“strategic investment”

DisallowancesSection 14ASection 14A426 judgments

The decision most relied on for strategic investment is Maxopp Investment Ltd. v. CIT (402 ITR 640), cited in 1,596 judgments on BharatTax.

Leading authorities on strategic investment

Maxopp Investment Ltd. v. CIT

402 ITR 640 · 2018 · Supreme Court

1,596

citing judgments

Disallowance under Section 14A is not automatic and requires the Assessing Officer to record satisfaction before applying Rule 8D. Only investments yielding exempt income are considered for disallowance, irrespective of their strategic nature.

Garware Wall Ropes Ltd. v. ACIT

65 SOT 86 · 2014 · ITAT

citing judgments

Disallowance under Section 14A read with Rule 8D(2)(iii) does not apply to long-term investments, including those in subsidiary/group concerns or strategic investments, and such investments should be excluded from the calculation.

Mazagaon Dock Ltd. v. CIT & Excess Profits Tax

34 ITR 368 · 1958 · Supreme Court

citing judgments

Investments made by a holding company in its subsidiary can be considered a business activity, allowing related business expenditures to be deducted and not disallowed.

Southern Petro Chemical Industries v. DCIT

3 SOT 157 · 2005 · ITAT

citing judgments

Proportionate management expenses are deductible when computing exempt dividend income, as investment decisions are strategic and involve top management.

Gareware Wall Ropes Ltd. v. ACIT

46 Taxmann.com 18 · 2014 · ITAT

citing judgments

Strategic investments in wholly-owned subsidiaries are to be excluded when calculating the disallowance under Section 14A, which pertains to expenses incurred in relation to exempt income. This exclusion applies even when these investments are made for holding a controlling stake rather than for earning dividends.

Pr. Commissioner of Income Tax-2 v. Enrich Agro Food Products Pvt. Ltd.

148 Taxmann.com 26 · 2023 · High Court

citing judgments

The Delhi High Court confirms that when shares are issued at a premium to investors, the valuation of such shares must be assessed based on established methods like the NAV or DCF method, and the revenue cannot arbitrarily determine the fair market value.

Mahindra & Mahindra Limited v. JCIT

36 SOT 348 · 2010 · ITAT

citing judgments

Investments on which no exempt income was received during the year, and investments in subsidiaries considered strategic, are excluded from average investment calculations for determining disallowance of interest expenses.

366 ITR 505 (Bom), CIT v. Reliance Utilities and Power

239 ITR 735 · High Court

citing judgments

Investments made by an assessee are presumed to be out of interest-free funds, and no disallowance under Section 14A is warranted if no dividend income is received from such strategic investments.

Judgments citing strategic investment

M/S. Madura Biotech (P) Ltd., Haridwar vs. DCIT, New Delhi

In the result, the appeal filed by the assessee is allowed partly with consequences to follow as per determination of grounds above

ITA 2593/DEL/2015[2010-11]Status: DisposedITAT Delhi23 Jul 2024AY 2010-11

Bench: Shri G.S. Pannu, Hon’Ble & Shri Anubhav Sharmaassessment Year: 2010-11 Madura Biotech (P) Ltd., Vs Dcit, Plot No.146-149, Sector I.I.D.C., Circle-6(1), Sidcul Ranipur, New Delhi. Haridwar. Pan: Aafcm8070L (Appellant) (Respondent) Assessee By : Shri Tanpreet Kohli, Ca Revenue By : Shri Kanav Bali & Shri Vivek Vardhan, Sr. Drs Date Of Hearing : 07.06.2024 Date Of Pronouncement : 23.07.2024 Order Per Anubhav Sharma, Jm:

For Appellant: Shri Tanpreet Kohli, CAFor Respondent: Shri Kanav Bali &

Section 143(3)Section 80Section 80I

well as the Tribunal that the majority investment was made in the mutual funds and bonds and in shares of group companies of strategic investment and only 23.01 Crore were invested in the shares of other companies out of total investment in shares and securities amounting to Rs.224.70 Crore

Ram Ratan Jangir, Amer vs. Income Tax Officer, Ward -7(2), Jaipur

In the result ground no. 1 raised by the

ITA 550/JPR/2024[2013-14]Status: DisposedITAT Jaipur22 Jul 2024AY 2013-14

Bench: DR. S. SEETHALAKSHMI (Judicial Member)

