TaxTMI 
TaxTMI 
2014 (3) TMI 847
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of law for our consideration :- "(A) Whether the Hon'ble Tribunal erred in law and on facts in deleting the disallowance of interest expenses of Rs. 64,00,000/= under section 14A of the Act in respect of dividend income of Rs. 10,18,43,271/= which is exempt from tax in the hands of the assessee-company ? (B) Whether the Hon'ble Tribunal erred in law and on facts in not appreciating that the assessee had taken interest bearing loans and had not discharged its onus to establish that interest bearing funds were not utilized for the purpose of investment and as such, since the assessee failed to furnish any quantification in respect of loan taken and investment made, the disallowance ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... urged that making any disallowance of any expenditure for earning exempt income under section 14A on presumption without there being any nexus was unwarranted. 4. The Assessing Officer disallowed, however, a sum of Rs. 64 lakhs under section 14A on the ground that as per the provisions of section 14A of the Act, the expenditure in terms of investment which pertained to the exempt income from interest bearing funds were not allowable. 5. When the matter was carried second time to the CIT [A], it held that the dividend income earned out of the investment were made in the earlier years and the investment were made as long back as in the A.Y 1995-96. No disallowance was made on the interest expenditure made in past and the Assessing Officer ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e was no investment made in the year under consideration. With the availability of the huge interest free funds in the form of share capital, reserves, etc., the Assessing Officer had not correctly applied the provisions of law to the issue. Such findings are also supported by the decision rendered by this Court in case of CIT v. Gujarat State Fertilizers & Chemicals Ltd. [2013] 358 ITR 323 (Guj) where identical question of law had come up before this Court, wherein the issue has been answered in the following manner :- "3.8 The moot question here is as to whether the CIT (Appeals) and the Tribunal were right in setting aside the order of Assessing Officer, whereby it disallowed the sum of Rs.1,14,43,040/-, applyin....