financial stat
10.5 The assessee h rendered by Deep C its strategic investm
ITA No ny tangible advantage resul
.
Ld. counsel for the assessee pla unal in the assessee’s own case in a similar disallowance had be fully considered the rival su ord. The factual position, w the assessee-company is enga tegic investments in various oration with foreign partners fo in joint ventures. This factual the Tribunal in assessment ved:
essee is stated to be investing company c acquiring and exercising control over co p to provide long term finance and s consultancy services to various com p. It is submitted that, Anand Group nufacturing product for automotive indust pany of the group, wherein Gabriel India anufacture shock absorbers. It is submitte tablished around 13 joint ventures and s. The assessee submitted that 99
eld by the assessee are in the companie as been classified as long term investm tements.”
has consistently maintained th
Anand Foundation were intrin ment operations and were nece
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ting from the aced reliance on e for assessment een deleted.
ubmissions and which remains aged in making group entities, or acquisition of matrix has also year 2011–12, carrying on mpanies in to provide mpanies of is a global try and is a a Ltd., was ed that, the 7 technical
9% of the es of Anand ments in its hat the services sically linked to essitated by the nature and scale of The assessee’s invest joint ventures with manufacturers, and such arrangements c law that the Assess judgment of a bus necessity, nor can an immediate or meas whether the expendit course of business.
10,6 The Tribunal, w year 2011–12, held t nor excessive, and ob
“7.6.3. It is from Mr. Deep one Mr. Adity
Arora & Asso individual cap were taken
Foundation. T under individ
Foundation d disallowed R fees paid. It years the prof disallowed.
7.6.4. From th the Foundatio taxation. Also services to S
ITA No its business. We find merit in tment portfolio comprises signi h globally reputed automot the need for professional advi cannot be doubted. It is a sett sing Officer cannot supplant sinessman with his own vie n expenditure be disallowed me urable business outcome. Th ture was incurred bona fide and while adjudicating the same issu that the expenditure was neithe bserved as under:
also submitted that apart from the serv p C. Mehta, the assessee had paid profes ya Narayan, M/s. Patel Investments an ociates, who were rendering various se pacities. The Ld.AR submitted that thes on the rolls of an entity called De
The Ld.AR thus submitted that the serv dual capacities, were rendered through D during the year under consideration s.1.6 crore the assessee under the head is the submission of the Ld.AR that in fessional fees rendered by these three pa he arguments advanced by both sides, it on has offered the money received from th o that these are incurred for rendering
Spicer India Ltd., and not for acquirin
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this contention.
ificant stakes in ive component sory support in tled principle of the commercial ew of business erely for want of he only test is d in the ordinary ue in assessment er unreasonable vices received ssional fees to nd M/s. Rohit rvices in their se individuals eep C Anand vices rendered
Deep C Anand
. The Ld.AO d professional the preceding arties were not t is noted that he assessee to g professional ng controlling interest. It is consideration business exp there is no lo revenue that unreasonable
10.7 In the absence notice for the year u the findings of the Tr the view that the dis
The expenditure is d exclusively for the p and the contrary co incorrect appreciation
10.8 We accordingly order of the Ld. CIT( the assessee’s appeal
11. Ground No. 7
expenses amounting assessee’s branch off
11.1 The essential maintained a bran claimed expenditure assessee asserted th management during
ITA No s noted that Spicer India Ltd for the n has been allowed the amount paid to th penditure. Though this is related party oss to the revenue. Further it is not th t the expenditure incurred by the a e and excessive.”
e of any distinguishing facts under consideration, and respe ribunal in assessment year 201
allowance of ₹6 crores is unsus emonstrated to have been incu purposes of the assessee’s bus nclusion of the Assessing Offic n of the assessee’s business mo direct that the disallowance be (A) on this issue be set aside. G l is, therefore, allowed.
of the appeal pertains to the g to ₹50,98,889/- incurred in fice in the United Kingdom.
facts, briefly stated, are tha ch office-cum-guest house in e of ₹52,98,889/- towards it hat the premises were utilised overseas business visits und
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e year under e assessee as y transaction, he case of the assessee are brought to our ctfully following
11–12, we are of stainable in law.
urred wholly and siness activities, cer rests on an del.
deleted and the Ground No. 6 of disallowance of respect of the at the assessee n London and s upkeep. The d by its senior dertaken in the normal course of its however, rejected thi was incurred not for the business interes view adopted in asse expenditure. The Ld.
