The Tax Publishers2016 TaxPub(DT) 2706 (Mum-Trib)

 

S.N. Bhobe and Associates Pvt. Ltd. v. ACIT

 

INCOME TAX ACT, 1961

--Disallowance under section 14A--Expenditure against exempt incomeInterest-free funds more than borrowed funds for making investments ----Where interest free funds were more than the amount of investments in tax free securities, it would have to be presumed that investments were made out of interest free funds available with assessee. Hence, disallowance could not be made out of interest expenditure. --Assessee had interest free funds which was more than the amount of investment in the tax free securities. AO disallowed the interest expenditure. Held: Following judgement of DCIT v. HDFC Bank Ltd. 366 ITR 505, it would have to be presumed that investment was made out of interest free funds available with the assessee so there was no requirement of making any disallowance out of interest expenditure.

Income Tax Act, 1961, Section 14A

Followed:CIT v. Reliance Utilities & Powers Ltd. (2009) 313 ITR 340 (Bom) and DCIT v. HDFC Bank Ltd. 366 ITR 505

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2008-09 & 2009-10



IN THE ITAT, MUMBAI BENCH

B.R. BASKARAN, A.M. & AMARJIT SINGH, J.M.

S.N. Bhobe and Associates (P) Ltd. v. ACIT

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