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| The Tax Publishers2020 TaxPub(DT) 1653 (Chen-Trib) INCOME TAX ACT, 1961
Section 14A, Rule 8D(2)(ii)
Since investments in securities capable of yielding exempt income were made out of sufficient own funds available with assessee, no disallowance of interest expenses under section 14A read with rule 8D(2)(ii) was called for.
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Disallowance under section 14A - Expenditure against exempt income - Interest expenses - Assessee having sufficient own funds
Assessee earned tax free dividend income on investments in shares but claimed no suo moto disallowance of interest expenses under section 14A. AO invoked rule 8D(2)(ii) and worked out disallowance. Held: Assessee demonstrated with cogent evidences that assessee had its own interest free funds which were higher than investments and presumption would apply that assessee had invested its own interest free funds for making investments in securities capable of yielding exempt income, accordingly, no disallowance of interest expenses under section 14A read with rule 8D(2)(ii) was called for.
REFERRED : CIT v. Reliance Industries Ltd. (2019) 102 taxmann.com 52(SC), CIT v. Reliance Utilities & Power Ltd. (2009) 313 ITR 340 (Bom), ACIT v. Apollo Hospitals Enterprises Ltd. (2012) 139 ITD 594 (Chen), CIT v. Bharti Televenture Ltd. (2011) 331 ITR 502 (Del.)
FAVOUR : in assessee's favour
A.Y. :
INCOME TAX ACT, 1961
Section 14A, Rule 8D(2)(iii)
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