The Tax Publishers2021 TaxPub(DT) 0948 (Mum-Trib)

INCOME TAX ACT, 1961

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

Since investments bearing tax-free income were made out of sufficient non-interest bearing own funds available with assessee, therefore, no disallowance was warranted under 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. AO invoked rule 8D(2)(ii) and worked out disallowance of interest expenses. Assessee claimed to have made investments out of sufficient own funds. Held: Assessee's capital, profit reserves, surplus and current account deposits were higher than the investment in tax-free securities, and, therefore, it was to be presumed that investment made by assessee out of the interest-free funds available with it and, therefore, no disallowance was warranted under rule 8D(2)(ii).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11


INCOME TAX ACT, 1961

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

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