Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 1446 - AT - Income TaxAddition u/s. 14A r.w.rule 8D - HELD THAT:- As far as disallowance of interest expenses under Rule 8D(2)(ii) of the Rules is concerned, it has been held in the case of CIT vs Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] and CIT vs HDFC Bank Ltd [2014 (8) TMI 119 - BOMBAY HIGH COURT] that where interest free funds and overdraft and loans taken are available with an assessee, then a presumption would arise that the investments would be out of the interest free funds generated or available with the assessee, if the interest free funds were sufficient to meet the investments. In the case of Principal CIT vs Rasoi Ltd. [2017 (2) TMI 863 - CALCUTTA HIGH COURT] . In view of the aforesaid legal position we direct the Assessing officer to examine the assessee`s own funds and reserves and if the AO finds that the interest free funds were sufficient to meet the investments, no disallowance would be made under Rule 8D(2) (ii) of The Rules. As far as Rule 8D(2)(iii) of the Rules is concerned, it has been held in the case of DCIT vs REI Agro Ltd. [2013 (5) TMI 582 - ITAT KOLKATA] that it is only the investment which yielded tax free income that should be considered for working out the average value of investment while applying the Rule 8D(2)(iii) of the Rules. This order of the tribunal has been confirmed by the decision of Hon’ble Calcutta High Court . [2013 (12) TMI 1517 - CALCUTTA HIGH COURT] . We direct the AO to exclude investments which had not yielded any exempt dividend income during the previous year while working out the average value of investments for the purpose of applying Rule 8D(2)(iii) of the Rules. Addition on account of interest paid to loan creditors - HELD THAT:- Assessee has furnished the relevant details i.e confirmation of bank statement, ROC details before the AO. Neither the AO nor the CIT(A) has considered the same. We note that details as filed by the assessee have not been considered in any of the two proceedings i.e. neither before the AO nor before the ld.CIT(A). Therefore, we deem it fit and proper in this peculiar facts and circumstances that larger interest of justice would be served in case ld. AO decides the entire issue once again taking into consideration the details which already submitted by the assessee before him. We also direct the assessee to submit the evidences/explanation to prove its boanfide. Ground no. 2 raised by the assessee is allowed for statistical purpose
|