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2019 (6) TMI 34 - ITAT MUMBAIDisallowance u/s 14A r/w rule 8D - addition under Rule–8D(2) - CIT(Appeals) restored the issue to AO with a direction to compute the disallowance keeping in view the decision of Maxopp Investment Ltd. v/s CIT [2018 (3) TMI 805 - SUPREME COURT] - HELD THAT:- It is well settled that while computing disallowance under rule 8D(2)(iii), the AO can consider only those investments which have yielded dividend income during the year under consideration. Therefore, the disallowance of expenditure under rule 8D(2)(iii) has to be made with reference to the investment of ₹ 5,39,000, which yielded dividend income of ₹ 38,900. This view of ours is as per the ratio laid down in Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] and Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] We direct the AO to restrict the disallowance u/s 14A the amount already disallowed by the assessee. The grounds are allowed. Disallowance of interest expenditure u/s 36(1)(iii) - as assessee has diverted interest bearing funds for non–business purpose by investing in jewellery and shares, the Assessing Officer disallowed interest expenditure u/s 36(1)(iii) - HELD THAT:- From the facts and material available on record, it is evident that the assessee had surplus fund of ₹ 92.30 crore available with it. Therefore, the presumption would be, the investments in jewellery and shares must have been made out of the surplus funds available with the assessee. That being the case, no disallowance under section 36(1)(iii) of the Act can be made. See M/S RELIANCE INDUSTRIES LTD [2019 (1) TMI 757 - SUPREME COURT]
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