AI Drafter 
TaxTMI 
TaxTMI 
2020 (3) TMI 1023
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....d/2015 for the A.Y.2009-10 and ITA No.3415/Ahd/2015 for the A.Y.2009-10 filed by the Revenue as well as the assessee respectively. 2. The Revenue has proposed the following question as the substantial question of law in the Tax Appeal No.11 of 2020; "Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in deleting the disallowance of interest expenses made by Assessing Officer u/s.14A of the Income Tax Act, 1961 r.w. Rule 8D(2)(ii) of the Income Tax Rules, 1962 merely on the basis that the assessee was having sufficient own interest free funds available, which exceeded tax free investments even though no material was placed on record by the assessee to establish that the said funds w....
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....earned dividend income of Rs. 4,22,54,212/-. It was further submitted that the appellant had sufficient interest free funds to carry out the investment and no borrowed funds were utilized for making investments and hence no disallowance ought to be made under Rule 8D(2) of the Act. The details of such interest free funds were also provided as per which the figures as on 31.03.2009 of such Interest Free Funds came to Rs. 30,35,98,242/- as against the amounts of Tax Free Investments made of Rs. 12,54,57,104/- One of the other major arguments taken by the Appellant before the CIT-I, Vadodara was that investment earning taxable income should be excluded for the purpose of calculation of average investment. The amount of such investment earning ....
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....curities is being financed by such outstanding balance of sundry creditors. In this circumstances, it is held that the part of interest paid by the appellant to the said sundry creditors is attributable to the investments made during the current year for the purpose of earning of exempt income. Hence, disallowance is required to be made under Rule 8D on account of investments of Rs. 85 lacs made during the course of the current year. Accordingly, the AO is directed to make this disallowance as per Rule 8D. 6.5.3.1 So far as the investment in daily dividend reinvestment plan of JP Morgen India Mutual Fund is concerned, such investments were made between 7/11/2008 to 11/11/2008. The details of such investments are as follows; Fund....
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....isallowance u/s.14A of administrative expenses. Hence, for the current year also, such disallowance is upheld. For this purpose, the entire investments yielding exempt income, whether made out of own funds of out of borrowed fund, and forming parts of opening balance as well as closing balance will be considered. The AO is directed to recompute the disallowance accordingly. 6.5.4 The appellant has also claimed that "Total assets" for computing the average total assets under Rule-8D would comprise of fixed assets, investments and current assets. In the balance sheet, current liabilities are netted off against current assets. Hence for the purpose of computing total assets, no such netting off of current liabilities should be made. T....
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.... disallowance towards the proportionate interest expenditure can be made under Rule 8D(2)(ii) as there was sufficient fund available with the assessee as its own fund, i.e, Rs. 30.35 Crore in excess of corresponding investment of Rs. 12.54 Crore giving rise to the exempt income, no addition can be made by applying Rule 8D(2)(ii) of the Income Tax Rules, 1962. To reach at the aforesaid finding, the Tribunal has relied upon the decision of this Court in the case of Pr. CIT vs. Sintex Industries Ltd., 82 taxmann.com 171 (Guj.) and the decision of the Bombay High Court in the case of CIT vs. HDFC Bank Ltd., 366 ITR 505 (Bom.). 8. In view of the concurrent finding of fact arrived at by the CIT (A) as well as the Tribunal, the question of law,....