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| The Tax Publishers2020 TaxPub(DT) 2905 (Del-Trib) INCOME TAX ACT, 1961
Section 14A Rule 8D(2)(ii)
Where interest free funds were more than enough to cover the investments yielding tax free income no disallowance of interest under rule 8D(2)(ii) was called for.
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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 investment in shares but claimed no suo moto disallownace of interest expenses under section 14A. AO invoked rule 8D(2)(ii) and worked out disallowance. Assessee contended that investments were made out of sufficient own funds available with assessee. Held: As evident from balance-sheet of assessee, share holder's funds at the beginning as well as at the end of the year was much more than the investment made by assessee and, therefore, it could be safely presumed that investments were made out of non-interest bearing own funds available with assessee and, therefore, no disallowance of interest under rule 8D(2)(iii) was called for.
Followed:HDFC Bank Limited reported in (2014) 366 ITR 505 (Bom) : 2014 TaxPub(DT) 3351 (Bom-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14
INCOME TAX ACT, 1961
Section 14A(2)
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