“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

J.P. Morgan India P.Ltd, Mumbai vs. Asst CIT RG 4(3), Mumbai

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

ITA 1502/MUM/2014[2009-10]Status: DisposedITAT Mumbai13 Jul 2022AY 2009-10

Section 143(3)Section 14A

J.P.Morgan India Pvt.Ltd. 9.1 We heard the parties on this issue. The main contention of the assessee was that the investments are mainly strategic investments. The Ld A.R, accordingly, submitted that there is no ground for applying Rule 8D in the facts of present case. Accordingly, he submitted that

DCIT CC 3(2), Mumbai vs. M/S. Varad Vinayak Textiles P. Ltd., Mumbai

In the result, the present appeal is allowed

ITA 998/MUM/2020[2011-12]Status: DisposedITAT Mumbai29 Jun 2022AY 2011-12

Bench: Shri Prashant Maharishi & Pavan Kumar Gadaledcit, Cc-3(2) Vs. M/S. Varad Vinayak Central Range – 3 Textiles P Ltd., Room No. 1913, Air 605, Business Classic, India Bldg, Nariman Chincholi Bunder Rd., Point, Mumbai – Malad (W) 400021. Mumbai – 400064. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaccv1777G Appellant .. Respondent Appellant By : Shri. Achal Sharma. Cit Dr Respondent By : None Date Of Hearing 25.05.2022 Date Of Pronouncement 30.06.2022 आदेश / O R D E R Per Pavan Kumar Gadale Jm: The Revenue Has Filed The Appeal Against The Order Of The Commissioner Of Income Tax (Appeals)-51, Mumbai Passed U/S 143(3) R.W.S 153A & 250 Of The Income Tax Act, 1961. The Revenue Has Raised The Following Grounds Of Appeal.

For Appellant: Shri. Achal Sharma. CIT DRFor Respondent: None

Section 143(1)Section 143(2)Section 143(3)Section 153ASection 69

passed by investors for investment in shares of appellant. M/s. Varad Vinayak Textiles P Ltd, Mumbai Investments made by appellant were part of its strategic investment strategy to cement its position in market. Textile industry was growing and with a view to strengthen its market and for future expansion, critical

Dy CIT-CC-1(4), Mumbai vs. M/S. Essel Mining & Industries Ltd., Mumbai

In the result, appeal of the Revenue is dismissed

ITA 705/MUM/2021[2015-16]Status: DisposedITAT Mumbai27 Jun 2022AY 2015-16

For Appellant: Sh. Yogesh TharFor Respondent: Sh. Amol B. Kirtane

Section 10(34)Section 115JSection 14ASection 234CSection 28Section 40Section 80I

erred m directing the AO to rework the computation of disallowance u/s. 14A after excluding investment in subsidiaries company which is claimed to be strategic investment, without appreciating the fact that the Rule 8D of the Income Tax Rules, 1962 does not prescribe any exclusion of such investment.” 2. Brief

Radhika Dipen Mehta, Mumbai vs. The ITO 19(3) (1), Mumbai

In the result, the appeals of the assessee are allowed

ITA 1882/MUM/2021[2014-15]Status: DisposedITAT Mumbai24 Jun 2022AY 2014-15

For Appellant: Shri Rajan Vora/ Nikhil TiwariFor Respondent: Shri Ashish Deharia (Sr. AR)

Section 143(3)Section 14ASection 271(1)(c)

promoter/director of a company M/s. Axis Capital Market Ltd. and being the promoters has A.Y. 2013-14 & 2014-15 Radhika Dipan Mehta made strategic investment to have controlling interest only and earning exempt income was not the intention per-se of the assessee and on the aforesaid back drop ... assessee claimed that no expenditure was incurred on the strategic investment made and therefore offered suo motto expences to the tune Rs 10,481/- and objected to disallowance u/s 14A r.w. Rule 8D and relied on the decision of this Tribunal J.M. Financial Ltd. Vs. ACIT 4(3) & Garware Wall