upheld the disallowa not promote the b subsidiaries.
11.2 Before us, the L lower authorities fai assessee’s business strategic investment investment process and engagement with extensive research interaction with the right entity is identif turn, evolve into a s the maintenance of facilitating these p continuous interface counsel contended erroneous post-inve
ITA No investment operations. The As s explanation, concluding that the assessee’s own business bu sts of its subsidiary companies essment year 2011–12, he disall
CIT(A), concurring with the As ance on the premise that the e business of the assessee bu
Ld. counsel for the assessee sub iled to correctly appreciate the , which is that of making ts in joint ventures. He expl necessarily involves identificat h prospective foreign partners, and due diligence, as wel management of such target en fied, the assessee invests in it, subsidiary or a controlled joint a London office was fundame re-investment activities and e with potential European par that both authorities below stment lens and, consequent
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ssessing Officer, the expenditure ut for advancing s. Following the lowed the entire ssessing Officer, expenditure did ut that of its bmitted that the e nature of the and managing lained that the tion, evaluation, which requires ll as constant ntities. Once the , which may, in t venture. Thus, ntally linked to the assessee’s rtners. The Ld.
w adopted an tly, mi irected themselves in con subsidiaries alone.
Tribunal, in assessm the context of Rule allowability of such e
11.3 We have give submissions and exa question for adjudic maintaining the Lond deduction under Sect
11.4 As earlier noted making strategic inv components sector.
with the mere act o investment stage i collaborators, evalu negotiation. These a presence to enable partners and to fac incurred for such assessee’s business because, at a subseq pre-investment exerc
ITA No ncluding that the expendit
He further pointed out that ment year 2011–12, had addresse e 8D(2)(i), it had not adjudic expenditure under Section 37(1) en thoughtful consideration amined the material placed on re ation is whether the expenditu don branch office and guest hou tion 37(1) of the Act.
d, the assessee is engaged in vestments in joint ventures in Such investment activity does of investing; it necessarily inc involving identification of s uation of synergies, due are activities which often requ e meaningful engagement w cilitate effective decision-makin purposes is intimately conne operations and cannot be dis quent stage, the entities identi cise become subsidiaries or join
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ture benefitted t although the ed the matter in cated upon the .
to the rival ecord. The short ure incurred on use qualifies for the business of the automotive not commence cludes the pre- uitable foreign diligence, and ire an overseas ith prospective ng. Expenditure ected with the sallowed merely ified during this nt ventures. The test under Section 3
wholly and exclusiv whether the expendit
11.6 It is pertinent assessment year 201
within the ambit of disallowance under S question of their al consider the issue ind
11.7 In the totality expenditure on main house was incurred assessee’s business, being laid out wholl disallowance sustain unsustainable. We, and set aside the ord
No. 7 of the appeal is 12. Ground No. 8
expenditure amounti repairs and mainte transit house at Lon capital in nature.
ITA No 37(1) is whether the expenditur vely for the purposes of bus ture yielded immediate or direct t to note that although th
1–12, observed that these expen f Rule 8D(2)(i) and were alread
Section 14A, the Tribunal did n llowability under Section 37(1
dependently in the present year of facts and circumstances, w ntaining the London branch o bona fide and in the ordinary
, and satisfies the statutory ly and exclusively for business ned by the lower authorities i therefore, direct deletion of th der of the Ld. CIT(A) on this iss s allowed.
of the appeal concerns the ing to ₹1,41,19,857/- incurred nance of the assessee’s bran ndon, which the Assessing Of Asia Investments Pvt. Ltd
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re was incurred iness, and not profit.
e Tribunal, in nses did not fall dy subjected to not examine the ). We therefore r.
we find that the office and guest y course of the requirement of s purposes. The is consequently he disallowance sue. The ground disallowance of towards routine nch office-cum- fficer treated as 12.1 The material fac noticed a substant maintenance expend
₹1,52,77,730/- were ₹4,11,000/- to Vasu
The Assessing Offic renovation and imp giving rise to a capita
Manufacturing & Eng installation, testing, characterised as repa as capital expenditur
Assessing Officer, su the assessee had fai constituted a busine routine repairs. The L
“5.2. I have c well as rival that Appellan a business
Rs.1,56,88,73
