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“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
74
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
57
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
34
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
22
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
20
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
14
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
13
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

ACIT Circle-3 (3)(2), Mumbai vs. M/S Solitaire Appliances Pvt Ltd., Mumbai

In the result, the appeals of the assessee for assessment year

ITA 7559/MUM/2019[2016-17]Status: DisposedITAT Mumbai31 May 2023AY 2016-17

Bench: Shri Kuldip Singh () & Shri Om Prakash Kant ()

For Appellant: Mr. Jay Dharod
Section 36(1)Section 36(1)(iii)

particularly relevant on the issues of The judgement is particularly relevant on the issues of The judgement is particularly relevant on the issues of strategic investment and stock in trade, while applying the strategic investment and stock in trade, while applying the strategic investment and stock in trade, while applying

Solitaire Appliances Pvt. Ltd., Mumbai vs. Dy. CIT 3 (3)(3), Mumbai

In the result, the appeals of the assessee for assessment year

ITA 5855/MUM/2019[2013-14]Status: DisposedITAT Mumbai31 May 2023AY 2013-14

Bench: Shri Kuldip Singh () & Shri Om Prakash Kant ()

For Appellant: Mr. Jay Dharod
Section 36(1)Section 36(1)(iii)

particularly relevant on the issues of The judgement is particularly relevant on the issues of The judgement is particularly relevant on the issues of strategic investment and stock in trade, while applying the strategic investment and stock in trade, while applying the strategic investment and stock in trade, while applying

Deputy Commissioner of Income Tax-3(3)(2), Mumbai vs. M/S. Solitaire Appliances Pvt. Ltd, Mumbai

In the result, the appeals of the assessee for assessment year

ITA 5587/MUM/2019[2015-16]Status: DisposedITAT Mumbai31 May 2023AY 2015-16

Bench: Shri Kuldip Singh () & Shri Om Prakash Kant ()

For Appellant: Mr. Jay Dharod
Section 36(1)Section 36(1)(iii)

particularly relevant on the issues of The judgement is particularly relevant on the issues of The judgement is particularly relevant on the issues of strategic investment and stock in trade, while applying the strategic investment and stock in trade, while applying the strategic investment and stock in trade, while applying

Ptc India Financial Services Ltd, New Delhi vs. DCIT, Circle- 19(1) & (2), New Delhi

In the result, the appeal filed by the assessee is allowed and the appeal filed by the Revenue is dismissed

ITA 5051/DEL/2017[2012-13]Status: DisposedITAT Delhi09 May 2023AY 2012-13
For Appellant: Shri Salil Kapoor, AdvocateFor Respondent: Shri T. Kipgen, CIT DR
Section 143(1)Section 14A

interest expenditure which could be directly or indirectly attributable to the exempt income. The CIT(A) further observed that the investments were strategic investment as per the assessee and the same should be excluded for calculating disallowance under Rule 8D. As per Rule 8D(2)(i), the assessee made disallowance ... under the head strategic investment and has taken 20% of employee cost and 5% of administrative cost. Thus, the findings given by the CIT (A) is just and proper. Therefore, Ground No. 1 is dismissed. As regards Ground No. 2, the details were submitted by the assessee during the assessment

M/S. Ptc India Financial Services Ltd., New Delhi vs. ACIT, New Delhi

In the result, the appeal filed by the assessee is allowed and the appeal filed by the Revenue is dismissed

ITA 4985/DEL/2017[2012-13]Status: DisposedITAT Delhi09 May 2023AY 2012-13
For Appellant: Shri Salil Kapoor, AdvocateFor Respondent: Shri T. Kipgen, CIT DR
Section 143(1)Section 14A

interest expenditure which could be directly or indirectly attributable to the exempt income. The CIT(A) further observed that the investments were strategic investment as per the assessee and the same should be excluded for calculating disallowance under Rule 8D. As per Rule 8D(2)(i), the assessee made disallowance ... under the head strategic investment and has taken 20% of employee cost and 5% of administrative cost. Thus, the findings given by the CIT (A) is just and proper. Therefore, Ground No. 1 is dismissed. As regards Ground No. 2, the details were submitted by the assessee during the assessment