Radhika Dipen Mehta, Mumbai vs. The ITO 19(3) (1), Mumbai

In the result, the appeals of the assessee are allowed

ITA 1881/MUM/2021[2013-14]Status: DisposedITAT Mumbai24 Jun 2022AY 2013-14

For Appellant: Shri Rajan Vora/ Nikhil TiwariFor Respondent: Shri Ashish Deharia (Sr. AR)

Section 143(3)Section 14ASection 271(1)(c)

United Breweries Ltd, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-7(1)(1), Bengaluru

ITA 2569/BANG/2017[2013-14]Status: DisposedITAT Bangalore01 Jun 2022AY 2013-14

Bench: Shri N.V. Vasudevan, Vice Preseident & Shri Padmavathy S

For Appellant: Shri K.R. Vasudevan, AdvocateFor Respondent: Shri Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru

Section 143(3)Section 92Section 92B(1)

Appellant; IT(TP)A No.2569/Bang/2017 Page 35 of 84 4.5 The learned AO has erred in law and on facts by adding strategic investments made for business while computing expenditure for disallowance; 4.6 The learned AO has erred in law and on facts by considering both investments, generating taxable

Deputy Commissioner of Income Tax-14(2)(1), Mumbai vs. Infrastructure Leasing and Financial Services Limited, Mumbai

In the result, both, assessee’s appeal and revenue’s appeal are partly allowed for statistical purpose

ITA 4515/MUM/2017[2012-13]Status: DisposedITAT Mumbai19 Apr 2022AY 2012-13

Bench: Shri Vikas Awasthy () & S. Rifaur Rahman ()

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

Tribunal at Para No. 6.2 held as under: "6.2. We have heard the rival contentions. We find it is fairly settled legal position that strategic investments not capable of yielding exempt incomes and investments held as stock in trade are not to be considered for computation of Section 14A disallowance ... investment of Rs. 1394.44 crores, which prima-facie weakens the argument advanced by Ld. AR. However, the Ld. AR has contended that investment includes strategic investments, investment not capable of earning exempt incomes and investment held as stock in trade, which are not includible in the value of investments

Infrastructure Leasing & Financial Services Ltd, Mumbai vs. DCIT 14(2)(1), Mumbai

In the result, both, assessee’s appeal and revenue’s appeal are partly allowed for statistical purpose

ITA 4448/MUM/2017[2012-13]Status: DisposedITAT Mumbai19 Apr 2022AY 2012-13

Bench: Shri Vikas Awasthy () & S. Rifaur Rahman ()

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

Credit Suisse Consulting (India) P. Ltd, Mumbai vs. DCIT RG 3(1), Mumbai

619/Mum/2014

ITA 619/MUM/2014[2009-10]Status: DisposedITAT Mumbai05 Apr 2022AY 2009-10

Section 143(3)Section 144C(5)

under:- Particulars SI. Amount Method No. 119,977,878 Provision of investment advisory and TNMM 1. support services in relation to strategic investments in Indian companies 1,586,445 2 Provision of information services TNMM 3 Provision of support services for 85,085,693 TNMM outsourced services 4 Provision ... Mumbai) for A.Y.2009-10 dated 30/11/2015. We find that Goldman Sachs (India) Securities (P) Ltd is into investment advisory services for Indian equities and strategic investment in India. We find that the Co-ordinate Bench of this Tribunal in the case of Goldman Sachs (India) Securities (P) Ltd reported

Kotak Securities Limited, Mumbai vs. Add. CIT Rnage 4(3) Mumbai, Mumbai

In the result, appeals filed by the Revenue are dismissed and appeals filed by the assessee are allowed

ITA 6024/MUM/2019[2011-12]Status: DisposedITAT Mumbai31 Mar 2022AY 2011-12

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri Amarjit Singh, Hon'Ble

For Appellant: Shri Farrokh IraniFor Respondent: Shri Shambhu Yadav

Section 14A

expenses. 6. Without prejudice to the above, it is submitted that the disallowance u/s 14A read with Rule 8D should be calculated excluding the strategic investment made in subsidiary companies / JV /Unlisted companies etc. as - it does not require any expenses on day to day basis 7. Without prejudice ... therefore, the applicability of the same is not under dispute. The difference in computation arises out of the fact that the assessee has excluded strategic investment as well as stock-in-trade while arriving at the disallowance whereas Ld. AO has adopted the aggregate value of investments irrespective of their

