The Tax Publishers2020 TaxPub(DT) 5504 (Mum-Trib)

INCOME TAX ACT, 1961

Section 14A

Where assessee had its own interest free funds by way of share capital reserves and surplus, far in excess of the investments made by it in equity shares which got yielded exempt income, therefore, disallowance under section 14A could not be sustained.

Disallowance under section 14A - Total investments for rule 8D - Disallowance of interest - Assessee having interest free funds

Assessee-company had earned exempt dividend income during the relevant year. AO made disallowance under section 14A by invoking rule 8D of Income Tax Rules, 1962. CIT(A) deleted the disallowance made under Rule 8D(2)(ii) in respect of interest. Held: CIT(A) following the decision of CIT v. Reliance Utilities and Power Ltd.[(2009) 313 ITR 340 (Bom) : 2009 TaxPub(DT) 1275 (Bom-HC)] and CIT v. HDFC Bank [(2014) 49 Taxmann.com 335 (Bom) : 2014 TaxPub(DT) 3351 (Bom-HC)] deleted the disallowance as the assessee had its own interest free funds by way of share capital reserves and surplus, far in excess of the investments made by it in equity shares which got yielded exempt income. Therefore, disallowance made by AO could not be sustained.

Followed:CIT v. HDFC Bank Ltd. (2014) 49 Taxmann.com 335 (Bom) : 2014 TaxPub(DT) 3351 (Bom-HC) and CIT v. Reliance Utilities & Power Ltd. (2009) 313 ITR 340 (Bom) : 2009 TaxPub(DT) 1275 (Bom-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13


INCOME TAX ACT, 1961

Section 14A

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