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2020 (12) TMI 1142 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D(2)(ii) - HELD THAT:- On perusal of the financials of the assessee, which is enclosed in the paper book filed by the assessee, it is clear that the interest free funds in possession of the assessee far exceeded the investments made during the current year and even in the immediately preceding assessment year. For the year ending 31.03.2016, the assessee’s share capital, reserves and surplus together is ₹ 33,70,22,076, whereas, the current year’s investment is only ₹ 11,07,43,921. The only justification of the CIT(A) was that the investments are from a common pool, and therefore, a portion of the interest disallowance is warranted. Hon’ble jurisdictional High Court in the case of CIT v. Microlabs Ltd [2016 (4) TMI 219 - KARNATAKA HIGH COURT] had held that even in a situation where investments are from common pool, if non-interest bearing funds are more than the investments in tax free securities, no disallowance can be made u/s 14A of the I.T.Act r.w.r. 8D(2)(ii) - we delete the disallowance made by the A.O. u/s. 14A of the I.T.Act r.w.r 8D(2)(ii) - we delete the disallowance made by the A.O. u/s. 14A of the I.T.Act r.w.r 8D(2)(ii) of the I.T.Rules - Decided in favour of assessee.
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