2014 (9) TMI 207

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....e appellant has raised the following substantial questions of law: (i) Whether in facts and circumstances of the present case, the learned authorities have erred in invoking the provisions of Section 14A read with Rule 8D without any finding that any expenditure has been incurred for earning exempt income is legally unsustainable the eyes of law? (ii) Whether in facts and circumstances of the case, the learned authorities below erred in law in making the provisions of Section 14A read with Rule 8D applicable to the assessee in a mechanical manner without controverting the fact finding in favour of the assessee? (iii) Whether the learned authorities below erred in ignoring the disallowance made by the assessee himself in respect of ....

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....nterest payment of Rs. 2,91,79,406/- includes interest on Term Loan amounting to Rs. 83,20,558/-. The Commissioner also returned a finding that income earned on interest is much more than the payment of interest. Thus, the Commissioner of Income Tax (Appeals) set aside the disallowance made by the Assessing Officer in terms of Section 14 A of the Act and Rule 8D of the Income Tax Rules. In subsequent appeal, the Income Tax Appellate Tribunal recorded the following findings: "21. On the perusal of the provisions of Rule 8D of the Income Tax Rules, we find that the expenditure relatable to the earning of exempt income is equal to aggregate of the amount of expenditure directly relatable to the income which does not form part of the tota....

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....ly allowed and ground raised by the assessee in cross-objection is allowed." Still aggrieved, the appellant is before this Court by raising the abovementioned substantial questions of law. Learned counsel for the appellant refers to Bombay High Court judgment reported as Commissioner of Income Tax Vs. Reliance Utilities and Power Ltd. (2009) 313 ITR 340 as well as a Division Bench judgment of this Court in Commissioner of Income Tax Vs. Hero cycles Ltd. (2010) 323 ITR 518, to contend that in view of the balance-sheet produced by the assessee, it shall be presumed that the funds available with the assessee were sufficient to meet the investments out of its own funds and that borrowed funds were not utilized for investment. Therefore, i....