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2018 (5) TMI 255 - AT - Income TaxDisallowance u/s 14A - Distinction for the disallowance u/s 14A in a case where the dividend was credited to the bank directly - sufficiency of own funds - Held that - We find from the perusal of the balance sheet of the assessee that the assessee is having sufficient own funds at its disposal for the purpose of making investments and accordingly it could be held that no borrowed funds were utilized for making investments. This factual issue had already been considered in assessee s own case by this tribunal in ITA No. 2016 (5) TMI 978 - ITAT KOLKATA for the Asst Year 2007-08 had categorically held that all the investments were made only out of own funds of the assessee and not out of borrowed funds. Hence there cannot be any disallowance of interest under second limb of Rule 8D(2) of the Rules. We find that during the year under appeal the same old investments were brought forward from earlier years. Moreover the profits of the assessee for the year also has increased during this year and investments had decreased during the year. Case of Pr.CIT vs Rasoi Ltd 2017 (2) TMI 863 - CALCUTTA HIGH COURT followed. No disallowance towards Interest under second limb of Rule 8D(2) of the Rules is warranted With regard to disallowance under Rule 8D(2)(iii) of the Rules we hold that only investments yielding exempt income should be considered for the purpose of working out disallowance thereon in consonance with the decision rendered by this tribunal in the case of REI Agro Ltd 2013 (9) TMI 156 - ITAT KOLKATA . Accordingly we direct the AO to recompute the disallowance under the third limb of Rule 8D(2) of the Rules accordingly
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