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| The Tax Publishers2020 TaxPub(DT) 0644 (Mum-Trib) INCOME TAX ACT, 1961
Section 14A Section 8D(2)(ii)
As interest-free funds available with assessee were sufficient to make advance to its sister concern, therefore, investment could be presumed to have been made out of interest-free funds available and not out of borrowed funds and, therefore, no disallowance of interest under rule 8D(2)(ii) was called for.
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Disallowance under section 14A - Expenditure against exempt income - Invocation of rule 8D(2)(ii) - Interest expenses--Assessee having suffcieint own funds
Assessee earned tax free dividend income but claimed no disallowance of interest expenses under section 14A. AO invoked rule 8D(2)(ii) and worked out disallowance. Assessee's case was that it was having sufficeint own funds.Held: As interest-free funds available with assessee were sufficient to make advance to its sister concern, therefore, investment could be presumed to be have been made out interest free funds available and not out of borrowed funds and therefore, no disallowance of interest under rule 8D(2)(ii) was called for.
REFERRED : M/s. Vardhman Polytex Ltd. v. DCIT dated 21-6-2019 and CIT v. HDFC Bank Ltd. (2014) 366 ITR 505 (Bom) : 2014 TaxPub(DT) 3351 (Bom-HC)
FAVOUR : In assessee's favour.
A.Y. : 2013-14
INCOME TAX ACT, 1951
Section 14A Rule 8D(2)(iii)
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