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2017 (11) TMI 1942 - AT - Income TaxDisallowance of interest expenditure made u/s.14A - sufficiency of own funds - HELD THAT:- As own funds available with the assessee is in excess value of mutual funds held by the assessee. Other investments made by the assessee consisted of fixed deposits made with the Bank and investment made in shares of Cooperative Bank, income from both of which is not exempt. Since own funds available with the assessee is in far excess of value of investment made in mutual funds, there is merit in the contentions of the assessee that the disallowance of interest expenditure is not called for, in view of the decision of HDFC Bank Ltd. [2016 (3) TMI 755 - BOMBAY HIGH COURT]. Accordingly, we set aside the order passed by the learned CIT(A) on this issue in all five years and direct the Assessing Officer to delete the disallowance of interest expenditure made u/s. 14A of the Act. For assessment year 2011-12, the AO is directed to compute the disallowance under Rule 8D(2)(iii) by adopting correct figures. Deemed dividend addition u/s. 2(22)(e) - AO noticed that the partners of the assessee-concern are also directors in a closely held company and the assessee company has borrowed funds from the above said closely held company - HELD THAT:-Hon'ble Supreme Court has since decided identical issue in the case of CIT Vs. Madhur Housing and Development Company [2017 (10) TMI 1279 - SUPREME COURT] has held that addition of deemed dividend u/s. 2(22)(e) of the Act can be made only in the hands of shareholders, meaning thereby, the decision rendered by Hon’ble Bombay high Court in the case of Impact containers P Ltd [2014 (9) TMI 88 - BOMBAY HIGH COURT] has been upheld by Hon’ble Supreme Court. Since the assessee is not a share holder of M/s Shirdi Chemicals P Ltd, the assessing officer was not right in law in invoking the provisions of sec. 2(22)(e) of the Act in its hands. - Decided against revenue.
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