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2014 (10) TMI 928 - ITAT JODHPURDisallowance u/s. 14A - whether the assessee has utilized interest bearing unsecured loans for investment in shares of companies/bank? - Held that:- For making the disallowance u/s. 14A it is required that there must be definite nexus between the expenditure incurred for earning the exempted income. However, in the present case, the assessee was having adequate interest free funds in the form of shareholders funds and reserved & surplus to back up the investment in shares, the funds available were of ₹ 56,36,54,029/- against the investment of ₹ 13,41,32,097/-. In the instant case, the Assessing Officer did not bring any cogent material on record to substantiate that the assessee incurred any expenditure to earn the exempted income. On the contrary, the explanation of the assessee was that all the DDs/cheques for the dividend received were payable at par and no other expenditure was incurred, the said explanation was not rebutted. The investment in the shares was made by the assessee from the interest free shareholders funds and reserved & surplus and no nexus was established by the Assessing Officer to substantiate that the assessee incurred any expenditure to earn dividend income. On the contrary, the Ld. CIT(A) has given categorical finding that the Assessing Officer had not proved that the borrowed funds were invested in the shares or brought the valid satisfaction supported by the cogent reasons to determine the expenses under Rule 8D. The said categorical finding given by the Ld. CIT(A) has not been rebutted. Therefore, we do not see any valid reason to interfere with the findings of the Ld. CIT(A). - Decided in favour of assessee
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