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| The Tax Publishers2019 TaxPub(DT) 6623 (Mum-Trib) INCOME TAX ACT, 1961
Section 14A
In case interest free funds available with the assessee are more than the investments in the securities yielding exempt income then the presumption has to be drawn that investments are made out from interest-free funds and not out of interest bearing funds.
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Disallowance under section 14A - Expenditure against exempt income - Sufficiency of owned funds -
Assessee challenged the disallowance made under section 14A contending that free reserves along with share capital far exceeded the borrowed capital and section 14A was wrongly invoked. Held: In case interest free funds available with the assessee are more than the investments in the securities yielding exempt income then the presumption has to be drawn that investments are made out from interest free funds and not out of interest bearing funds. Similarly, on the issue of disallowance under rule 8D(2)(iii), the disallowance cannot exceed the expenses incurred by assessee.
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
INCOME TAX ACT, 1961
Section 36(1)(iii)
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