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2020 (2) TMI 1216 - AT - Income TaxDisallowance u/s 14A - availability of interest free funds as more than the investments - HELD THAT:- We find that Hon’ble Bombay High Court in the case of HDFC Vs. DCIT [2016 (3) TMI 755 - BOMBAY HIGH COURT] has held that when interest free funds available with the assessee are in excess of investments and then the investments are presumed to be out of interest free funds. Before us, Revenue has not placed any contrary binding decision in its support. In view of all these facts and following the decision of Hon’ble Bombay High Court in the case of HDFC Vs. DCIT (supra), we are of the view that no disallowance of interest under Rule 8D(2)(ii) is called for. Thus, the ground of the assessee is allowed. Deemed dividend u/s 2(22)(e) - HELD THAT:- Working of the deemed dividend u/s 2(22)(e) of the Act is to be worked out on the basis of the opening balance of the accumulated reserves of the lender company. Further, it is assessee’s contention that the higher amount of deemed dividend has been offered by the assessee due to mis-interpretation of the legal position. The aforesaid contention of the assessee has not been controverted by the Revenue. It is a settled proposition of law that no tax can be levied or recovered without authority of law for which reference can be made to the decision of Hon’ble Apex Court in the case of CIT Vs. Shelly Products [2003 (5) TMI 4 - SUPREME COURT] and Vijay Gupta Vs. CIT and another [2016 (3) TMI 977 - DELHI HIGH COURT] wherein it was observed that if an assessee by mistake or inadvertence or on account of ignorance included in his income any amount which is exempted from payment of income tax or is not income within the contemplation of law, the assessee may bring the same to the notice of the assessing authority which if satisfied may grant the assessee necessary relief and refund the tax paid in excess, if any. Considering the totality of the facts and in view of the aforesaid decisions, we are of the view that the deemed dividend u/s 2(22)(e) of the Act be worked out on the basis of the opening balance of KIPL as on 01.04.2012. We thus direct accordingly. Thus, the grounds of the assessee are allowed.
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