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| The Tax Publishers2020 TaxPub(DT) 1923 (Mum-Trib) INCOME TAX ACT, 1961
Section 14A
Unless nexus of borrowed funds vis-Ã -vis investments made by assessee was established by AO, a presumption was to be drawn in assessee's favour that the investments were out of own funds. Therefore, interest disallowance under rule 8D(2)(ii) was not warranted.
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Disallowance under section 14A - Expenditure incurred for earning exempt income - Assessee's own funds exceeded investments held by assessee -
Unless nexus of borrowed funds vis-Ã -vis investments made by assessee was established by AO, a presumption was to be drawn in assessee's favour that the investments were out of own funds. Therefore, interest disallowance under rule 8D(2)(ii) was not warranted. Held: Perusal of assessee's financial statements implied that assessee's own funds far exceeded the investments held by assessee. Unless nexus of borrowed funds vis-Ã -vis investments made by assessee was established by AO, a presumption was to be drawn in assessee's favour that the investments were out of own funds. Therefore, interest disallowance under rule 8D(2)(ii) was not warranted.
Followed:ACIT v. Vireet Investment (P.) Ltd. (2017) 82 Taxmann.com 415 (Del) : 2017 TaxPub(DT) 1760 (Del-Trib)
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2013-14, 2014-15
INCOME TAX ACT, 1961
Section 14A
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