Jsw Steels Ltd, Mumbai vs. DCIT CC 8(3), Mumbai

In the result, the appeal by the assessee is allowed for statistical purposes

ITA 2116/MUM/2017[2012-13]Status: DisposedITAT Mumbai04 May 2023AY 2012-13

Bench: Shri Amarjit Singh & Shri Sandeep Singh Karhail

For Appellant: Shri Rishabh Shah a/wFor Respondent: Dr. Yogesh Kumar
Section 115JSection 142(1)Section 143(2)Section 143(3)Section 144C(1)Section 144C(13)Section 144C(5)Section 14ASection 801ASection 80I

disallowance should not be made under section 14 A r/w Rule 8D. In response thereto, the assessee submitted that the assessee has made strategic investments for the purpose of promoting and facilitating its business, and with the intention of acquiring and retaining controlling interest in the Companies whose shares were

Shri Girishkumar Vachhraj Dholakia, Junagadh vs. The Pr. Commissioner of Income Tax-1, Rajkot-Gujarat

In the result, both the appeals filed by the assessee(s) are dismissed

ITA 15/RJT/2021[2015-16]Status: HeardITAT Rajkot02 May 2023AY 2015-16

Bench: Shri Waseem Ahmed & Ms. Madhumita Royआयकर अपील सं./ Ita No. 14/Rjt/2021 Assessment Year : 2015-2016 Shri Jugalkishore Natwarlal Pr. Commissioner Of Dholakia, Vs Income-Tax, C/O. Chokshi Vachhraj Makanji & Pcit-1, Rajkot Co., Shishumangal Road, Gandhigram, Junagadh-362001 Pan : Abqpd 2710 D आयकर अपील सं./ Ita No. 15/Rjt/2021 Assessment Year : 2015-2016 Shri Girishkumar Vachhraj Pr. Commissioner Of Dholakia, Vs Income-Tax, C/O. Chokshi Vachhraj Makanji & Pcit-1, Rajkot Co., Shishumangal Road, Gandhigram, Junagadh-362001 Pan : Abupd 6245 P अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee By : Shri Samir Jani, Ar Revenue By : Shri Vijay Kumar Jaiswal, Cit-Dr सुनवाई क" तारीख/Date Of Hearing : 01/05/2023 घोषणा क" तारीख /Date Of Pronouncement: 02/05/2023 आदेश/O R D E R Per Ms. Madhumita Roy:-

For Appellant: Shri Samir Jani, ARFor Respondent: Shri Vijay Kumar Jaiswal, CIT-DR
Section 10Section 142(1)Section 143(2)Section 14ASection 263Section 36(1)(iii)

earned on Fix Deposits is Rs. 792202/- and taxable remuneration income from the firm is Rs. 10713603/-. The investments made in the firm are strategic investments to have effective control over the firm. All the above income is shown as taxable income in the return of income for A.Y.2015-16

Shri Jugalkishore Natwarlal Dholakia, Junagadh vs. The Pr. CIT-1, Rajkot

In the result, both the appeals filed by the assessee(s) are dismissed

ITA 14/RJT/2021[2015-16]Status: HeardITAT Rajkot02 May 2023AY 2015-16

Bench: Shri Waseem Ahmed & Ms. Madhumita Royआयकर अपील सं./ Ita No. 14/Rjt/2021 Assessment Year : 2015-2016 Shri Jugalkishore Natwarlal Pr. Commissioner Of Dholakia, Vs Income-Tax, C/O. Chokshi Vachhraj Makanji & Pcit-1, Rajkot Co., Shishumangal Road, Gandhigram, Junagadh-362001 Pan : Abqpd 2710 D आयकर अपील सं./ Ita No. 15/Rjt/2021 Assessment Year : 2015-2016 Shri Girishkumar Vachhraj Pr. Commissioner Of Dholakia, Vs Income-Tax, C/O. Chokshi Vachhraj Makanji & Pcit-1, Rajkot Co., Shishumangal Road, Gandhigram, Junagadh-362001 Pan : Abupd 6245 P अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee By : Shri Samir Jani, Ar Revenue By : Shri Vijay Kumar Jaiswal, Cit-Dr सुनवाई क" तारीख/Date Of Hearing : 01/05/2023 घोषणा क" तारीख /Date Of Pronouncement: 02/05/2023 आदेश/O R D E R Per Ms. Madhumita Roy:-

For Appellant: Shri Samir Jani, ARFor Respondent: Shri Vijay Kumar Jaiswal, CIT-DR
Section 10Section 142(1)Section 143(2)Section 14ASection 263Section 36(1)(iii)

earned on Fix Deposits is Rs. 792202/- and taxable remuneration income from the firm is Rs. 10713603/-. The investments made in the firm are strategic investments to have effective control over the firm. All the above income is shown as taxable income in the return of income for A.Y.2015-16