Kotak Securities Limited, Mumbai vs. Add. CIT-Circle-4(3), Mumbai

In the result, appeals filed by the Revenue are dismissed and appeals filed by the assessee are allowed

ITA 6023/MUM/2019[2010-11]Status: DisposedITAT Mumbai31 Mar 2022AY 2010-11

Bench: Shri S. Rifaur Rahman, Hon'Ble & Shri Amarjit Singh, Hon'Ble

For Appellant: Shri Farrokh IraniFor Respondent: Shri Shambhu Yadav

Section 14A

Hathway Investment Pvt Ltd., Mumbai vs. Asst CIT Circle-12 (2)(2), Mumbai

In the result, appeal is partly allowed

ITA 7105/MUM/2019[2015-16]Status: DisposedITAT Mumbai30 Mar 2022AY 2015-16

For Appellant: Shri Vijay Mehta

Section 143(3)Section 14ASection 250

learned CIT(A) erred in not directing the Assessing Officer to exclude shares held as stock-in-trade as well as shares held as strategic investments (i.e. investments in subsidiaries & investment in joint ventures) while calculating average investment for the purpose of disallowance under section 14A. 3. Without prejudice ... under section 14A of the Act amounting to Rs. 39,02,754/-. (ii) to exclude shares held as stock-in-trade as well as strategic investment while calculating average investment for the purpose of disallowance under section 14A. (iii) Without prejudice to what has been stated above, to restrict

DCIT 3(2), Mumbai vs. Kotak Mahindra Bank Ltd, Mumbai

In the result, the appeal of the revenue is dismissed and the appeal of the assessee is allowed for statistical purposes

ITA 4857/MUM/2009[2007-08]Status: DisposedITAT Mumbai29 Mar 2022AY 2007-08

Bench: Shri Amarjit Singh & Ms. Kavitha Rajagopaldy. Commissioner Of Vs. M/S Kotak Mahindra Income-Tax, 3(2) Bank Ltd. 36-38A, Room No. 608, 6Th Floor, Nariman Point, Ayakar Bhavan, Mumbai – 400021 Mumbai – 400020 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaack4409J Respondent .. Appellant M/S Kotak Mahindra Vs. Dy. Commissioner Of Bank Ltd. 36-38A, Income-Tax-3(2) 227 Nariman Point, Aayakar Bhavan, Mumbai – 400021 Mumbai – 400020 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaack4409J Appellant .. Respondent

For Appellant: Shri F.V. IraniFor Respondent: Shri Jasbir Chouhan

Section 143(3)Section 14ASection 2Section 3

require any expenses of day to day basis, therefore, directed the assessing officer to restrict the disallowance @ 0.5% on average investment, other than strategic investment and accordingly, arrived at disallowance to the amount of Rs.10,53,875/-. Since the assessee has made suo motto disallowance at Rs.14,70,606/-, therefore

Asstt. CIT (OSD) - CC -7 (3), Mumbai vs. M/S. Macrotech Developers Ltd. (Earlier Known As M/S Lodha Developers Ltd.), Mumbai

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

ITA 68/MUM/2019[2015-16]Status: DisposedITAT Mumbai25 Mar 2022AY 2015-16

Bench: S Shri Rifaur Rahamn & Pavan Kumar Gadaledcit – Cc-7(3) Vs. Macrotech Developers Room No. 655, 6Th Ltd (Successor To Floor, Aayakar Bhavan, Bellissimo Crown Mk Road, Mumbai – Buildmart Pvt Ltd) 400020. (Earlier Known As Lodha Crown Build Mart Ltd) 412, 17-G, Vardhaman Chambers, Cp Road, Horniman Circle Fort, Mumbai – 400001 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacl1490J Appellant .. Respondent Macrotech Developers Vs. Dcit – Cc-7(3) Ltd (Successor To Room No. 655, 6Th Bellissimo Crown Floor, Aayakar Bhavan, Buildmart Pvt Ltd) Mk Road, Mumbai – (Earlier Known As 400020. Lodha Crown Build Mart Ltd) 412, 17-G, Vardhaman Chambers, Cp Road, Horniman Circle Fort, Mumbai – 400001. "थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaacl1490J Appellant .. Respondent

