“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

Electro Investment Private Limited, Mumbai vs. Income Tax Officer 6(2)(3), Mumbai

In the result, the appeal of the assessee is dismissed as withdrawn

ITA 167/MUM/2025[2017-18]Status: DisposedITAT Mumbai20 Feb 2025AY 2017-18

Bench: Smt. Beena Pillai & Smt. Renu Jauhrim/S. Electro V/S. Ito, Ward 6(2)(3), Investment Pvt. Ltd. बनाम Mumbai C/O. Gowthama & Ayakar Bhavan, Maharishi Company, Chartered Karve Road, Churchgate, Accountants, No. 23/57, Mumbai-400020 41St Cross, East End C Main Road, 9Th Block, Jayanagar, Bangalore-560069 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaace1153F Appellant/अपीलार्थी .. Respondent/प्रतिवादी

For Appellant: Shri Pavan KumarFor Respondent: Shri Asif Karmali

Section 14ASection 250

exempt. 4. The Appellant submits that out of the accumulated Reserves and capital of the company only, the Appellant company had invested in strategic investment in their group company, which did not earn any income at all and therefore when the expenditure incurred is NIL against exempted income arrived

Parakkott Investment India Pvt Ltd, Mumbai vs. Income Tax Officer Ward 14(2)(4), Mumbai

In the result, no question of law arises

ITA 2137/MUM/2024[2017-18]Status: DisposedITAT Mumbai19 Feb 2025AY 2017-18

Bench: Shri Amit Shukla & Shri Girish Agrawalassessment Year: 2017-18

For Appellant: Shri M. Subramaniam, AdvocateFor Respondent: Shri Krishna Kumar, Sr. DR

Section 143(3)Section 14ASection 36

this respect, he observed that assessee has taken long term borrowings of Rs.44,85,30,926/- and diverted its borrowings towards strategic investment and not for business purposes which requires disallowance u/s.14A r.w.r. 8D. He negated the contention of the assessee of it having not earned any exempt income

Deputy Commissioner of Income Tax, Kolkata vs. Dollar Holding Pvt. Ltd., Kolkata

In the result, both the appeals of the Revenue are dismissed

ITA 1729/KOL/2024[2017-18]Status: DisposedITAT Kolkata11 Feb 2025AY 2017-18

Bench: Shri Rajesh Kumar, Am & Shri Pradip Kumar Choubey, Jm

For Appellant: Shri A.K. Tulsyan, ARFor Respondent: Shri Abhijit Kundu, DR

Section 14ASection 68Section 69C

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM

Deputy Commissoenr of Income Tax, Kolkata vs. Dollar Holding Pvt. Ltd., Kolkata

In the result, both the appeals of the Revenue are dismissed

ITA 1728/KOL/2024[2015-16]Status: DisposedITAT Kolkata11 Feb 2025AY 2015-16

Bench: Shri Rajesh Kumar, Am & Shri Pradip Kumar Choubey, Jm

For Appellant: Shri A.K. Tulsyan, ARFor Respondent: Shri Abhijit Kundu, DR

Section 14ASection 68Section 69C

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM

Businessmatch Services (India) Private Limited, Mumbai vs. DCIT Circle 4(1)(1), Mumbai

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

ITA 6386/MUM/2024[2014-15]Status: DisposedITAT Mumbai04 Feb 2025AY 2014-15

Bench: Shri B.R. Baskaranshri Sandeep Singh Karhailassessment Year : 2014-15

For Appellant: Shri Ravikant S. PathakFor Respondent: Shri Kailash C. Kanojiya, CIT-DR

Section 115Section 139Section 143(3)Section 154Section 250

that the assessee is engaged in the business of providing consultancy services for private placement of shares with foreign institutional investors, financial institutes, strategic investment, arranging loans and also insurance business advice. For the year under consideration, the assessee filed its return of income on 30/11/2014, declaring a loss