M/S. Computer Science Corporation India Pvt. Ltd., Chennai vs. Deputy Commissioner of Income Tax-Circle 2(1), Indore

In the result, all the three appeals are partly allowed for statistical purpose and the Stay Application is also disposed of

ITA 319/IND/2018[2013-14]Status: DisposedITAT Indore10 Apr 2023AY 2013-14

Bench: Ms. Suchitra Kamble & Shri Bhagirath Mal Biyani

For Appellant: Shri Vishal Kalra, AdvocateFor Respondent: Shri P.K. Mishra, CIT DR
Section 143(3)Section 144C(13)Section 144C(8)

profit and loss account had no bearing to the earning of dividend and non current investment. (ii) non-current investment of Rs.825.90 Crores was strategic investment in subsidiary companies and was not for earning any dividend. Subsidiary companies were merged with CSC India w.e.f. 01.04.2015 and during financial years ... profit and loss account had no bearing to the earning of dividend and non current investment. (ii) non-current investment of Rs.1417.46 Crores was strategic investment in subsidiary companies and was not for earning any dividend. Subsidiary companies were merged with CSC India w.e.f. 01.04.2015 and during financial years

M/S. Computer Science Corporation India Pvt. Ltd., Chennai vs. The ACIT-Circle 2(1), Indore

In the result, all the three appeals are partly allowed for statistical purpose and the Stay Application is also disposed of

ITA 292/IND/2017[2012-13]Status: DisposedITAT Indore10 Apr 2023AY 2012-13

Bench: Ms. Suchitra Kamble & Shri Bhagirath Mal Biyani

For Appellant: Shri Vishal Kalra, AdvocateFor Respondent: Shri P.K. Mishra, CIT DR
Section 143(3)Section 144C(13)Section 144C(8)

profit and loss account had no bearing to the earning of dividend and non current investment. (ii) non-current investment of Rs.825.90 Crores was strategic investment in subsidiary companies and was not for earning any dividend. Subsidiary companies were merged with CSC India w.e.f. 01.04.2015 and during financial years ... profit and loss account had no bearing to the earning of dividend and non current investment. (ii) non-current investment of Rs.1417.46 Crores was strategic investment in subsidiary companies and was not for earning any dividend. Subsidiary companies were merged with CSC India w.e.f. 01.04.2015 and during financial years

M/S. Computer Sciences Corporation India Private Limited, Indore vs. The Asst. Commissioner of Income Tax-2(1), Indore

In the result, all the three appeals are partly allowed for statistical purpose and the Stay Application is also disposed of

ITA 179/IND/2016[2011-12]Status: DisposedITAT Indore10 Apr 2023AY 2011-12

Bench: Ms. Suchitra Kamble & Shri Bhagirath Mal Biyani

For Appellant: Shri Vishal Kalra, AdvocateFor Respondent: Shri P.K. Mishra, CIT DR
Section 143(3)Section 144C(13)Section 144C(8)

profit and loss account had no bearing to the earning of dividend and non current investment. (ii) non-current investment of Rs.825.90 Crores was strategic investment in subsidiary companies and was not for earning any dividend. Subsidiary companies were merged with CSC India w.e.f. 01.04.2015 and during financial years ... profit and loss account had no bearing to the earning of dividend and non current investment. (ii) non-current investment of Rs.1417.46 Crores was strategic investment in subsidiary companies and was not for earning any dividend. Subsidiary companies were merged with CSC India w.e.f. 01.04.2015 and during financial years

M/S. Ecoplast Ltd., Valsad vs. Asst. Cmmissioner of Income Tax, Valsad Renge, Valsad

In the result, appeal filed by the assessee is allowed

ITA 545/SRT/2019[2016-17]Status: DisposedITAT Surat30 Mar 2023AY 2016-17

Bench: Shri Pawan Singh, Jm & Dr. A. L. Saini, Am आयकर अपील सं./Ita No.545/Srt/2019 "नधा"रण वष"/Assessment Year: (2016-17) (Physical Court Hearing) Ecoplast Ltd., Vs. The Acit, Valsad Circle, S No.309, National Highway No.8, Valsad. Water Works Cross Road, Abrama, Valsad – 396002. (Assessee) (Respondent) "थायीलेखासं./जीआइआरसं./Pan/Gir No.: Aaace5030H