Section 143(2)Section 14ASection 36(1)(iii)

assessee has borrowing funds in the F.Y.2014-15. The assessee has filed the explanations that the investments in equity shares of its associate companies are strategic investments and no exempt income is earned on such investments and further no expenditure was incurred for earning income from investments

Jsw Steel Limited, Mumbai vs. Addlcit, Bangalore

858/M/2011

ITA 858/BANG/2011[2007-08]Status: DisposedITAT Mumbai16 Mar 2022AY 2007-08

Bench: Shri Om Prakash Kant () & Shri Amarjit Singh () Assessment Year: 2007-08 Jsw Steel Limited, The Addl. Cit, Range 11, Jindal Mansion, 5A, Vs. Bangalore. Dr. G. Deshmukh Marg, Mumbai-400026. Pan No. Aaacj 4323 N Appellant Respondent Assessment Year: 2007-08 Dc. Cc.46, M/S Jsw Steel Ltd., R.No. 659, 6Th Floor, Aayakar Vs. Jindal Mansion, 5-A, Dr. G Bhavan, M.K. Road, Deshmukh Marg, Mumbai-20. Mumbai-400026. Pan No. Aaacj 4323 N Appellant Respondent Assessment Year: 2007-08 M/S Jsw Steel Ltd., Dcit, Central Circle 46, Jsw Centre, Bandra Kurla Vs. 6Th Flr., Aayakar Bhavan, M.K. Complex, Road, Mumbai-400051. Mumbai-400020. Pan No. Aaacj 4323 N Appellant Respondent

For Appellant: Mr. Danesh Bafna &For Respondent: Mr. Achal Sharma, CIT-DR

Section 14ASection 37(1)

assessee and therefore question of disallowance under section 14A of the Act does not arise in case of such investments. As far as, strategic investments are concerned, the Hon’ble Supreme Court in Maxopp India Investment Ltd. v. CIT in Civil Appeal No. 104-109 of 2015 has settled ... issue that such strategic investments are liable for disallowance under section 14A of the Act. This is also settled that in JSW Steel Ltd. 48 ITA No.s 858/M/2011 & Ors. assessment year 2007-08, the rule 8D was not applicable, and therefore where an assessee is not able to quantify

DCIT 3(3)(2), Mumbai vs. M/S Sky Appliances Ltd, Mumbai

Appeal is allowed

ITA 4707/MUM/2019[2014-15]Status: DisposedITAT Mumbai08 Mar 2022AY 2014-15

Bench: Shri Kuldip Singh & Shri Gagan Goyalassessment Year: 2014-15

For Appellant: NoneFor Respondent: Shri B.K. Bagchi, D.R

Section 115JSection 14A

judgement on the section 14A in the case of Maxopp Investment Ltd 91 Taxmann.com 154. The judgement is particularly relevant on the issues of strategic investment and stock in trade, while applying the provisions of section 14A. It is held that if expenditure is incurred on earning dividend income, that

Kotak Mahindra Asset Management Co. Ltd., Mumbai vs. Dy CIT -Circle-14(2)(1), Mumbai

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

ITA 1074/MUM/2021[2017-18]Status: DisposedITAT Mumbai02 Mar 2022AY 2017-18

Bench: Shri S. Rifaur Rahman, Am & Shri Amarjit Singh, Jm आयकर अपील सं/ I.T.A. No. 1074/Mum/2021 (निर्धारण वर्ा / Assessment Year: 2017-18) Kotak Mahindra Asset बिधम/ Dcit, Circle-14(2)(1) Management Co. Ltd. Aayakar Bhavan, Mumbai- Vs. 27 Bkc, Bandra Kurla 400020. Complex, Bandra East, Mumbai-400051. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaack5576C (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) Assessee By: Shri Farrokh Irani Revenue By: Shri Shambu Yadav (Dr) सुनवाई की तारीख / Date Of Hearing: 13/01/2022 घोषणा की तारीख /Date Of Pronouncement: 02/03/2022 आदेश / O R D E R Per Amarjit Singh, Jm: The Assessee Has Filed The Present Appeal Against The Order Dated 15.04.2021 Passed By The National Faceless Appeal Centre (Nfac), Delhi [Hereinafter Referred To As The “(Nfac)”] In The Relevant A.Y.2017-18. 2. The Assessee Has Raised The Following Grounds: - “1. The Commissioner Of Income Tax Appeal, National Faceless Appeal Centre (Nfac) (Hereinafter Referred To As The Cit(A)) Erred In Confirming The Disallowance Made By The Dy Commissioner Of Income Tax, Circle 14{2) 1 Amounting To Rs.29,07,525 Under Section 14A By Invoking The Provisions Of Rule 8D(2)(Ii).

