TaxTMI 
TaxTMI 
2017 (1) TMI 1707
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....dition by the AO was not based on any definite finding of incurring of expenditure as required under section 14A of the Income Tax Act, 1961. In the second ground, the grievance of the appellant is against the ld. CIT (A) not appreciating the fact that the assessee's own funds were far more than the investments in tax free securities. 3. Brief facts of the case are that the assessee filed his return of income on 26.9.2011 declaring total income of Rs. 90,10,300/- which was processed under section 143(1) of the Act. Thereafter the case of the assessee was selected for scrutiny and the notices under section 143(2) and 142(1) were issued and served upon the assessee. During the course of assessment proceedings, the AO noticed that the a....
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....idered the facts of the case and appellant's submissions. The appellant's capital and reserves in this case i.e. own funds Rs. 8,59,97,514/- and investments in tax free securities of Rs. 65,00,843/-. As appellant's own funds are higher than investments, no interest can be disallowed in view of the decision of the Hon'ble Bombay High Court in the case of HDFC Bank Ltd. (ITA No. 330 of 2012 dated 23.7.2014 and CIT v. Reliance Utilities 313 ITR 340/-. However, AO is directed to compute 0.5% of the average investments excluding fixed deposits from the average investments as fixed deposits income is taxable which is not acceptable. So ground of appeal is partly allowed" 5. Now, the ld. counsel of the assessee vehemently submit....
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....me then presumption would be that the investments would be out of the interest-free funds generated or available with the assessee. If the interest-free funds were sufficient to meet the investments, then Rule 8D is not to be applied. Similar is the ratio decendi in the case of Hon'ble Punjab and Haryana High Court in the case of Max India Ltd. (supra) and therefore prayed that the ground raised by the assessee be dismissed by upholding the order of ld. CIT (A). 7. We have carefully considered the rival submissions and perused the material placed before us. We find that the ld. CIT (A) has already given finding that since own funds of the assessee is more than the investments in shares and securities and therefore no interest can be ....
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....hich were pledged with the bank as security as the assessee was having FDRs in his HUF. This was done in order to save the interest on overdraft facilities as there was a difference in the rate of interest of 2% in the case own FDRs and 1% in the case of FDR of third party are pledged. Therefore, in order to claim benefit of 1%, the assessee transferred his own funds from his HUF account and the same were put in the fixed deposits receipts which were in turn used to obtain credit facilities from the bank. Assessee during the year the assessee accrued interest to the tune of Rs. 2,15,261/- on the said FDR which made out of the funds received from HUF and after showing the same in the income from other sources claimed the same as deduction u/....
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....e appellate proceedings, appellant had not provided evidence to show that this deposit was mainly for the purpose of obtaining bank overdraft facility. The appellant has other FDS which is enough for obtaining bank overdraft facility. Hence AO's addition is confirmed and ground of appeal is dismissed." 10. The ld. AR vehemently contended before us that the same income could not be taxed twice first by way of disallowance of deduction claimed u/s. 57(iii) of the Act in the hands of the assessee thereby taxing the interest on FDR in the hands of the assessee and also in the hands of HUF where the assessee has duly shown the interest income received from individual account. The ld. AR took us through the copy of balance sheet, computati....
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....uthorities below. It is adequately clear that the assessee transferred funds from HUF account to his individual account in order to make FDR which was pledged with the bank for obtaining credit facilities' at concessional rate. During the year the assessee received interest on FDR which were made out of the funds borrowed from HUF account. We also find that the assessee after showing the same as income under the head "other sources" also claimed deduction of the equal amount under section 57(iii) as interest paid to HUF and shown in the return of income filed by the HUF which was proved from the return of income and computation of income, balance sheet and other annexure filed by the ld.AR during the course of hearing. It is trite law t....