Section 142(1)Section 143(1)Section 143(2)Section 143(3)Section 36(1)(iii)

bank dues till the currency of the facilities. 14. The assessee (Ecoplast Limited) has also given corporate guarantee of Rs.396 lakhs. The strategic investment in subsidiary was made mainly to explore the business potential of the Company's Multilayer film business due to logistic advantage and favorable market conditions prevailing

Opelina Finance and Investment Ltd., Delhi vs. ITO, Ward- 19(2), New Delhi

In the result, appeal of the assessee is partly allowed

ITA 1422/DEL/2018[2013-14]Status: DisposedITAT Delhi15 Mar 2023AY 2013-14

Bench: Sh. Anil Chaturvedi & Sh. N.K Choudhrym/S Opelina Finance & Vs. Ito, Ward-19(2), Investment Ltd., New Delhi 110002 28, Nazafgarh Road, Delhi 110015 Pan No. Aaaco 5195 R (Appellant) (Respondent) Assessee By Shri Salil Kapoor, Adv. Ms. Ananya Kapoor, Adv. Shri Amarbir Singh, Adv. Revenue By Shri Jitender Chand, Sr. Dr Date Of Hearing: 07.03.2023 Date Of Pronouncement: 15.03.2023 Order Per Anil Chaturvedi, Am : This Appeal Filed By The Assessee Is Directed Against The Order Dated 20.11.2017 Of The Commissioner Of Income Tax (Appeals)-New Delhi Relating To Assessment Year 2013-14. 2. Brief Facts Of The Case As Culled Out From The Material On Record Are As Under :-

Section 143(3)Section 234BSection 271(1)(c)

have erred in ignoring the fact that the majority of the dividend income earned by the assessee is from the strategic investments made in the group concerns and hence no disallowance is justified w/s 14A. 7. Without prejudice, the AO and CIT(A) have erred in not appreciating the fact

DCIT, New Delhi vs. Ptc India Financial Services Ltd, New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 1268/DEL/2015[2011-12]Status: DisposedITAT Delhi14 Mar 2023AY 2011-12

Bench: Shri Shamim Yahya & Ms. Astha Chandraasstt. Year: 2011-12

For Appellant: Shri Salil Kapoor, AdvFor Respondent: Shri T Kipgen, CIT(DR)
Section 143(1)Section 14A

interest expenditure which could be directly or indirectly attributable to the exempt income. The CIT(A) further observed that the investments were strategic investment as per the assessee and the same should be excluded for calculating disallowance under Rule 8D. As per Rule 8D(2)(i), the assessee made disallowance ... under the head strategic investment and has taken 20% of employee cost and 5% of administrative cost. Thus, the findings given by the CIT (A) is just and proper. Therefore, Ground No. 1 is dismissed. As regards Ground No. 2, the details were submitted by the assessee during the assessment

Planet Gogo Private Ltd., Gurgaon vs. ITO Ward-3(2), Gurgaon

In the result, the appeal is allowed

ITA 1526/DEL/2022[2016-17]Status: DisposedITAT Delhi24 Feb 2023AY 2016-17

Bench: Shri Saktijit Deyassessment Year: 2016-17

Section 56(2)Section 56(2)(viib)

could have yielded return/ profit in the revenue projection made at the time of issuance of shares, without understanding that 16 ITA No.1526/Del./2022 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

Holtec Consulting Pvt. Ltd., New Delhi vs. Addl. CIT, Special Range - 4, New Delhi

Appeal of the assessee is allowed for statistical purposes

ITA 485/DEL/2019[2008-09]Status: DisposedITAT Delhi21 Feb 2023AY 2008-09

Bench: Shri Kul Bharat & Shri Pradip Kumar Kedia

Section 14Section 143(3)Section 14ASection 250Section 254

should have considered the submissions of assessee that a part of investments were not for earning dividends but were strategic investments. In view of the above, we are of the opinion that the issue of disallowance be readjudicated by the Assessing Officer and the Assessing Officer should decide the disallowance

Haldia Coke and Chemicals Pvt. Ltd., Chennai vs. DCIT Circle 11(1), New Delhi

In the result, the appeal filed by the assessee is allowed for statistical purposes only

