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| The Tax Publishers2021 TaxPub(DT) 0812 (Hyd-Trib) INCOME TAX ACT, 1961
Section 14A Rule 8D(2)(ii)
Where investments bearing tax free income were made out of sufficient own funds available with assessee, no disallowance of interest expenditure under section 14A was called for.
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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 under section 14A. AO invoked rule 8D(2)(ii) and disallowed interest expenses. Assessee pleaded to have sufficient own funds. Held: As per assessee's balance-sheet interest free funds representing share capital and reserves and surplus were much more than, the investments bearing tax free income and necessary presumption that flow in such an instance was that of utilisation of non-interest bearing funds only in deriving exempt income. Therefore, no disallowance of interest expenditure under section 14A was called for.
Relied:CIT v. Reliance Utilities & Power Ltd., (2009) 313 ITR 340 (Bom) : 2009 TaxPub(DT) 1275 (Bom-HC) and CIT v. HDFC Bank Limited (2014) 366 ITR 505 (Bom) : 2014 TaxPub(DT) 3351 (Bom-HC)
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14
INCOME TAX ACT, 1961
Section 14A Rule 8D(2)(iii)
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