ACIT-1(1), Indore vs. Flexituff Ventures International Limited, Dhar

Appeal is dismissed

ITA 195/IND/2024[2013-14]Status: DisposedITAT Indore30 Jan 2025AY 2013-14

Bench: Us Assailing The Order Of First-

Section 10ASection 143(3)Section 14A

Page 2 of 6 Flexituff Ventures International Ltd. ITA No. 195/Ind/2024 – AY 2013-14 acquired by assessee in controlled subsidiary companies as part of “strategic investment”, and (ii) that the provision of section 14A itself could not be applied when the tax-exempt income was absent. However, the AO turned ... down assessee’s all submissions, invoked section 14A and made disallowance. During first-appeal, the CIT(A) accepted assessee’s plea of “strategic investment” and accordingly deleted the disallowance. 5. We have heard learned representatives of both sides qua this issue and carefully examined the orders of lower-authorities

Deputy Commissioner of Income Tax, Circle-2(1)(1), Bengaluru vs. Canara Bank, Bengaluru

In the result, appeal of the revenue in ITA No

ITA 297/BANG/2024[2018-19]Status: DisposedITAT Bangalore17 Jan 2025AY 2018-19

Bench: Shri Waseem Ahmed & Shri Keshav Dubeyassessmentyear: 2017-18

For Appellant: Sri Abharana &Anantham, A.RsFor Respondent: Ms. Neera Malhotra, D.R

Section 115JSection 143(3)Section 14ASection 234BSection 250

jointly by 5 institutional investors one of which is Canara Bank. The assessee was having a stake in the company as a strategic investment to the tune of 43.5%. Before us, ld. A.R. of the assessee submitted that the substantial stake in M/s. Can Fin Homes Ltd. was acquired itself ... shows that the intention to acquire the shares in the subject company was to hold as a strategic investment for a long period. Furtheron account of substantial shareholding in Can Fin Homes Ltd., assessee bank has treated the same as a strategic investment but not as stock in trade

Deputy Commissioner of Income Tax, Circle-2(1)(1), Bengaluru vs. Canara Bank, Bengaluru

ITA 222/BANG/2024[2017-18]Status: DisposedITAT Bangalore17 Jan 2025AY 2017-18

Bench: Shri Waseem Ahmed & Shri Keshav Dubey

For Respondent: Sri Abrarana &Anantham, A.Rs

Section 115JSection 14ASection 250Section 36(1)

CanFin Homes Ltd. are to be treated as capital asset. 3. 2. The learned CIT(A) failed to appreciate the fact that it was strategic investment by the bank. 3. 3. The learned CIT(A) erred in not following the CBDT circular. 4. The learned CIT(A) erred in upholding ... jointly by 5 institutional investors one of which is Canara Bank. The assessee was having a stake in the company as a strategic investment to the tune of 43.5%. Before us, Id. A.R. of the assessee submitted that the substantial stake in M/s. Can Homes Ltd. was acquired itself shows

Canara Bank, Bengaluru vs. The Deputy Commissioner of Income Tax, Circle 2(1)(1), Bangalore, Bengaluru

ITA 210/BANG/2024[2017-18]Status: DisposedITAT Bangalore17 Jan 2025AY 2017-18

Bench: Shri Waseem Ahmed & Shri Keshav Dubey

For Respondent: Sri Abrarana &Anantham, A.Rs

Section 115JSection 14ASection 250Section 38(1)(vii)

bank in CanFin Homes Ltd. are to be treated as capital asset. 3. 3. The learned CIT(A) failed to appreciate that it was strategic investment by the bank. 4. Without prejudice to the above, the learned CIT(A) erred in not deleting the various additions made to the book

Deputy Commissioner of Income Tax, Circle-2(1)(1), Bangalore, Bengaluru vs. Canara Bank, Bengaluru

