TaxTMI 
TaxTMI 
2016 (9) TMI 1594
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....e the learned CIT(A) arising from the assessment order dated 28th December, 2011 passed by the learned Assessing Officer (hereinafter called "the AO") u/s 143(3) of the Income Tax Act,1961 Hereinafter called "the Act"). 2. The grounds of appeal raised by the assessee company in the memo of appeal filed with the Income Tax Appellate Tribunal, Mumbai (hereinafter called "the Tribunal") read as under:- "1. The CIT(A) erred in upholding the disallowance of finance expenses and other expenses of Rs. 11,91,18,562/- made by A.O. on investment in shares out of business income without appreciating the fact that the appellant had surplus interest free funds available for investment in shares and hence no finance expenses and other expenses is attri....
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....n the said companies. Thus, the A.O. observed that the borrowed fund utilized in making investment in shares were not used for the purpose of business of the assessee and the interest paid on the same can be disallowed under the provisions of section 36(1)(iii) of the Act. The A.O. held that the onus is on the assessee to establish the nexus between funds utilized in investment in shares and source of such fund. The assessee submitted that it has sufficient funds for making investment in shares and on that basis the Hon'ble High Court and ITAT has allowed relief to the assessee for the earlier years whereby the ITAT has come to the conclusion that in view of availability of surplus funds with the assessee company for the investment made in ....
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....its own sufficient funds to make investments in shares and in the earlier years the appellate authorities have accepted the contentions of the assessee and deleted the addition w.r.t. interest expenditure disallowed by the Revenue. The ld. CIT(A) considered the submissions of the assessee and observed that the A.O. after verification of the facts submitted by the assessee has recorded his satisfaction and the A.O. has rightly made the disallowance u/s 14A of the Act read with Rule 8D of Income Tax Rules,1962. The action of the A.O. was , therefore, confirmed by the ld. CIT(A) vide appellate orders dated 06-11- 2012. 6. Aggrieved by the appellate orders dated 06-11-2012 of the ld. CIT(A) , the assessee is in appeal before the Tribunal. 7. ....
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....ood at Rs. 209.37 crores as at 31-03-2009 , while investments in shares stood at Rs. 128.67 crores as at 31-03-2009. Similarly it was submitted that the investment as at 31-03-2008 was Rs. 141.80 crores and as against this the share capital was Rs. 60.48 crores and Reserves and surplus was Rs. 174.68 crores. It was submitted that no disallowance of interest expenditure of Rs. 11.26 crores on borrowings as were made by the Revenue is sustainable. The chart has been filed by the assessee to reflect the financial figures as at 31-03-2008 and 31-03-2009 to contend that owned funds of the assessee comprising of share capital and reserves and surplus are more than the investments in shares both as at 31-03-2008 and 31-03- 2009. The said chart whi....
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....8,47,63,455/- . However, no audited financial statements are submitted by the assessee . We , however, agree with the proposition and contentions of the assessee that presumption will apply that the assessee has made investment in shares out of its own surplus funds unless contrary is brought on record keeping in view the decision of the Hon'ble Bombay High Court in the case of CIT v. Reliance Utilities and Power Ltd., (2009)313 ITR 340(Bom. HC) and HDFC bank Limited v. DCIT (2016) 383 ITR 529(Bom. HC) . Hence keeping in view the factual matrix of the case as set out above, the disallowance of interest amounting to Rs. 11,26,89,134/- made by the A.O. under Section 14A of the Act read with Rule 8D(2)(ii) of Income Tax Rules, 1962 is not sust....