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2014 (5) TMI 115 - ITAT MUMBAIDisallowance u/s 14A r.w. Rule 8D of the Act – Disallowance of interest expenses – Held that:- Relying upon The Commissioner of Income Tax Versus Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] – if there are funds available, both interest free and overdraft/loans taken, then presumption would arise that investments would be out of the interest free fund generated or available with the assessee - the contention of the assessee is accepted that the major investments were made by the assessee in AY 2005-06 - Total investment in AY 2005-06 was of Rs.7.20 crores as against which capital and free reserves were of Rs.27.00 crores - capital & free reserves exceeded investment - Borrowings were from banks in the form of export bill discounting and packing credit - The two borrowings were for export business of the assessee and could not be said to be diverted for the purpose of investment in shares - the investments in the shares were made from the interest free funds available with the assessee and not from the interest bearing funds – thus, no disallowance is called for in relation to interest expenditure under rule 8 D(ii) of the I.T. Rules – Decided in favour of Assessee. Disallowance of administrative expenses – Held that:- There is no reason to interfere in the order as the assessee himself offered disallowance of 0.5% of the average investment – Decided against Assessee.
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