TaxTMI 
TaxTMI 
2013 (10) TMI 1076
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....s of precipitated Silica. It electronically filed its return of income for AY 2007-08 on 21.10.2007 declaring total income of Rs 5,42,79,162/-. The case was selected for scrutiny and thereafter the assessment was framed u/s 143(3) vide order dated 15.12.2009 and the total income was determined at 5,56,19,260/-. Aggrieved by the order of AO, Assessee carried the matter before CIT(A). CIT(A) vide order dated 27.4.2010 granted partial relief to the assessee. Aggrieved by the aforesaid order of CIT(A), the Assessee is now in appeal before us and has raised the following effective ground. 1. The Ld. CIT(A) has grossly erred in law and on facts in confirming the action of ld. Assessing Officer by invoking provisions of Section 14A of the Act a....
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....ation of the assessee. He accordingly calculated the disallowance by following the formula prescribed under Rule 8D and worked out the disallowance of interest at Rs 6,78,250/- and other expenses at Rs 85,846/- and thus made aggregate disallowance of Rs 7,64,096/-.Aggrieved by the order of AO, Assessee carried the matter before CIT(A). CIT(A) dismissed the ground of Assessee by holding as under: 2.2 I have carefully considered the facts of the case, and the law on the point and I find that the issue under consideration is directly covered against the appellant by my order in the case of associate concern of the appellant in the case of Aquagel Chemicals Pvt. Ltd. for A.Y. 2006-07 passed in Appeal No. CIT(A)-XX/133/08-09 dated 18/03/2009 ....
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.... an undisputed fact that Assessee has earned tax free income from dividend amounting to Rs 44,68,289/-and has not disallowed any expenditure u/s 14A while computing the taxable income. From the audited Balance Sheet as on 31st March 2007 which is placed on record, it is seen that the investments at the year end have reduced from Rs 3.24 crore ( as on 31.3.2006) to Rs 18.81 lacs (as on 31.3.2007) meaning thereby that no new investments have been made as at the end of the year. As per the audited Balance Sheet of the company as on 31.3.2007, the owned funds of the assessee in the form of Capital and Reserves are to the tune of Rs 23.61 crores as against the investments of Rs 18.81 lacs meaning thereby that the owned funds are far in excess of....
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.... the AO to show the nexus between the interest bearing borrowed funds and investment whose income is exempt. 19 Further, provisions of sub-sections (2) & (3) of section 14A of the Act and Rule 8D are applicable w.e.f. Assst. Year 2007-08 as held by Hon. Bombay High Court in the case of Godrej Boyce MFG. Co. Ltd. (2010) 328 ITR 81 (Bom). The disallowance u/s 14A for the year under consideration can be made on reasonable basis after following the authorities on the subject. Even otherwise Hon'ble Bombay High Court in CIT vs. Reliance Utilities and Power Ltd (2009) 313 ITR 340 (Bom.) held that if there are funds available, both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of th....