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2021 (3) TMI 41 - AT - Income TaxDisallowance u/s. 14A r.w.r. 8D - Addition on account of interest under Rule 8D(2)(ii) and indirect expenses under Rule 8D(2)(iii) - HELD THAT:- As far as the disallowance of interest expenses under Rule 8D(2)(ii) of interest is concerned, from the copy of Balance Sheet placed by the assessee we find that the interest free funds of the assessee in the form of Share Capital and Reserves and Surplus as on 31.03.2013 are in the region of ₹ 59 crores as against the investments of around ₹ 1 crore meaning thereby that the interest free funds are more than the investments. On the issue of presumptions 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,. We find that Hon'ble Bombay High Court in the case of HDFC . [2014 (9) TMI 1042 - BOMBAY HIGH COURT] held that there is now no need for the assessee to establish with evidence that the amounts which has been invested in the tax free securities have come out of interest free funds available with it. This is because once the assessee is possessed of interest free funds sufficient to make the investment in tax free securities, it is presumed that it has been paid for out of the interest free funds - we are of the view that no disallowance of interest under Rule 8D(2)(ii) is called for in the present case. Disallowance of indirect expenses under Rule 8D(2)(iii) before us, Learned AR fairly admitted that the maximum disallowance can be to the extent worked out under Rule 8D(2)(iii). We therefore, uphold the action of AO as far as the disallowance of ₹ 50,565/- under Rule 8D(2)(iii) is concerned. Thus the ground of appeal of the assessee is partly allowed.
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