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2013 (10) TMI 772 - AT - Income TaxDisallowance u/s 14A of the Income Tax Act – Disallowance on account of interest – Held that:- Sufficient own funds in the form of share capital amounting to Rs. 193.98 lacs and in the form of reserves and surplus amounting to Rs. 1,795.65 lacs were available with the assessee at the relevant time to make the payment of advance tax liability - Profit of the assessee for the year under consideration before tax was Rs. 891.57 lacs which itself was sufficient to cover the advance tax liability. In the case of Commissioner of Income-tax v. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - HIGH COURT BOMBAY] cited by the ld. Counsel for the assessee, the Hon'ble Bombay High Court has held that when the own funds and borrowed funds are maintained in a mixed manner, a presumption can be drawn that the own funds are utilized by the assessee for making the investments etc. as per its own wish – Keeping in view the ratio of above judgment disallowance u/s 14A is not sustainable – Decided in favor of Assessee. Applicability of Rule 8D read with Section 14A of the Income Tax Act for computation of disallowability – Held that:- Reliance has been placed upon the judgment in the case of Godrej Boyce Mfg. Co. Ltd [2010 (8) TMI 77 - BOMBAY HIGH COURT] - Rule 8D is applicable only prospectively from A.Y. 2008-09 - Disallowance made by the A.O. u/s 14A of the Act is restriced to 5% of the exempt dividend income being fair and reasonable – Decided in favor of Assessee.
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