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The Tax PublishersITA No. 2149/Kol/2019 and C.O. No. 22/Kol/2020 (in ITA No. 2149/Kol/2019)
2020 TaxPub(DT) 5064 (Kol-Trib) : (2021) 187 ITD 0035INCOME TAX ACT, 1961
Section 14A Rule 8D(2)(ii)
As investment in tax-free securities were made out of sufficient interest-free funds available with assessee, therefore, interest disallowance under section 14A read with rule 8D(2)(ii) was not called for.
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Disallowance under section 14A - Expenditure against exempt income - Interest expenses under rule 8D(2)(ii) - Assessee having sufficient own funds
Assessee earned tax free dividend income on investments in shares. AO invoked section 14A read with rule 8D(1)(ii) and disallowed interest expenses. Assessee pleaded to have sufficient own funds. Held: The interest-free funds of its own available with the assessee in the form of share capital and free reserves were substantially more than the corresponding investments made to earn interest free income and, therefore presumption could be drawn that investment in tax-free securities were made out of sufficient interest-free funds available with assessee and, therefore, interest disallowance under section 14A read with rule 8D(2)(ii) was not called for.
Relied:Reliance Utilities & Power Limited 313 ITR 340 : 2009 TaxPub(DT) 1275 (Bom-HC) and CIT v. HDFC Bank Limited 383 ITR 529 (Bom-HC) : 2016 TaxPub(DT) 1316 (Bom-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15
INCOME TAX ACT, 1961
Section 14A Rule 8D(2)(iii)
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