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| The Tax Publishers2019 TaxPub(DT) 7190 (Mum-Trib) INCOME TAX ACT, 1961
Section 14A Rule 8D
Since assessee had sufficient own funds as against investment made by it and therefore, unless it was shown that the investments were made out of borrowed funds and the nexus between the two was brought on record, a presumption was to be drawn in assessee's favour that own funds were used to make the investments. However, no such exercise emanated from assessment order and thus, the matter of disallowance under section 14A was remanded to AO for de novo adjudication.
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Disallowance under section 14A - Expenditure against exempt income - Assessee having sufficient own funds as against investment made by it -
AO transpired that assessee earned exempt income during year under consideration but did not offer any disallowance under section 14A. Accordingly, he show-caused assessee as to why the disallowance under section 14A read with rule 8D was not to be made considering the investments so made. However, as assessee failed to submit any details, the AO applying rule 8D, made disallowance under section 14A. Held: It was found that assessee had sufficient own funds in the shape of Share Capital & Reserves as against investment made by it and therefore, unless it was shown that the investments were made out of borrowed funds and the nexus between the two was brought on record, a presumption was to be drawn in assessee's favour that own funds were used to make the investments. However, no such exercise emanated from assessment order. Thus, the matter of disallowance under section 14A was not properly addressed by Revenue and hence, the same was remanded to AO for de novo adjudication.
REFERRED :
FAVOUR : In assessee's favour by way of remand
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 14
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