2019 (4) TMI 1501

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....irst issue in this appeal of the revenue is against the order of the CIT(A) deleting the disallowance of expenses relatable to exempt income by invoking the provisions of sect ion 14A read with Rule 8D( i i) of the Rules. For this, the revenue has raised the following two grounds: "1. Whether on facts and in the circumstances of the case and in law, id. CIT(A)/has erred in deleting addition made on account of disallowance u/s 14A r.w. Rule 8D(ii) of the Act without appreciating the fact that from AY 2008-09 disallowance has to be mandatorily be calculated as per Rule 8D?" 3. '"Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition made on account of disallowance u/s 14A ....

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....gives rise to exempt income are to the tune of Rs. 17,73,16,229/-. The assessee before the CIT(A) and before us now claimed that the assessee's own funds are more than total investment, which gives rise to exempt income and in that case it is presumed that the assessee had used own funds for investment which earned exempt income. Hence, no disallowance can be made under Rule 8D(ii) on account of interest. Ld Counsel for the assessee drew our attention to the balance sheet of the assessee, wherein, share capital reserve to the tune of Rs. 40,84 cores is available and total investment is Rs. 17.73 crores, which is invested to earn exempt income. There are mixed funds and the Assessing Officer has not proved any nexus with the earning of exemp....