In the result, appeal of the Revenue is dismissed

ITA 1175/BANG/2023[2013-14]Status: DisposedITAT Bangalore17 Jan 2025AY 2013-14

Bench: Shri Waseem Ahmed & Shri Keshav Dubeyassessment Year: 2013-14

For Appellant: Sri S. Ananthan, A.RFor Respondent: Ms. Neera Malhotra, D.R

Section 10(38)Section 143(3)Section 250Section 28

CARE Ltd. was acquired itself shows that the intention to acquire the shares in the subject company was to hold as a strategic investment for a long period. On account of substantial shareholding in CARE Ltd., assessee bank has treated the same as a strategic investment but not as stock

Canara Bank, Bengaluru vs. The Deputy Commissioner of Income Tax, Circle-2(1)(1), Bangalore, Bengaluru

ITA 1154/BANG/2023[2018-19]Status: DisposedITAT Bangalore17 Jan 2025AY 2018-19

Bench: Shri Waseem Ahmed & Shri Keshav Dubey

For Appellant: Sri Abarana &Anantham, A.RsFor Respondent: Ms. Neera Malhotra, D.R

Section 115JSection 14ASection 250Section 38(1)

bank in CanFin Homes Ltd. are to be treated as capital asset. 3. 2. The learned CIT(A) failed to appreciate that it was strategic investment by the bank. 3. 3. The learned CIT(A) erred in not following the circular. 4. The learned CIT(A) erred in upholding ... jointly by 5 institutional investors one of which is Canara Bank. The assessee was having a stake in the company as a strategic investment to the tune of 43.5%. Before us, Id. A.R. of the assessee submitted that the substantial stake in M/s. Can Fin Homes Ltd. was acquired itself

Deputy Commissioner of Income Tax, Circle 4(2), Delhi, I.P.Estate vs. Bureau Veritas Consumer Products Services(India) Pvt. Ltd., Lajpat Nagar

ITA 3158/DEL/2023[2017-18]Status: DisposedITAT Delhi14 Jan 2025AY 2017-18

Bench: Ms. Madhumita Roy & Shri Amitabh Shukla, Accountnat Member [Assessment Year: 2013-14] The Assistant Commissioner Of M/S Dalmia Cement Bharat Ltd. Income Tax, Circle-1, Dalmiapuram, Williams Road, Vs Tamilnadu, 621651 Cantonment, Trichy, Tamil Nadu-620001 Pan-Aadca9414C Assessee Revenue Cross Objection No.63/Chny/2018 (Arising Out Of Ita No.3157/Chny2017) [Assessment Year: 2013-14] M/S Dalmia Cement Bharat Ltd. The Assistant Commissioner Of Dalmiapuram, Income Tax, Circle-1, Tamilnadu-621651 Vs Williams Road, Cantonment, Trichy, Tamil Nadu-620001 Pan- Aadca9414C Assessee Revenue [Assessment Year: 2014-15] The Assistant Commissioner Of M/S Dalmia Cement Bharat Ltd. Income Tax, Circle-1, Dalmiapuram, Williams Road, Vs Tamilnadu, 621651 Cantonment, Trichy, Tamil Nadu-620001 Pan-Aadca9414C Assessee Revenue

Section 14ASection 32(1)(iia)

DCIT VS.THE SARASWAT CO- OPERATIVEBANK LTD.(ITA No.1140&694/Mum/2012;ITA No.5627/Mum/2003& ITA No.1/ Mum/ 2014, dt.31/10/2016) the ITAT, 'E' Bench held that the strategic investment made by the assessee in its subsidiary as well in the other securities which are capable of yielding exempt income i.e. by way of Dividend ... exempt from tax shall be INCLUDED while computing disallowance u/s.14A of the Act AS THE STATUTE DOES NOT GRANT ANY EXEMPTION TO THE STRATEGIC INVESTMENTS WHICH ARE CAPABLE OF YIELDING EXEMPT INCOME TO BE EXCLUDED ITA Nos. 5416 & 5417/Del/2017 along with other cases WHILE COMPUTING DISALLOWANCE U/S.14A

