2015 (1) TMI 1224

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.... of Multi Commodity Exchange. During the year under consideration income from operations were shown at Rs. 3,25,65,994/- on which net profit is computed at Rs. 39,01,789/-. During the course of the assessment proceedings, the Assessing Officer noticed that the assessee has shown dividend income of Rs. 11,565/-. The assessee was asked to explain why disallowance u/s. 14A r.w.Rule 8D should not be made. The assessee filed a detailed reply claiming that it has not incurred any expenditure on earning the said dividend income, further, it has not invested any borrowed funds. 3.1. The submissions of the assessee did not find any favour with the AO who proceeded by applying Rule 8D and computed the disallowance u/s. 14A at Rs. 1,42,894/-. While....

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....g own funds at Rs. 1.16 crores and the investment is only Rs. 30.44 lakhs. Thus it can be safely concluded that the investments have come out of own funds. Even the Hon'ble Jurisdictional High Court of Bombay has held in the case of Reliance Utilities and Power Ltd. 313 ITR 340 that where both own funds and loan funds are utilized by the assessee, the presumption is that the investments have come from the own funds. However, at the same time, we cannot deny that no expenditures have been incurred for earning the dividend income. Considering the facts of the case in totality and in the interest of justice and fair play, we direct the AO to restrict the disallowance to Rs. 11,565/- being the amount of dividend received during the year and del....