J. M FIANANCIAL & INVESTMENT CONSULTANCY SERVICES P.LTD,MUMBAI vs. DCIT 3(2), MUMBAI

In both these appeals, the common grievance of the assessee relates to disallowance made u/s.14A read with rule 8D.

Ld. AR drew our attention to the submissions filed before the CIT(A) with regard to strategic investments made by the assessee in group concerns and it was contended that in view of the following judicial pronouncements no disallowance should be made with respect to investment made in group concerns :- i) JM Financial Ltd. (ITA No.4521/Mum/2012] ii) Garware Wall Ropes Ltd. Vs. Addl.CIT(ITA No.5408/Mum/2012] iii) Oriental Structure Engineers (P) ltd. Vs. ACIT affirmed by the Hon’ble Delhi High Court]

We have considered rival contentions and found that similar disallowance was made by the AO in the assessment year 2008-09, which was confirmed by the CIT(A). Assessee was in appeal before the Tribunal and the Tribunal in assessee’s own case in for the assessment year 2008-09, vide order dated 11-5-2016, decided as under :- 5. We have considered rival contentions and found that while computing disallowance under rule 8D, the AO has not excluded amount of strategic investment while computing average investment as per rule 8D. As per the decision of Delhi Bench of the Tribunal in the case of Interglobe Enterprises Ltd., ITA Nos.1362&1032/Del/2013, order dated 4-4-2014 and the decision of Mumbai Bench of the Tribunal in the case of Garware Wall Ropes Ltd, strategic investment is not to be taken into account. Respectfully following the above decision of the Tribunal, we restore the matter to the file of AO and direct the AO to recompute the disallowance under rule 8D after excluding strategic investment out of average investment so made by the assessee.