The Tax Publishers2020 TaxPub(DT) 4426 (Kol-Trib)

INCOME TAX ACT, 18961

Section 14A Rule 8D(ii)

Since investments bearing tax-free income were made out of sufficient own funds available with assessee, therefore, no disallowance of interest expenses under rule 8D(2)(ii) was called for.

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 disallowance of interest expenses under section 14A. AO invoked rule 8D(2)(ii) and made disallowance. Assessee pleaded to have sufficient own funds.Held: Assessee-company at the relevant time had sufficient funds of its own and, therefore, it could be safely presumed that such non-interest bearing own funds were utilized by the assessee for making investments in the corresponding shares and, therefore, no disallowance of interest expenses under rule 8D(2)(ii) was called for.

Followed:CIT v. Rasult (IT No. 09/416 dated 15-2-2017).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :


INCOME TAX ACT, 1961

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

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