ITAT: Investment vs. stock-in-trade distinction irrelevant for Sec 14A application; Disallows expenditure on strategic investments

Chennai ITAT upholds Sec 14A disallowance for AYs 2011-12 & 2012-13 in respect of strategic investments made by assessee-company in subsidiary / associate companies for business purposes;  ITAT clarifies that the holding of asset/property under reference either as an investment or as stock-in-trade becomes inconsequential or irrelevant for Sec 14A application,  what is relevant is not the object for which the investment was made, but the nature of income – tax-exempt or otherwise, that arises from the investment;  Remarks that “Now, it stands to reason that if ‘investments’ forming part of the assessee’s stock-in-trade does not preclude application of sec. 14A, investments made for business, i.e., assuming so, would surely not.”; Further rejects assessee’s stand that no expenditure was incurred for making strategic investments, remarks that “the very fact that the assessee claims it as having business implications, makes such a review imperative, entailing cost.”, upholds disallowance of indirect expenditure as per Rule 8D(iii) ; Relies on Special Bench ruling in Daga Capital Management P. Ltd., Mumbai ITAT ruling in DH Securities (P.) Ltd., Bombay HC ruling Godrej & Boyce Mfg. Co. Ltd. and Calcutta HC ruling in Dhanuka & Sons, differs from co-ordinate bench ruling in EIH Associated Hotels Ltd.  in as much as the same was without reference to the language of the provision and the aforesaid decisions:ITAT