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2018 (4) TMI 391 - AT - Income TaxDisallowance u/s. 14A - Held that:- Case of HDFC Bank Ltd. v. DCIT reported in (2016 (3) TMI 755 - BOMBAY HIGH COURT) will apply and presumption will apply that assessee has invested its own funds in making of the investment in Mutual Funds and there is no finding recorded by authorities below that interest bearing funds were specifically used for making investments in Mutual Funds and no direct nexus between interest bearing funds with the investments made in Mutual Funds are brought on record. Thus, the addition to the tune of ₹ 3,53,455/- as was made under rule 8D2(ii) r.w.s. 14A stood deleted but so far as disallowance under rule 8D 2(iii) r.w.s. 14A of the 1961 Act to the tune of ₹ 5,77,419/- being @0.5% of the average investments as was made by the AO which was later upheld by learned CIT(A) stood confirmed as we find no justification for the deletion of the same and we have no hesitation in confirming the addition to the tune of ₹ 5,77,419/- to the income of the assessee u/s 14A r.w.r. 8D(2)(iii) . The assessee gets part relief. Deduction u/s. 10B with respect to its 100% EOU should be allowed even on income from interest and miscellaneous income - Held that:- We are of the considered view that the AO has not examined the direct nexus between the interest income as well miscellaneous income and export income derived by the assessee from eligible industrial undertaking of the assessee on which deduction u/s 10B is available which requires examination of the facts, hence keeping in view ratio of decision in the case of India Comnet International v. ITO reported in (2012 (9) TMI 372 - SUPREME COURT), the matter is set aside to the file of the AO for examination/verification of direct nexus between income from interest as well miscellaneous income and income derived from exports business by 100% export oriented eligible undertaking of the assessee to see whether the said income can fall within the ambit of being derived from export business of the eligible industrial undertaking being 100% EOU. Depreciation of eligible unit which stood adjusted against other business income from non eligible in the earlier years can not now be adjusted on notional basis against the income of eligible unit for the impugned assessment year while computing deduction u/s 80IA. See CIT v. Hercules Hoists Ltd. [2017 (6) TMI 1125 - BOMBAY HIGH COURT]
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