2022 (3) TMI 1568

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....d 09.02.2015 for assessment year 2012-13. Before us the assessee has assailed the impugned order on the following grounds of appeal: "1. That the learned Commissioner of Income Tax (Appeals) erred in passing the order without allowing proper opportunity to the appellant and therefore, the order be cancelled. 2. That without prejudice, the learned Commissioner of Income Tax (Appeals) further erred in confi9rming the addition of Rs.3,99,790/- made by the learned Assessing Officer u/s.14A though the provisions of section 14A as well as Rule 8D were not applicable. The disallowance of Rs.3,99,790/- is not according to the law and be deleted. 3. The learned Commissioner of Income Tax (Appeals) further erred in....

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....e hearing of appeal, it was submitted by the Ld. Authorized Representative (for short 'AR') that as the assessee had sufficient self-owned funds for making investment in exempt income yielding assets, therefore, no part of the interest expenditure was liable to be disallowed u/s.14A of the Act. It was submitted by the Ld. AR that while for investment in the exempt income yielding investments aggregated to Rs.1,18,17,751/- while for, the assesee had sufficient interest free own funds of Rs.6,16,95,322.05/-. In order to fortify his aforesaid claim the Ld. AR had drawn our attention to the "balance sheet" of the assessee society for the year under consideration (Page 1A - 2 of the APB). Backed by his aforesaid contentions, it was submitted by ....

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.... by the Hon'ble Supreme Court that where interest-free own funds available with the assessee exceeded their investment in tax free securities, then, it would be presumed that investments were made by the assessee out of its own funds and no disallowance would be warranted u/s.14A r.w Rule 8D(2)(ii) of the Income Tax Rules, 1962 on the ground that separate accounts were not maintained by the assessee for investments and other expenditure incurred for earning of tax free income. 8. Backed by our aforesaid observations, we are unable to persuade ourselves to sustain the disallowance of interest expenditure of Rs.3,99,790/- made by the Assessing Officer u/s.14A r.w Rule 8D(2)(ii) of the Income Tax Rules, 1962 which is accordingly vacated. Th....