The Tax Publishers2020 TaxPub(DT) 1829 (Del-Trib) : (2020) 183 ITD 0111

INCOME TAX ACT, 1961

Section 14A Rule 8D(2)(ii)

Where assessee claimed to have made investments yielding tax free income out of non-interest bearing own funds, matter was remanded back to AO. If it was found that entire investment in assets yielding exempt income had been made out of interest free own funds, then no disallowance would be called for under rule 8D(2)(ii).

Disallowance under section 14A - Expenditure against exempt income - Invocation of rule 8D - Interest expenses--Assessee pleading to have 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.Held: If there were sufficient interest-free funds available, it could be presumed that investment had been made out of from such funds. Accordingly, matter was remanded if AO finds that entire investment in assets yielding exempt income had been made out of interest free own funds, then no disallowance would be called for under rule 8D(2)(ii).

REFERRED : CIT v. Reliance Utilities and Power Ltd. (2009) 313 ITR 340 (SC) : 2009 TaxPub(DT) 1275 (Bom-HC).

FAVOUR : Matter remanded.

A.Y. : 2012-13

INCOME TAX ACT, 1961

Section 37(1)

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