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2021 (7) TMI 4 - AT - Income TaxDisallowance u/s. 14A r.w.r. 8D - contention of the assessee is that since the assessee has surplus reserves, it may be presumed that the investments were made out of interest-free funds - HELD THAT:- The assessee was unable to show whether sufficient reserves and surplus are available on the date of investment made. Merely showing statistical data at the year end is not sufficient and she should have proved before the authorities below that the assessee has surplus funds which have been invested - on perusal of the financial statements, there was hardly investment of only ₹ 4,30,164/- made during the year. The assessee has invested in the earlier years - we observe that there was increase in the reserves and surplus during the impugned AY is ₹ 95,71,47,370/-. The details of investments are appearing in Note No. 8 where the increase in the investments in mutual funds only by ₹ 4,30,164/-. The assessee also tried to explain that investments were made on 31st March, 2007 in mutual funds of ₹ 1,95,58,373/-, which has been carried forward till the impugned AY, but, it is not clear that exact scrips were in existence during the impugned AY and the quantum of mutual fund investments has also been reduced from 2007 to 2013 which only ₹ 45,43,087/-. The total investments at the year end as per Schedule No. 8 is ₹ 2,75,95,387/-, but, the assessee has not explained the rest of the amount of investment from where it has been invested either from own funds or from interest bearing funds. As during the impugned AY, the assessee has also paid interest. While perusing the order of the AO, we notice that the AO has wrongly taken the figures of investments while disallowing u/s. 14A whereas, the actual investments are much lower than quoted by the AO. Therefore, the issue in dispute is restored back to the file of the AO for recalculation of disallowance made u/s. 14A Assessee drew our attention to the disallowance made under Rule 8D(2)(iii) and submitted that the AO has taken wrong figures while calculating the disallowance under the said section. Therefore, we remit this issue is also to the file of the AO with a direction recompute the disallowance under the said section with correct figures. Ground No. 2 & 4 raised on these issues is allowed for statistical purposes.
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