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2016 (6) TMI 529 - AT - Income TaxDisallowance u/s 14A r.w.r 8D - Held that:- From the records, we find that the assessee’s own fund comprising the share capital and reserves were to the tune of ₹ 20,06,22,262/- vis a vis the investments in shares of ₹ 11,12,76,771/- and the loan funds were ₹ 5,19,09,835/- at the year end. Thus ,it is amply clear from the above facts that the assessee’s own funds were far more than the value of investments in shares and there is merit in the submissions and arguments of the ld. counsel of the assessee that disallowance under rule 8D (2)(ii) of ₹ 13,99,868/- was not justified. Further, the case of the assessee is fully covered by the decision of the jurisdictional High Courts. In the case of CIT V/s RELIANCE UTILITIES AND POWER LTD. [2009 (1) TMI 4 - BOMBAY HIGH COURT ] it has been held that if both funds are available with the assessee i.e. interest bearing funds and interest free funds then the presumption would arise that investment made would be out of interest free funds available with the company, if the interest free funds are sufficient to meet the investments. So far as the addition made under rule 8D(2)(iii) is concerned, the assessee company has demonstrated before us that the AO has completely ignored the facts of strategic investments of ₹ 1,36,65,695/- in the associate concerns which were intended not for the purpose earning gain or tax free income but to acquire the control over those concerns. A working of the disallowance under section 14A r.w.r 8D was also filed by the assessee which was arrived at after reducing the amount of investments in strategic concerns ₹ 1,36,65,695/- and investment in growth scheme of Mutual funds ₹ 8,15,61,466/- as on 31.3.2008 from the total value of investments of ₹ 11,12,76771/- and thus the disallowance u/s 14A r.w.r.8D 2(iii) was worked out at ₹ 60,809/- which is in our opinion is the correct amount of disallowance. In view of the above facts we direct the AO to delete the addition of ₹ 13,99,868/- as made u/r 8D(2)(ii) and ₹ 2,92,780/- as made u/r 8D (2)(iii). - Decided partly in favour of assessee.
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