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2019 (4) TMI 502 - AT - Income TaxDisallowance u/s 14A read with rule 8D - HELD THAT:- Assessee filed evidence of borrowings of the current year and the preceding year to demonstrate that the borrowings were for special purposes and claimed that they were utilised towards those purposes. We note that Hon`ble Bombay High Court in the case of HDFC BANK LTD. vs. DEPUTY COMMISSIONER OF INCOME TAX [2016 (3) TMI 755 - BOMBAY HIGH COURT] held that in a situation where own funds or interest free funds exceeded the amount of relevant investment, it may be presumed that the investment was from own funds. Therefore, ld CIT(A) following the judgment of Bombay High Court in the case of HDFC BANK LTD (supra), deleted the addition. In respect of Rule 8D (2) (iii), we note that Coordinate Bench of ITAT Kolkata in the case of REI Agro Ltd. Vs. DCIT [2013 (9) TMI 156 - ITAT KOLKATA] has held that it is only the investments which yields dividend during the previous year that has to be considered while adopting the average value of investments for the purpose of Rule 8D(2)(ii) & (iii) of the Rules also confired by HC [2014 (4) TMI 713 - CALCUTTA HIGH COURT]. Therefore, we direct the assessing officer to compute the disallowance under Rule 8D (2) (iii) taking into account the dividend bearing securities only. We allow both the appeal filed by the assessee for statistical purposes.
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