ACIT Vs Af-taab Investment Company Limited (ITAT Mumbai)
The revenue is aggrieved by the decision of learned CIT(A) directing exclusion of diminution in the value of investments for the purposes of computation of disallowance u/s 14A.We have observed that the AO has also included diminution in the value of investments for the purpose of computing disallowance u/s.14A, which loss has arisen because of the restructuring / amalgamation owing to loss written off of in the investment in subsidiary namely Vantech Investments Limited, which stood merged with the assessee. In our considered view , said losses being diminution in the value of investment being written off cannot be considered as an expenditure incurred for earning of exempt income for the purposes of disallowance under Section 14A as the mandate is to disallow expenditure incurred in relation to earning of an exempt income and it cannot be stretched to include losses arising due to diminution in the value of the investments due to merger/amalgamation, that certainly is not the mandate of Section 14A. We affirm the order of learned CIT(A) on this ground and dismiss the appeal of the Revenue.
Further Points
Strategic investments/stock in trade are to be excluded for computing disallowance under 14A
