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2021 (12) TMI 1205 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - Assessee submitted that only exempt yielding investments were to be considered to compute the disallowance - HELD THAT:- It is settled legal position that it was incumbent on the part of Ld. AO to record dissatisfaction, having regards to the accounts of the assessee, as to why the disallowance offered by the assessee was not acceptable. The failure to do so would make the disallowance bad in law. We find that no such dissatisfaction has been recorded by Ld. AO in the assessment order. Secondly, upon perusal of assessee's financial statements for the year ending 31.03.2011 & 31.03.2012 as placed on record, it could be seen that own funds in the shape of share capital and free reserves far exceed the investments made by the assessee and therefore, unless nexus of borrowed funds vis-à-vis investment was established by Ld. AO, a presumption would run in assessee's favor that the investments were sourced out of assessee's own funds. We find that no such nexus has been established by Ld. AO. Thirdly, the disallowance as offered by the assessee is in accordance with the earlier decisions of the Tribunal for AYs 2010-11 & 2011-12. In fact, these decisions were followed in AY 2013-14 [2019 (12) TMI 1567 - ITAT CHENNAI] - The revenue preferred further appeal against the same before Hon'ble High Court of Madras[2020 (8) TMI 885 - MADRAS HIGH COURT] wherein Hon'ble Court refused to admit the substantial question of law as raised by the revenue.
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