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| The Tax Publishers2022 TaxPub(DT) 1019 (Mum-Trib) INCOME TAX ACT, 1961
Section 14A Rule 8D(2)(ii)
As per assessee's balance-sheet, interest free fund available with the assessee was much more than the investment made. In case of common pool of funds, it was to be presumed that interest free funds had been utilized for making the investments. Hence, no disallowance under rule 8D(2)(ii) could be made.
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Disallwance 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 but claimed no disallowance under section 14A. AO invoked rule 8D(2)(ii) and disallowed interest expenses. Assessee pleaded to have sufficient own funds. AO's case was that assessee failed to establish nexus between the available interest-free fund and the investments made. Held: As per assessee's balance-sheet, interest-free fund available with the assessee was much more than the investment made. In case of common pool of funds, it was to be presumed that interest free funds had been utilized for making the investments. Hence, no disallowance under rule 8D(2)(ii) could be made.
Relied:CIT v. Reliance Utilities & Power Ltd. (2009) 313 ITR 340 (Bom) : 2009 TaxPub(DT) 1275 (Bom-HC) and CIT v. HDFC Bank Ltd. (2014) 366 ITR 505 (Bom) : 2014 TaxPub(DT) 3351 (Bom-HC) and South Indian Bank Ltd. v. CIT [Civil Appeal No. 9606 of 2011 Judgment, dated 9-9-2021] : 2021 TaxPub(DT) 5150 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2008-09
INCOME TAX ACT, 1961
Section 14A Rule 8D(2)(iii)
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