For Appellant: Sh. Anoop Bhatiya, CAFor Respondent: Smt. Monisha Choudhary (Addl. CIT)

Section 143(3)Section 147Section 148

that case were that the Assessee viz. M/s Reliance Utilities and Power Ltd. had invested certain amounts in Reliance Gas Ltd. and Reliance Strategic Investments Ltd. It was the case of the Assessee that they themselves were in the business of generation of power and they had earned regular business ... income therefrom. The investments made by the Assessee in M/s Reliance Gas Ltd. And M/s Reliance Strategic Investments Ltd. were done out of their own funds and were in the regular course of business and therefore no part of the interest could be disallowed. It was also pointed out that

Capitalg International Llc (Formerly Known As Gc Aisa L.L.C.), Mumbai vs. Assistant Commissioner of Income Tax Int Tax Circle 2(1)(1), Mumbai

ITA 1632/MUM/2023[2017-2018]Status: DisposedITAT Mumbai08 Jul 2024AY 2017-2018

Section 143(3)

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘K’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI GAGAN GOYAL, ACCOUNTANT MEMBER

A.H.Multisoft P.Ltd, New Delhi vs. ITO, Ward-1(1), New Delhi

Appeal of the appellant is dismissed

ITA 2400/DEL/2023[2016-17]Status: DisposedITAT Delhi05 Jul 2024AY 2016-17

Bench: SHRI G.S PANNU, HON'BLE (Vice President), SHRI ANUBHAV SHARMA (Judicial Member)

For Appellant: Shri Sanjiv Sapra, CAFor Respondent: Shri Zafarul Haque Tanweer, CIT-DR

Section 143(3)

Rs.20/- per share (which included share premium of Rs.10/- per share). In order 2 to subscribe to such rights issue and for maintaining its strategic investment of 20% in equity shares of SAFL, the Appellant had to raise funding from its own shareholders and for such purposes it got valuation

Enn Vee Holdings Pvt Ltd, New Delhi vs. DCIT Central Circle 31, New Delhi

In the result, the addition made u/s 68 and u/s 56(2)(viib) in the case of M/s Realtime Marketing Pvt

ITA 1195/DEL/2023[2016-17]Status: DisposedITAT Delhi05 Jul 2024AY 2016-17

Bench: Dr. B. R. R. Kumar, Sh. Yogesh Kumar Us

For Appellant: Sh. Neeraj Jain, Adv. &For Respondent: Ms. Sapna Bhatia, CIT-DR

Section 132Section 132(4)Section 143(1)Section 143(2)Section 153ASection 68

some instrument which could have yielded return/ profit in the revenue projection made at the time of issuance of shares, without understanding that strategic investments and risks are undertaken for appreciation of capital and larger returns and not simply dividend and interest. Any businessman or entrepreneur, visualise the business based

DCIT, CC-31, New Delhi vs. Realtime Marketing Pvt. Ltd., Delhi

In the result, the addition made u/s 68 and u/s 56(2)(viib) in the case of M/s Realtime Marketing Pvt

ITA 1839/DEL/2021[2015-16]Status: DisposedITAT Delhi05 Jul 2024AY 2015-16

Bench: Dr. B. R. R. Kumar, Sh. Yogesh Kumar Us

For Appellant: Sh. Neeraj Jain, Adv. &For Respondent: Ms. Sapna Bhatia, CIT-DR

Section 132Section 132(4)Section 143(1)Section 143(2)Section 153ASection 68

The ACIT, Circle-2(1)(2), Ahmedabad vs. Kunvarji Finance Pvt. Ltd., Ahmedabad

ITA 2147/AHD/2017[2014-15]Status: DisposedITAT Ahmedabad02 Jul 2024AY 2014-15

Bench: Ms. Suchitra Kamble & Shri Makarand V. Mahadeokar, Accountnat Member Assessment Year : 2014-15 The Acit Kunvarji Finance Pvt.Ltd. Circle-2(1)(2) Vs Block B, 1St Floor Ahmedabad Siddhi Vinayak Tower Off S.G. Highway Mouje Makarba, Ahmedabad Pan: Aaack 8759 R अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee By : Shri Bandish Soparkar, Ar Revenue By : Smt. Malarkodi R., Sr.Dr सुनवाई क" तार"ख/Date Of Hearing : 20/06/2024 घोषणा क" तार"ख /Date Of Pronouncement: 02/07/2024 आदेश/O R D E R Per Shri Makarand V. Mahadeokar, Am:

