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| The Tax Publishers2020 TaxPub(DT) 2250 (Coch-Trib) INCOME TAX ACT, 1961
Section 14A
Though assessee pleaded that assessee had suficient interest free own funds available to make investments yielding tax free income, however, assessee had not established in the cash flow statements about availability of enough own funds at the time of making investments in exempted income yielding assets. Accordingly, assessee was directed to produce cash flow statements which had to be examined by AO before making disallowance under section 14A read with rule 8D(2)(ii).
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Disallowance under section 14A - Expenditure agianst exempt income - Interest expense under rule 8D(2)(ii) - Assessee pelading to have suficient own funds
Assessee earned tax free dividend income on investments in shares but claimed no disallowance of interest expenses under section 14A. AO invoked rule 8D(2)(ii) and worked out disallowance. Assessee contended that assessee had suficient interest free own funds available to make investments.Held: Though assessee pleaded that assessee had suficient interest free own funds available to make investments yielding tax free income, however, assessee had not established in the cash flow statements about availability of enough own funds at the time of making investments in exempted income yielding assets. Accordingly, assessee was directed to produce cash flow statements showing availability of enough own funds for making such investments with supporting documents which had to be examined by AO before making disallowance under section 14A read with rule 8D.
REFERRED :
FAVOUR : Matter remanded.
A.Y. : 2010-11 to 2012-13
IN THE ITAT, COCHIN BENCH
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