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| The Tax Publishers2020 TaxPub(DT) 1624 (Bom-HC) : (2020) 423 ITR 0220 : (2020) 273 TAXMAN 0167 INCOME TAX ACT, 1961
Section 14A
Where interest-free funds available with assessee-company were far in excess of advance given by it, the disallowance made under section 14A was liable to be deleted.
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Disallowance under section 14A - Expenditure against exempt income - Assessee having sufficient interest free funds -
AO made disallowance under section 14A. However, CIT (A) deleted the said disallowance by observing that interest-free funds available with assessee-company were far in excess of advance given by it. Held: If there are funds available with the assessee, both, interest-free and overdraft and/or loans taken then a presumption would arise that investments would be out of the interest-free funds generated or available with the assessee if the interest-free funds were sufficient to meet the investments. In instant case, interest-free funds available with assessee-company were far in excess of advance given by it. Accordingly, the disallowance made under section 14A was rightly deleted.
REFERRED : CIT v. Reliance Utilities & Power Ltd. 313 ITR 340 (Bom)
FAVOUR : In assessee's favour
A.Y. :
INCOME TAX ACT, 1961
Section 36(1)(iii)
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