For Appellant: Shri Bandish Soparkar, ARFor Respondent: Smt. Malarkodi R., Sr.DR

Section 106Section 143(1)Section 143(3)Section 14A

failed to appreciate that as per own admission of the assessee, out of total investment of Rs.8.04 crores, strategic investment were of Rs.7.82 crores and other investment were of Rs.22.13 lakhs. Therefore the transaction in crores for these 2 unknowns scrips/penny stocks is not a normal. transaction

DCIT 3(3)(1), Mumbai vs. Sp Port Maintenance Private Limited, Mumbai

ITA 3896/MUM/2023[2018-19]Status: DisposedITAT Mumbai25 Jun 2024AY 2018-19

Bench: Ms. Padmavathy S. & Shri. Raj Kumar Chauhan

Section 115JSection 142(1)Section 143(2)Section 14ASection 250

income, which is attributable to dividend income, has to be disallowed and cannot be treated as business expenditure in respect of the issues of strategic investment and stock in trade. Therefore, the strategic investments are not exempted from the definition of investment for applicability of Section 14A r.w.r

DCIT 3(3)(1), Mumbai vs. Sp Port Maintenance Private Limited, Mumbai

In the result, appeal filed by the revenue are dismissed in the above terms

ITA 3895/MUM/2023[2017-18]Status: DisposedITAT Mumbai25 Jun 2024AY 2017-18

Bench: Ms. Padmavathy S. & Shri. Raj Kumar Chauhan & Dcit 3(3)1 Vs. Sp Port Maintenance Private Room No. 522, Aaykar Bhavan, M. Limited K. Road, Churchgate, Mumbai – 41/44, Shapoorji Pallonji 400 020. Centre Mumbai, Colaba S.O, Pan: Aaxcs6219B Mumbai – 400 005. (Appellant) (Respondent)

Section 115JSection 142(1)Section 143(2)Section 14ASection 250

Port Maintenance Pvt. Ltd.; A.Y. 2017-18 & 2018-19 and cannot be treated as business expenditure in respect of the issues of strategic investment and stock in trade. Therefore, the strategic investments are not exempted from the definition of investment for applicability of Section 14A r.w.r. 8D of the Income

Assistant Commissioner of Income Tax, Circle-1(1), New Delhi, C.R. Building vs. Apollo Finance Limited, Delhi

In the result, the appeal of the Revenue is partly allowed for statistical purposes

ITA 3258/DEL/2023[2008-09]Status: DisposedITAT Delhi24 Jun 2024AY 2008-09

Bench: Shri Challa Nagendra Prasad & Shri Brajesh Kumar Singh[Assessment Year: 2008-09]

Section 115JSection 143(3)Section 14A

without prejudice, disallowance may be made by taking only the average value of investment, which yielded exempt income and iii) value of strategic investment be excluded in computing the disallowance. During the course of hearing of appeal, the ground that disallowance be restricted to the exempt income was not pressed

Beacon Higher Education Services Pvt Ltd, New Delhi vs. DCIT Circle-4(2), New Delhi

In the result, the appeal of the assessee is allowed

ITA 1748/DEL/2019[2012-13]Status: DisposedITAT Delhi14 Jun 2024AY 2012-13

Bench: Shri Saktijit Dey, Hon’Ble & Shri M. Balaganeshm/S. Beacon Higher Education Vs. Dcit, Services Pvt. Ltd, Circle-4(2), S-40, 2Nd Floor, Vasant Square Delhi Mall, Plot No. A, Sector-B, Vasant Kunj, New Delhi (Appellant) (Respondent) Pan:Aaecb1283F

For Appellant: Shri V. K. Agarwal, ARFor Respondent: Shri Kanv Bali, Sr. DR

Section 143(3)Section 36(1)(iii)

Companies Act 1956. The said section 25 company was working in the area of promoting higher education in the management field. It was a strategic investment by way of equity and loans made by GLMPL in GLIM to get associated with a very high quality education institution in higher education

N. K. Proteins Ltd., Ahmedabad vs. The Assistant Commissioner of Income Tax, Circle-3(1)(1), Ahmedabad

ITA 313/AHD/2022[2017-18]Status: DisposedITAT Ahmedabad12 Jun 2024AY 2017-18

Bench: Or During The Course Of Hearing Of The Appeal.”

