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| The Tax Publishers2020 TaxPub(DT) 3584 (Pune-Trib) INCOME TAX ACT, 1961
Section 14A Rule 8D(2)(ii)
Where assessee made investments out of non-interest bearing own funds, no disallowance of interest under section 14A read with rule 8D(2)(ii) towards earning of tax-free income from such investments 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 investments in shares but claimed no suo moto disallowance under section 14A. AO invoked rule 8D(2)(ii) and worked out disallowance of interest expenses. Assessee pleaded to have sufficient own funds. Held: Assessee had interest free funds of its own which were more than investment capable of earning exempt income and, therefore, it could be safely presumed that investments were made from interest-free funds available with assessee and, therefore, no disallowance of interest expenses was called for.
Followed:CIT v. Reliance Utilities & Power Ltd. (2009) 313 ITR 340 (Bom.) and HDFC Bank Ltd. v. Dy.CIT (2014) 366 ITR 505 (Bom) : 2014 TaxPub(DT) 3351 (Bom-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
INCOME TAX ACT, 1961
Section 14A Rule 8D(2)(iii)
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