argument has there is a r
Waterdelle M
Therefore, so expenditure is worth-approv
& Engineering testing of pum not at all Re nature. The A ITA No cts, briefly stated, are that the A ial increase in the assessee iture during the year. Payment e made to Waverly Renovat udeva Manufacturing & Engine cer held that the expenditu provement of the building stru al asset. In respect of the payme gineering Pvt. Ltd., it was held t and commissioning of pump airs. The entire claim was, there re. The Ld. CIT(A), affirming the ustained the disallowance on the iled to demonstrate how the L ess asset or how the expenditu
Ld. CIT(A), observing as under:
considered the findings of the Assessing submission of the Appellant/A.R., carefu nt has not explained as to how House at asset and how such expend
30/- is not a Capital Expenditure. Onl s been advanced without demonstrating routine repairs & maintenance of Hou
Manor, 20, Hairwood Avenue, Londo far as finding of the Assessing Officer s a cpital expenditure is concerned, such al. Similarly, the bills of Vasudeva Man g Pvt. Ltd. is found to be for supply, inst mps which is definitely a capital expend enovation or Repairing which is Miscella
Appellant has also not established the fa
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Assessing Officer e’s repairs and s aggregating to tion Ltd., and eering Pvt. Ltd.
ure represented ucture, thereby ent to Vasudeva that the supply, s could not be efore, disallowed e findings of the e reasoning that London property ure represented
Officer as ully. I find
London is diture of ly general as to how use at 9, on (U.K.).
that such finding is ufacturing tallation &
diture and aneous in act that as to how House
Assessing Of disallowed th there is no op
Officer hence, of Rs. 1,41,19
12.2 We have heard material placed on re whether the expend capital or revenue in Act.
12.3 Out of the total payments made to W detailed description o of carpets, repair rectification, soundp involving downlighter and polishing of exis other refurbishment
12.4 On a compreh performed, we find n addition, or expansi undertaken. The exp existing structure an condition. It neither on the assessee an en
ITA No e Property at London is a business asset.
Officer has allowed the depreciation he capital expenditure of Rs. 14119857
ption but to confine to the finding of the A , disallowance of capital expenditure to 9,857/- is sustained.”
d the rival submissions and ecord. The issue that arises for d iture of ₹1,56,88,730/- is to nature for the purposes of Sect l amount, a sum of ₹1,52,77,73
Waverly Renovation Ltd. The in of work executed include paintin of kitchen leakages, ceiling proofing, radiator replacement, rs and switches, fitting of shelvi sting furniture, replacement of p measures.
hensive appraisal of the natur no material to suggest that any ion of the capital base of th penditure is primarily aimed at nd maintaining it in a functiona brings into existence a new as nduring benefit in the capital se
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Since the and has 7/- hence,
Assessing the extent examined the determination is be regarded as tion 37(1) of the 30/- pertains to nvoices and the ng, replacement g and flooring electrical work ing units, repair patio doors, and re of the work y new structure, e property was t preserving the al and habitable sset nor confers ense. In law, the test of “enduring be mechanically; expend existing asset to its notwithstanding the therefore hold that t refurbishment by Wa expenditure under Se
12.5 With respect to Manufacturing & En commissioning of pu any material to sh replacement of an ex one. In the absence was for restorative p amount is capital in n allowable in accordan
12.6 In view of the fo
₹4,11,000/- is sus
₹1,52,77,730/- is dir is accordingly set asid
13. Now, we take u year 2013-14. The g as under:
ITA No enefit” must be applied pragma diture which merely preserves s original condition is revenu e magnitude of the amount the expenditure of ₹1,52,77,730
averly Renovation Ltd. is allowa ection 37(1).
the payment of ₹4,11,000/- ma gineering Pvt. Ltd. for supply, i umps, the assessee has not pl how that the installation w xisting system rather than acqu of evidence establishing that t purposes, we are constrained t nature. Depreciation thereon sh nce with law.
oregoing analysis, the addition stained, whereas the balanc rected to be deleted. The order o de to the extent indicated above up the appeal of the assessee grounds raised by the assessee
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atically and not or restores an ue in character, t involved. We
0/- incurred on able as revenue ade to Vasudeva installation, and laced on record was by way of uisition of a new the expenditure to hold that the hall, however, be to the extent of ce addition of of the Ld. CIT(A) e.
for assessment are reproduced

Mumbai;
Dated: 27/11/2025
Rahul Sharma, Sr. P.S.

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

////

ITA No ded to :

BY ORDER

(Assistant Re

ITAT, Mu

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R, gistrar) umbai