For Appellant: Shri Farrokh IraniFor Respondent: Shri Shambu Yadav (DR)

Section 14A

disallowed by the Appellant in Return of Income. 10. Without prejudice to the above, the Appellant prays that the AO be directed to exclude strategic Investments and investment made in unlisted companies for working out disallowance u/s 14A. 11. Without prejudice to the above, AO be directed to restrict

DCIT 7(1)(1), Mumbai vs. Goldman Sachs (India) Securities P.Tl, Mumbai

In the result, appeal of the Revenue is dismissed

ITA 1546/MUM/2015[2010-11]Status: DisposedITAT Mumbai17 Feb 2022AY 2010-11

Bench: Mrs. Diva Singh & Shri Rifaur Rahmangoldman Sachs (India) Dy.Cit-7(1)(1), Securities Pvt. Ltd. Room No. 522, Aayakar Bhavan, 951 A, Rational House, Vs M.K. Road, Mumbai-400020. Appasaheb Marathe Marg, Prabhadevi, Mumbai-400025. Pan: Aafca6819F अपीलाथ"/Appellant ""यथ"/Respondent & Dy.Cit-7(1)(1), Goldman Sachs (India) Securities Room No. 522, Aayakar Pvt. Ltd. Bhavan, Vs 951 A, Rational House, M.K. Road, Mumbai-400020. Appasaheb Marathe Marg, Prabhadevi, Mumbai-400025. Pan: Aafca6819F अपीलाथ"/Appellant ""यथ"/Respondent Assessee By : Sh. Percy J. Pardiwalla, Sr. Advocate Sh. M. Aggarwal, Advocate Revenue By : Sh. Yogesh Kamat, Cit-Dr Date Of Hearing : 25.11.2021 Date Of Pronouncement : 17.02.2022

For Appellant: Sh. Percy J. Pardiwalla, Sr. AdvocateFor Respondent: Sh. Yogesh Kamat, CIT-DR

Section 133Section 143(3)Section 144C(13)

services) Rs 1 34,450,732 (Payment for services) 2 Investment advisory and support Rs 511,629,884 TNMM services in respect of strategic investments into India 3 Securities broking services in respect Rs 399,170,671 CUP of securities traded in the cash equity segment

Goldman Sachs (India) Securities P.Ltd, Mumbai vs. DCIT RG 7(1)(1), Mumbai

In the result, appeal of the Revenue is dismissed

ITA 1115/MUM/2015[2010-11]Status: DisposedITAT Mumbai17 Feb 2022AY 2010-11

For Appellant: Sh. Percy J. Pardiwalla, Sr. AdvocateFor Respondent: Sh. Yogesh Kamat, CIT-DR

Section 133Section 143(3)Section 144C(13)

Century Real Estate Holdings Pvt Ltd, Bangalore vs. Deputy Commissioner of Income Tax Central Circle-2(2), Bangalore

In the result, the appeal of the assessee is partly allowed

ITA 1588/BANG/2017[2012-13]Status: DisposedITAT Bangalore17 Feb 2022AY 2012-13

For Appellant: Shri Ramakrishna, CA

Section 10Section 132Section 139(1)Section 143(3)Section 14ASection 153ASection 153B

subsidiaries/SPVs are to promote the core business on account of business expediency and not for investment per se to earn capital gains, and the strategic investments made by the appellant in its subsidiary/SPVs is not to be reckoned for disallowance u/s 14A rwr 8D. 9. For the above