For Appellant: Shri Vartik Choksi, A.RFor Respondent: Shri Ketan Gajjar, CIT-D.R

Section 115JSection 14ASection 250

alters or change the law as it early stood. ....... In appeal before the CIT(A), the assessee took the plea that he had made strategic investment in group companies for business purposes. However, the Id. CIT(A) relied upon the decision of the Hon'ble Supreme Court in the case

Tata Industries Limited, Mumbai vs. Addl.C.I.T., Range-2(3), Mumbai

ITA 3676/MUM/2009[2005-06]Status: DisposedITAT Mumbai07 Jun 2024AY 2005-06

For Respondent: Shri P.C Chhottary

Section 115JSection 143(3)Section 143(3)(ii)Section 14A

IN THE INCOME TAX APPELLATE TRIBUNAL "E" BENCH, MUMBAI SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER

C.M.D. Ratnakar Dy. Commissioner of Income Tax, Circle 2(1), Hyderabad vs. Jasper Industries Private Limited, Hyderabad

In the result, the appeal of the assessee is partly allowed and the appeal of the Revenue is dismissed

ITA 6/HYD/2021[2016-17`]Status: DisposedITAT Hyderabad05 Jun 2024

Bench: Shri Laliet Kumar, Hon'Ble & Shri Manjunatha G., Hon'Bleधििाारण वर्ा आ.अपी.सं अपीलार्थी / प्रत्‍यर्थी / / A.Y. Appellant Respondent / Ita No. M/S. Jasper Asst. Commissioner Industries Private Of Income Tax, Limited, 781/Hyd/2020 2016-17 Circle-2(1), Hyderabad Hyderabad [Pan: Aaacj5760H] M/S. Jasper Dy. Commissioner Industries Private Of Income Tax, 6/Hyd/2021 2016-17 Limited, Circle-2(1), Hyderabad Hyderabad [Pan: Aaacj5760H]

For Appellant: Shri C.S. Subrahmanyam and Shri EV Sri Krishna, ARsFor Respondent: Shri K. Meghnath Chowhan, CIT-DR

Section 14A

supplementing the assessee own business. (f) The Ld. CIT(A) ought to have appreciated that the impugned investment is purely a long term strategic investment, not for dividend income and that it cannot be separated from business activities of the appellant. (g) The Ld. CIT(A) ought to have appreciated ... without appreciating the fact that when the appellant has filed necessary details and proved that investment in equity instruments are for the purpose of strategic investment, there cannot be any disallowance towards interest expenditure. Ld.Counsel for the assessee referring to various investments in equity instruments submitted that the assessee

Jasper Industries Private Limited, Hyderabad vs. Assistant Commissioner of Income Tax, Circle -2(1), Hyderabad

In the result, the appeal of the assessee is partly allowed and the appeal of the Revenue is dismissed

ITA 781/HYD/2020[2016-17]Status: DisposedITAT Hyderabad05 Jun 2024AY 2016-17

For Appellant: Shri C.S. Subrahmanyam and Shri EV Sri Krishna, ARsFor Respondent: Shri K. Meghnath Chowhan, CIT-DR

Section 14A

Divyanidhi Buildcon Private Limited, Jaipur vs. DCIT Circle 6, Jaipur

In the result, the appeal filed by the assessee is allowed

ITA 616/JPR/2023[2017-18]Status: DisposedITAT Jaipur03 Jun 2024AY 2017-18

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri V.K. Jain (C.A.)For Respondent: Smt. A.S. Nehra (Addl.CIT)

Section 142(1)Section 143(2)Section 143(3)Section 45(3)

real estate. The company purchased 2 lands in F.Y. 2011-12 (Total 4.09 hectares). The purchase of land was with an object of making strategic investment in land to be commercially exploited at the opportune time. During F.Y. 2014-15 the assessee company applied for conversion of 3.56 hectares

DCIT-2(3)(1), Mumbai vs. Paranjapee Schemes Construction Ltd., Mumbai

In the result, the appeal filed by the revenue is dismissed

ITA 4090/MUM/2023[2020-21]Status: DisposedITAT Mumbai31 May 2024AY 2020-21

Bench: Shri Amit Shukla & Smt Renu Jauhridcit-2(3)(1) Vs. Paranjapee Schemes Room No. 552, 5Th Floor, Construction Ltd. Aaykar Bhawan, 1, Somnath, Cts. No. 988, Mumbai-400020 Ram Mandir Road, Vile Parle (E), Near Tilak Mandir, Mumbai-400057 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaccp1941Q Appellant .. Respondent