Akhil Taneja, New Delhi vs. ITO Ward 1(1), Gurgaon

In the result, the appeal of the Revenue is dismissed

ITA 3560/DEL/2023[A.Y. 2013-14]Status: DisposedITAT Delhi07 Jan 2025

Bench: Shri Mahavir Singh & Shri Amitabh Shukla[Assessment Year : 2010-11] Dcit Vs M/S. Gen X Commodities (P) Ltd., Central Circle-29 Fa-45, Shivaji Enclave New Delhi New Delhi-110027 Pan-Aaaca2303H Appellant Respondent Shri Jitender Singh, Cit Dr Revenue By Assessee By Shri Ved Jain, Adv. & Shri Ayush Garg, Ca Date Of Hearing 26.06.2025 Date Of Pronouncement 25.07.2025

Section 14ASection 2(22)(e)Section 250(6)

During the appellate proceedings, the appellant has stated that the investment in group company JCSL, was strategic investment and not made for earning the dividend income. The dividend income on this investment was NIL and therefore, the A.O. was wrong in invoking provision of section 14A. The appellant has also ... income has been earned, which can be treated as exempt income, and  A The investment made in its group concern, is on account of strategic investments and on which, no dividend income has been earned. In view of the above, I agree with the arguments of the appellant that

Air India Limited, Mumbai vs. ACIT Circle 5(1)(1), Mumbai

In the result, the appeal is partly allowed

ITA 5996/MUM/2024[2020-21]Status: DisposedITAT Mumbai06 Jan 2025AY 2020-21

Bench: Shri Saktijit Dey, Vp & Smt Renu Jauhri, Am Air India Limited Asst. Cit, Circle 5(1)(1) Block – 4, Vatika One On One, Room No. 568, 5Thfloor, Sector-16, Nh-48, Industrial Estate, Vs. Aaykar Bhavan, M. K. Road, Gurgaon, Haryana-122 007 Mumbai – 400 020

For Appellant: Shri Madhur Agrawal &For Respondent: Shri Ram Krishn Kedia

Section 14A

computed under Rule 8D r.w.s. 14A of the Act. In reply, the assessee submitted that, the investments are in the nature of strategic investments and had been made out of its own funds. Therefore, the assessee had not incurred any expense for earning the income. The A.O. however

Deputy Commissioner of Income Tax, Circle- V (I), Kolkata vs. Birla Corporation Limited, Birla Building

In the result, both the appeals of the revenue is dismissed, as also the cross objection filed by the assessee for both the years

ITA 1024/KOL/2023[2016-17]Status: DisposedITAT Kolkata24 Dec 2024AY 2016-17

Bench: SHRI SONJOY SARMA, JUDICIAL MEMBER SHRI SANJAY AWASTHI (Accountant Member)

Section 115JSection 14ASection 250Section 80I

justified in directing the AO to compute the disallowance u/r 8D(2)(iii) by considering only the dividend bearing investments and by excluding the strategic investments. This decision deserves to be reversed and the lower authorities may, therefore, be directed accordingly.” 22. The ld. counsel for the assessee, however ... supra) has held that the exempt 9 I.T.A. No. 1024/Kol/2023 CO No. 04/Kol/2024 Birla Corporation Limited income earned by the assessee from the strategic investments made in the sister concern/subsidiaries are also subjected to disallowance u/s 14A of the Act. In view of this, the impugned order

Asia Investments P.Ltd, Mumbai vs. Addl CIT RG 2(1), Mumbai

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

ITA 916/MUM/2016[2011-12]Status: DisposedITAT Mumbai20 Dec 2024AY 2011-12

Bench: Smt. Beena Pillai & Shri Omkareshwar Chidara

For Appellant: ShriH.P. Mahajani, ARFor Respondent: Dr. K.R. Subhash, CIT-DR

Section 14A

section 14A of the Income Tax Act, 1961 (‘Act, for short) in respect of investments aggregating to Rs. 198,74,78,114, which were strategic investments not made with the intention of earning dividend income 7. On the facts and in the circumstances of the case ... section 14A of the Income Tax Act, 1961 (Act', for short) in respect of investments aggregating to Rs. 198,74,78,114, which were strategic investments not made with the intention of earning dividend income. 7. On the facts and in the circumstances of the case