ITA 1796/DEL/2019[2015-16]Status: DisposedITAT Delhi13 Feb 2023AY 2015-16

Bench: Shri C.M. Garg & Dr. B.R.R. Kumarassessment Year: 2015-16 Haldia Code & Chemicals Pvt. Ltd., Vs. Dcit, No.18/3, Sigapi Achi Building, Circle-11(1), 4Th Floor, Rukmini Lakshmipathi Road, New Delhi. Egmore, Chennai, Tamilnadu – 600 004. Pan: Aabch5389P (Appellant) (Respondent) Assessee By : Shri R. Sivaraman, Advocate Revenue By : Shri Anuj Garg, Sr. Dr Date Of Hearing : 08.02.2023 Date Of Pronouncement : 13.02.2023 Order

For Appellant: Shri R. Sivaraman, AdvocateFor Respondent: Shri Anuj Garg, Sr. DR
Section 14ASection 36Section 36(1)(iii)Section 37(1)

DCIT, Company Circle 1 (1), Chennai [2012] 52 SOT 36 (Chennai)(URO) - Annexure-3 In the following cases, it has been held that strategic investments made in subsidiary companies have to be excluded for computation of disallowance u/s.14A r.w. Rule 8D. I. ITAT Chennai in the case of EIH Associated ... assessee’s plea that share application money does not quantify for disallowance u/s 14A. He also rejected assessee’s submission that investment made as strategic investment in subsidiary can help the case of the assessee. He also rejected the plea that no dividend income has been earned so disallowance

Punyah Building Materials Pvt. Ltd., Faridabad vs. ITO Ward 2(1), Faridabad

In the result, the appeal of the assessee is allowed

ITA 6171/DEL/2019[2015-16]Status: DisposedITAT Delhi19 Jan 2023AY 2015-16

Bench: Dr. B. R. R. Kumar & Sh. Yogesh Kumar U.S.

Section 143(1)Section 143(3)Section 251Section 56(2)(viib)Section 68

yielded return/ profit in the revenue projection made at the time of issuance 18 Punyah Building Materials Vs. ITO 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

ACIT, New Delhi vs. M/S. India Bulls Power Ltd., New Delhi

The appeals are dismissed in regard to the first question

ITA 2013/DEL/2017[2011-12]Status: DisposedITAT Delhi05 Jan 2023AY 2011-12

Bench: Shri Anil Chaturvedi & Ms. Astha Chandraasstt. Year: 2011-12 Acit, Vs. India Bulls Power Ltd. (Now Known Circle-21(1), As Rattan India Power Ltd.) New Delhi. 5Th Floor, Tower-B, Worldmark-1, Aerocity, New Delhi- 110 037 Pan Aalcs2063D (Appellant) (Respondent)

For Appellant: Shri Ajay Wadhwa, AdvocateFor Respondent: Shri Anuj Garg, Sr. DR
Section 10Section 143(3)Section 14ASection 154

evident from the submissions filed by the appellant that the investments have been made in the subsidiary companies which are in the nature of strategic investments. The Hon'ble jurisdictional High Court in the case of M/s Cheminvest Limited vs. CIT held as under: "15. Turning to the central question ... that has not been disputed is that 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 interest expenditure must be held to have been incurred for holding and maintaining

D.C.I.T., CC - 4(4), Kolkata vs. Electrosteel Casting Ltd., Kolkata

In the result, the appeal of the revenue is dismissed

ITA 485/KOL/2022[2016-2017]Status: DisposedITAT Kolkata29 Dec 2022AY 2016-2017

Bench: Shri Rajpal Yadav, Vice- & Shri Girish Agrawalassessment Years: 2016-17 Deputy Commissioner Of M/S. Electrosteel Casting Ltd. Income-Tax, Central G.K. Tower Vs. Circle-4(4), Kolkata. 19, Camac Street Kolkata -700017 (Pan: Aaace4975B) (Appellant) (Respondent)

Section 143(3)Section 14ASection 43(1)

with' Rule 8D2(ii) & (iii) of the Rules, the AO while adopting the Average value of investments has to exclude the investments which are strategic investments. 141. The learned counsel for the Assessee filed before us a Chart wherein he has given the figures with regard to submissions in paragraph ... above, viz., Investments of the Assessee (Rs.15,894.02 lakhs), Strategic investments (Rs.5990.06 Lakhs), investments which yielded dividend income during the previous year including Strategic investments (Rs.13,650.89 Lakhs) and investments in dividend yielding shares (excluding Strategic investments) (Rs.7,660.83 Lakhs). 142. Without prejudice to the above submissions, it was also