For Appellant: Shri. Yogesh Thar &For Respondent: Shri H. M. Bhatt

Section 143Section 144Section 14ASection 250

erred in deleting the disallowance u/s. 144 of the Act, without realizing the fact that the assessee is also earning exempt income on the strategic investments and expenses incurred on the same should be disallowed u/s 144 r.w.rule 8D. 2. Whether on the fact and in the circumstances

Pradipta Kumar Parida DCIT321, Mumbai vs. Kail Limited, Mumbai

ITA 4669/MUM/2023[2014-15]Status: DisposedITAT Mumbai22 May 2024AY 2014-15

Section 143(3)Section 14A

brief facts are that Assessee Company is engaged in the business of selling various kitchen appliances. The assessee has made certain strategic investment in A.Y.2014-15 and no dividend income has been earned and no exempt income has been claimed by the assessee. However, assessee had suomoto disallowed Rs.10 ... Rs.10,68,15,648/- mostly on account of interest despite assessee stating that no borrowed funds have been utilized for the purpose of strategic investments. The core contention which has been raised that now in light of amendment by the Finance Act 2022 to Section 14A in the statute w.e.f

Jaypee Infra Venutres Private Limited, Noida vs. DCIT, Circle13(2), New Delhi

In the result, the appeal of the assessee is allowed

ITA 1484/DEL/2023[2014-15]Status: DisposedITAT Delhi22 May 2024AY 2014-15

Bench: Shri M. Balaganesh & Shri Vimal Kumarjaypee Infra Ventures Pvt. Ltd, Vs. Dcit, Sector-128, Noida Circle-13(2), New Delhi (Appellant) (Respondent) Pan: Aaccj5628G Assessee By : Shri V. K. Garg, Adv Shri Parveen Kumar, Ca Revenue By: Shri Sandeep Kr. Mishra, Sr. Dr Date Of Hearing 13/05/2024 Date Of Pronouncement 22/05/2024

For Appellant: Shri V. K. Garg, AdvFor Respondent: Shri Sandeep Kr. Mishra, Sr. DR

Section 115JSection 143(3)Section 14ASection 14A(2)

record. The assessee company is engaged in the business of designing and technical consultancy services to various infrastructural projects. The assessee had made various strategic investments in group concerns which were acquired mainly on amalgamation of group concern, Japyee Ventures Pvt Ltd in the year

DCIT, Circle- 3(1), New Delhi vs. Apollo Fiege Integrated Logistics Pvt. Ltd., Gurgaon

In the result, both the appeals filed by the Revenue are dismissed

ITA 7834/DEL/2019[2016-17]Status: DisposedITAT Delhi21 May 2024AY 2016-17

Bench: Shri G.S. Pannu, Hon’Ble & Shri Anubhav Sharmaassessment Year: 2015-16 Assessment Year 2016-17 Acit, Vs Apollo Fiege Integrated Circle-3(1), Logistics Pvt. Ltd., New Delhi. Plot No.20, Sector-44, Gurgaon, Haryana – 122 002. Pan: Aalca0748D (Appellant) (Respondent) Assessee By : Shri Pradeep Dinodia, Shri R.K. Kapoor & Shri Harish Dhamija, Ca’S Revenue By : Shri Zafarul Haque Tanweer, Cit- Dr Date Of Hearing : 22.02.2024 Date Of Pronouncement : 21.05.2024 Order Per Anubhav Sharma, Jm: This Appeal Is Preferred By The Revenue Against The Order Dated 31.07.2017 Of The Commissioner Of Income Tax (Appeals)-I, New Delhi, (Hereinafter Referred As Ld. First Appellate Authority Or In Short Ld. ‘Faa’) In Appeal No.722/16-17 Arising Out Of The Appeal Before It Against The Order Dated

For Appellant: Shri Pradeep DinodiaFor Respondent: Shri Zafarul Haque Tanweer, CIT- DR

Section 143(3)Section 14ASection 56(2)(viib)Section 68

disallowance of expenses made u/s 14A r.w.r. 8D of the IT Rules, admittedly, the investments were made in a subsidiary company and being a strategic investment the same could not have been taken up for making a disallowance u/s 14A of the Act. There is no infirmity in the findings