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| The Tax Publishers2021 TaxPub(DT) 3641 (Mum-Trib) INCOME TAX ACT, 1961
Section 14A Rule 8D(2)(i)
Where assessee had significant interest-free funds to make investments in the exempt income yielding securities, no part of interest expenditure could have been disallowed under section 14A read with rule 8D(2)(ii).
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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. AO invoked section 14A read with rule 8D(2)(ii) and disallowed interest expenses. Assessee pleaded to have sufficient own funds. Held: Interest-free funds available with assessee were more than investments made in securities which have yielded exempt income, therefore, it had to be presumed that such investments were made out of the interest free funds, and hence, there was no justification on his part in sustaining any part of the disallowance relatable to the interest expenditure under section 14A read with rule 8D(2)(ii).
Followed: CIT v. HDFC Bank Ltd. (2014) 366 ITR 505 (Bom-HC) : 2014 TaxPub(DT) 3351 (Bom-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2014-15.
INCOME TAX ACT, 1961
Section 254(1)
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