, , आयकर अपीलीय अिधकरण इंदौर (cid:586)ायपीठ इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER AND SHRI PARESH M. JOSHI, JUDICIAL MEMBER ITA No.58/Ind/2024 Assessment Year:2017-18 DXC Technology India Pvt. DCIT, Circle 1(1)

Ltd. Indore

4^th Floor, Brilliant Titanium, /

बनाम Plot No.9, Scheme no.78, Vs.

Part-II, Vijay Nagar, Indore (Assessee/Appellant) (Revenue/Respondent)

PAN: AAGCC3373B Assessee by Shri Satyen Sethi, AR Revenue by Shri Ram Kumar Yadav, CIT-DR Date of Hearing 24.03.2025 Date of Pronouncement 08.05.2025 आदेश / O R D E R Per B.M. Biyani, A.M.:

Feeling aggrieved by order of first appeal dated 30.11.2023 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 30.12.2019 passed by learned DCIT/ACIT-2(1), Indore [“AO”] u/s 143(3) of Income-tax Act, 1961 for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on following grounds:

“1. That on the facts and circumstances of the case and in law, the Commissioner of Income tax (Appeals)-National Faceless Appeal Centre, Delhi("the CIT(A)-NFAC") has erred in upholding the disallowance ofRs. 7,27,84,216/- under section 14A of the Income tax Act, 1961 ("the Act")

r/w Rule 8D ofIncome taxRules, 1962 ('the Rules').

2. That on the facts & circumstances of the case and in law, the CIT(A)-NFAC has erred in holding that the satisfaction required to be recorded by the Assessing Officer under section 14A(2) of the Act was properly recorded. Mere reference to the amountofinvestmentin shares & mutual funds yielding dividend, Circular No. 5/2014 dated 11.2.2014 and Notification 43/2016 dated 2.6.2016 is no satisfaction particularly because expenditure suo-moto disallowed was neither adjudicated noradversely commented upon.

2.1 That on the facts & circumstances of the case and in law, the CIT(A)-NFAC has failed to appreciate thatthe Assessing Officerinvoked Rule 8D even before recording requisite satisfaction based on examination of accounts as to the correctness of claim of suo-moto disallowance.

3. That on the facts & circumstances of the case and in law, the CIT(A)-NFAC in upholding disallowance of Rs. 7,27,84,216/- u/s 14A r/w Rule 8D did notappreciate that:

(a) Since the Appellant out of 'employee benefit expense' had disallowed salary of the employees of treasury branch, therefore, proportionate disallowance outofsame expense head as expenditure indirectly attributable to earning of exempt income was not called for, more-so because mutual funds investment was in growth funds, where the dividend is automatically reinvested without any effort of the investor (the Appellant).

(b) Out of 'other expenses' of Rs. 587.38 Cr., expenditure of Rs.

496.54 Cr. was incurred on (i) rent(ii) repairs &maintenance (iii) travelling & conveyance (iv) technical services (v) corporate charges (vi) printing & stationery (vii) provisions for doubtful trade and receivable and (vii) foreign currency loss, which per-

se are notrelated to earning ofdividend income.

(c) Allthe investments were made outofown funds. No investment was made outof borrowed funds, as is evident from Note 13 to the Balance Sheet under the head other financial liabilities, Further, during the relevantprevious year, the finance costwas only Rs.0.33 Cr(Note 21 to the Balance sheet).

4. That on the facts & circumstances of the case and in law, the CIT(A)-NFAC has erred in not appreciating that the Assessing officer exceptfor mechanically applying Rule 8D, has failed to establish nexus between the expenditure and dividend income.”

2. The background facts leading to present appeal are such that the assessee is a company engaged in the business of software development. For AY 2017-18, the assessee filed its original return followed by a revised return declaring a total income of Rs. 2,62,66,59,110/-. The case was selected for scrutiny and the notices u/s 143(2)/142(1) were issued which were complied by assessee. Du