Mumbai ITAT rules against
taxpayer & reverses CIT(A), denies relief from Sec 14A in respect
of strategic investment made by assessee (a cooperative bank) in its
subsidiary company; Observes that the statute does not grant any
exemption to strategic investments which are capable of yielding exempt income
for arriving at Sec. 14A disallowance; Thus holds that any investment including
strategic investments in subsidiary company as well as in other securities
which are capable of yielding tax-free income (by way of dividend) shall be
included for the purpose of computing disallowance u/s 14A; Relies on Karnataka
HC ruling in United Breweries, Bombay HC rulings in Reliance Utilities and HDFC
Bank Ltd. and coordinate bench ruling in Uma Polymers Ltd. ; Separately holds
that assessee being a cooperative society is not subject to Sec. 40A(2)
disallowance in respect of payment towards software and data entry services to
its related enterprise, relies on Bombay HC ruling in Manjara Shetkari
Saharakari Karkhana Ltd. in this regard:ITAT
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