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2018 (2) TMI 2090 - AT - Income TaxDisallowance u/s. 14A r.w. Rule 8D - contention of the assessee that, the Capital Reserves and interest free funds are much more than the investments, have to be examined by the AO - HELD THAT:- It is true that the in the cases of CIT v. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] and CIT v. Reliance Utilities Power Limited [2009 (1) TMI 4 - BOMBAY HIGH COURT] held that, if assessee had adequate interest free funds available with it, no disallowance needs to be made u/s 8D2(ii). We remit this issue to the file of the AO who shall examine the contentions of the assessee that the interest free funds are much more than the investments. If the submissions of the assessee are found to be correct, no disallowance under Rule 8D2(ii) is required in view of the decisions in the cases of CIT v. HDFC Bank Ltd [2014 (8) TMI 119 - BOMBAY HIGH COURT] and CIT v. Reliance Utilities Power Limited [2009 (1) TMI 4 - BOMBAY HIGH COURT] Similarly, the Special Bench in the case of ACIT v. Vireet Investments Private Limited [2017 (6) TMI 1124 - ITAT DELHI] held that only those investments which yielded dividend income should be considered for disallowance under Rule 8D2(iii). Thus, respectfully following the Special Bench decision, we direct the Assessing Officer to recompute the disallowance under Rule 8D2(iii) following the Special Bench. Accordingly, we set-aside this issue to the file of the Assessing Officer with the above observations. This ground of appeal is allowed for statistical purpose. Disallowance of interest u/s. 36(1)(iii) - HELD THAT:- This issue arose in the Assessment Years 2008-09 [2013 (9) TMI 1297 - ITAT MUMBAI], 2009-10 and 2010-11 [2016 (6) TMI 1460 - ITAT MUMBAI] and the Tribunal had set aside the issue to the file of the AO for examining the contentions of the assessee and the consequential orders were passed accepting that the assessee has its own funds much more than the investments and no interest was disallowed u/s. 36(1)(iii) and also no proportionate interest expenses were disallowed towards and the advances to partnership firm.
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