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2016 (1) TMI 1250 - AT - Income TaxDisallowance under section 14A - Held that:- No disallowance under section 14A of the Act can be made if there is no taxable income earned during the year. Assessee has not been able to demonstrate before us with the help of documents that no tax free income has actually been earned during year. In view of this, we think it proper to send the case back to the file of the Assessing Officer. If there is no tax free income during the year, the Assessing Officer is directed not to make disallowance under section 14A of the Act. Otherwise, he has to decide the case as per law. Further, on the argument of the assessee that it had sufficient owned funds to make investment, we see, that for the proposition that in case of mixed funds, the assessee having sufficient owned funds to make investment, it can be presumed that the investments are made out of owned funds, we are guided by the judgments in the case of Bright. Enterprises Pvt. Ltd. Vs. CIT [2015 (11) TMI 342 - PUNJAB & HARYANA HIGH COURT ]. Though the said judgments were delivered in the context of section 36(1)(iii) of the Act, but the proposition laid down is that in the event of mixed funds available with the assessee, it can safely be presumed that the investments are made out of owned funds. However, since we are sending back the case to the file of the Assessing Officer on the first issue, we think it proper to send this issue also to the file of the Assessing Officer and decide the same as per law explained hereinabove. - Decided in favour of assessee for statistical purposes.
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