Kiri Industries Limited, Ahmedabad vs. The Dy.CIT, Circle-2(1)(1), Ahmedabad

In the result, appeal of the assessee is partly allowed

ITA 1513/AHD/2024[2018-19]Status: DisposedITAT Ahmedabad19 Dec 2024AY 2018-19

Bench: Dr.Brr Kumarshri Tr Senthil Kumar

For Appellant: Shri Tushar Hemani, Sr. Advocate with Shri Parimalsinh B Parmar, ARFor Respondent: Shri Rignesh Das, Sr. DR

Section 14ASection 234ASection 270ASection 36(1)(iii)Section 36(1)(va)Section 40

that the quantification of disallowance is excessive and erroneous. It is argued that the appellant has made investment in the nature of long- term strategic investments in its own subsidiaries and joint ventures. The objective of the appellant behind investing in its own subsidiaries was not to earn dividend income ... subsidiaries/joint venture/ associates companies. The Appellant received dividend of Rs. 2,80,00,000/- on preference shares of Lonsen Kiri Chemical Industries Ltd. (from Strategic investment) on which exemption is claimed u/s. 10(34) of the Act and dividend of Rs. 60,000/- on shares of Kalupur Commercial

Shaha Finlease Private Limited, Mumbai vs. Dy Commissioner of Income Tax 13(2)(2), Mumbai

In the result, appeal of the assessee is allowed

ITA 4182/MUM/2023[2013-14]Status: DisposedITAT Mumbai17 Dec 2024AY 2013-14

Bench: SHRI AMIT SHUKLA (Judicial Member), MS PADMAVATHY S (Accountant Member)

Section 143(3)Section 56Section 56(1)(viib)Section 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

Biswanath Hosiery Mills Ltd., Kolkata vs. ACIT, Cir. 4(2), Kolkata

In the result, the appeal of the assessee is allowed

ITA 470/KOL/2024[2017-18]Status: DisposedITAT Kolkata25 Nov 2024AY 2017-18

Bench: Shri Anikesh Banerjee & Shri Rakesh Mishraassessment Year: 2017-18

For Appellant: Shri Aayush Kedia, ARFor Respondent: Shri Mahare Yogesh Prabhakar, DR

Section 10(34)Section 143(2)Section 143(3)Section 14ASection 250

appellant believed that disallowance under Section 14A A.Y. 2017-18 Biswanath Hosiery Mills Ltd read with Rule 8D should apply only to non-strategic investments held by the appellant company. Based on this view, the appellant made a disallowance of Rs. 5,350/- in its computation of total income ... details of calculation of disallowance made by the appellant is as follows:- Particulars Amount Amount Total Non-Strategic Investments 53,50,000 Kamala Tea Ltd 2,00,000 Bala Techna Synthetics Ltd 1,00,000 Sundaram Finance Ltd 30,000 Unispin India Ltd 2,00,000 West Bengal Hosiery

M/S. Cadila Pharmaceuticals Ltd., Ahmedabad vs. The Dy.Commissioner of Income Tax, Circle-1(1)(2), Ahmedabad

In the result, appeal of the Revenue is partly allowed for statistical purpose and the appeal of the assessee is partly allowed

ITA 383/AHD/2020[2012-13]Status: DisposedITAT Ahmedabad12 Nov 2024AY 2012-13

Bench: Ms. Suchitra Kamble & Shri Makarand Vasant Mahadeokarassessment Year: 2012-13

Section 115JSection 144Section 2Section 35Section 36(1)(iii)Section 36(1)(vii)Section 37Section 43BSection 80I

Agro Products Ltd. The Assessing Officer observed in assessment order that "it may be true that the nature of advances are strategic investments for the purpose of job work or any other purposes; nonetheless, it is also true that certain amount has remained outstanding during the year. In essence