TaxTMI 
TaxTMI 
2021 (4) TMI 331
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....Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2013-2014. 2. The assessee has raised the following grounds of appeal: Ground I On the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals)-3, Vadodara (hereinafter referred to as the CIT(A) has erred in confirming the disallowance of interest expenditure u/s. 14A r.w.r. 8D to the extent of Rs. 4,31,184/- as against the amount worked out by the appellant to the extent of Rs. 42,079/- The appellant being aggrieved, prays that the disallowance of interest made u/s.14A r.w.r 8D to the extent of Rs. 4,31,184/- being unjustified, unwarranted, bad in law and illegal be reduced to Rs. 42,079/-....
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....4/- and added to the total income of the assessee. 5. Aggrieved assessee preferred an appeal to the ''Ld.CIT (A)'' who confirmed the order of the AO by observing as under: 6.1 I have gone through the assessment order of the AO and written submissions of the appellant. Since the appellant had earned Exempt Income (Tax Free) / of Dividend from shares of companies to the extent of Rs. 19,85,5077- during the year, / disallowance for the expenditure incurred to earn such tax exempt income needs to be made as contemplated in Section 14A r.w.r. 8D of the income Tax Rules. The appellant had voluntarily not made any disallowance u/s 14A while furnishing the Income Tax Return since the appellant had not incurred any such e....
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....ceeds the amount of investments. Therefore, there cannot be any disallowance of the interest expenses under the provision of section 14A r.w. Rule 8D of Rules. 7.1 Regarding the administrative expenses the Ld. AR submitted that the assessee is maintaining personal books of accounts wherein the exempted income has been shown. The assessee in his personal income and expenditure account has already shown the expense of Rs. 2,728/- and therefore there cannot be disallowance on account of administrative expenses. 8. On the other hand Ld. DR vehemently supported the order of the authorities below. 9. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the own fund of the asse....
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....pport from the judgment of Hon'ble Gujarat High Court in the case of UTI Bank Ltd. reported in 32 Taxmann.com 370 where the headnote reads as under : "If there are sufficient interest free funds to meet tax free investments, they are presumed to be made from interest free funds and not loaned funds and no disallowance can be made under section 14A". 9.4 In view of the above proposition, we hold that no disallowance of interest expense claimed by the assessee can be made on account of investments as discussed above. 9.5 Regarding the administrative expenses we find that the assessee has claim to have maintained separate books of accounts and accordingly the assessee has prepared separate income and expenditure account which is....