The Tax Publishers2020 TaxPub(DT) 2868 (Kol-Trib)

INCOME TAX ACT, 1961

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

As investments bearing tax free dividend income were made out sufficient non-interest bearing own funds available with assessee, therefore, no disallowance was called for under section 14A read with rule 8D(2)(ii).

Disallowance under section 14A - Expenditure against exempt income - Interest expenses under rule 8D(2)(ii) - Assessee having sufficient own funds

Assessee earned tax free dividend income on investments in shares but claimed no suo moto disallowance under section 14A. AO invoked rule 8D(2)(ii) and worked out disallowance. Assessee pleaded to have sufficient own funds. Held: As evident, own interest free funds of assessee company was Rs. 43,663 lakhs, that was far in excess of investments of Rs. 17,923 lakhs held by the company, therefore, it could be safely presumed that no interest bearing funds had been diverted for making of investments and, therefore, no disallowance was called for under section 14A read with rule 8D(2)(ii).

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

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

INCOME TAX ACT, 1961

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

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