The Tax Publishers2020 TaxPub(DT) 0037 (Mum-Trib)

INCOME TAX ACT, 1961

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

As evident from assessee's balance-sheet assessee's own interest free funds in the shape of share capital and reserve and surplus were much more than investment yielding tax free income, therefore, no disallowance of interest expenses under rule 8D(2)(ii) was called for.

Disallowance under section 14A - Expenditure against exempt income - Invocation of rule 8D(2)(ii) - Interest expenses--Assessee having sufficient own funds

Assessee earned tax free dividend income. AO invoked rule 8D(2)(ii) and disallowed interest expenses. Assessee's case was that it was having sufficient own funds.Held: As evident from assessee's balance-sheet assessee's own interest free funds in the shape of share capital and reserve and surplus were much more than investment yielding tax free income, therefore, no disallowance of interest expenses under rule 8D(2)(ii) was called for.

Followed:CIT v. HDFC Bank Ltd. (2014) 366 ITR 505 (Bom) : 2014 TaxPub(DT) 3351 (Bom-HC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-08 & 2008-09


INCOME TAX ACT, 1961

Section 234B Section 140A

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