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2019 (10) TMI 1164 - ITAT MUMBAIDisallowance of dividend income u/s. 14A by invoking Rule 8D - computing Book Profits u/s 115JB - HELD THAT:- Upon perusal of financial statements as placed on record, it is also observed that the assessee has sufficient own funds in the shape of Share Capital & Reserves amounting to ₹ 101.61 Crores as against investment of ₹ 12.85 Crores and therefore, unless it is shown that the investments were made out of borrowed funds and the nexus between the two was brought on record, a presumption was to be drawn in assessee’s favour that own funds were used to make the investments. However, no such exercise emanates from quantum assessment order. Therefore, upon careful perusal of facts and circumstances, we find that matter of disallowance u/s 14A has not been properly addressed by lower authorities. Therefore deem it fit to remit the matter of disallowance u/s 14A while computing income under normal provisions as well as while computing Book Profits u/s 115JB to the file of AO for adjudication de-novo after considering the issue in correct perspective. AO is directed to appreciate the suo-moto disallowance offered by the assessee and if not satisfied, recompute the disallowance keeping in view the ratio of binding judicial pronouncements and principals laid down regarding the same. The adjustment of disallowance u/s 14A while computing Book Profits u/s 115JB, in terms of clause (f) to explanation-1 to Sec 115JB(2), would be attracted only in case it is established that the assessee has actually debited any expenditure in profit & loss account relatable to earning of any exempt. Resultantly, the ground stand allowed for statistical purposes. Treatment of lease rental income - HELD THAT:- Matter may be restored back to the file of Ld. AO on same lines as done by the Tribunal in assessee’s own case for AY 2011-12. Therefore, following the earlier view of Tribunal for AY 2011-12, this matter stand restored back to the file of Ld. AO for fresh adjudication on similar lines as directed by Tribunal vide paras 4 to 6 of the stated order. This ground also stand allowed for statistical purposes. Interest disallowance u/s 36(1)(iii) - HELD THAT:- For this the Ld. AR has relied upon the recent decision of Hon’ble Supreme Court rendered in CIT V/s Reliance Industries Ltd. [2019 (1) TMI 757 - SUPREME COURT] for the submission that in case of mixed use of funds, a presumption was to be drawn that capital advances were out of free funds available with the assessee. CIT(A) has directed AO to recompute the disallowance based on number of days for which funds were actually utilized for capital advances. However, respectfully following the cited decision, we modify the directions by directing AO to ascertain the nexus of borrowed funds vis-à-vis capital advances made by the assessee and until nexus is established between the two, a presumption would be drawn in assessee’s favour that capital advances were out of free funds available with the assessee as per the cited decision of Hon’ble Supreme Court as well as the decision of jurisdictional High Court rendered in CIT Vs. Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] . This ground also stand allowed for statistical purposes.
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