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2014 (5) TMI 115 - AT - Income TaxDisallowance 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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