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| The Tax Publishers2019 TaxPub(DT) 8274 (Bang-Trib) INCOME TAX ACT, 1961
Section 14A
Since investments yielding tax free income were made out of non-interest bearing own funds available with assessee, therefore, no disallowance of interest expenditure was called for under section 14A read with rule 8D(2)(ii).
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Disallowance under section 14A - Expenditure against exempt income - Interest expenses - Assessee having sufficient own funds
Assessee earned tax free dividend income but claimed no disallowance of interest expenditure under section 14A. AO invoked rule 8D(2)(ii) and worked under section 14A. AO invoked rule 8D(2)(ii) and worked out disallowance.Held: Assessee had sufficient non-interest bearing own funds available with it so as to cover the investments made, accordingly, it could be safely presumed that no interest bearing funds had been diverted towards making a investments and, therefore, no disallowance of interest expenditure was called for.
Followed:CIT v. Microlabs Ltd. (2016) 383 ITR 490 (Karn) : 2016 TaxPub(DT) 2372 (Karn-HC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2010-11
INCOME TAX ACT, 1961
Section 37(1)
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