The Tax Publishers2020 TaxPub(DT) 4270 (Mum-Trib)

INCOME TAX ACT, 1961

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

Where investments yielding tax-free income, were made out of interest-free fund generated or available with assessee, no disallowance of interest expenses under section 14A read with rule 8D(2)(ii) was called for.

Disallowance under section 14A - Expenditure against exempt income - Interest expenses under rule 8D(2)(ii) -

Assessee earned tax free dividend income on investments in shares 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: Undisputedly assessee's capital, profit reserves, surplus and current account deposits were higher than investment in the tax-free securities and, therefore, it could be safely presumed that investments were made out of interest-free fund generated or available with the company and, therefore, no disallowance of interest expenses under section 14A was called for.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14

Income Tax Act, 1961

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

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT