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The Tax PublishersITA Nos. 3207, 2199, 1631, 3443/Del/2011, 2062, 1984/Del/2012, 2473, 5381/Del/2014
2020 TaxPub(DT) 4221 (Del-Trib) : (2020) 185 ITD 0742INCOME TAX ACT, 1961
Section 14A
Where assessee made investment in shares bearing tax free income out of sufficient own funds available with it, no disallowance of interest expenses was called for under section 14A. However, with respect to administative expenditure assessee itself disallowed Rs. 10 lakhs, therefore, disallowance was restricted to that extent.
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Disallowance under section 14A - Expenditure against exempt income - Invocation of rule 8D - Assessee having sufficient own funds
Assessee earned tax free dividend income on investment in shares and claimed suo moto disallowance under section 14A. AO invoked rule 8D(2) and disallowed interest and administrative expenses. Assessee pleaded to have sufficient own funds. Held: Assessee had own funds in the form of share capital and free reserve much more than the investments made, therefore, it could be safely presumed that investments were made out of non-interest bearing own funds and, therefore, no disallowance of interest expenses was called for under section 14A. However with respect to administative expenditure assessee itself disallowed Rs. 10 lakhs, therefore, disallownace was restricted to that extent.
Followed:CIT v. Reliance Utilities & Power Ltd. (2009) 313 ITR 340 (Bom-HC) : 2009 TaxPub(DT) 1275 (Bom-HC).
REFERRED :
FAVOUR : Partly in assessee's favour.
A.Y. : 2005-06
INCOME TAX ACT, 1961
Section 43B
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