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2023 (7) TMI 281 - AT - Income TaxAddition u/s 14A r/w rule 8D - assessee company has made investment in shares of unlisted companies from which either exempt income is generated or no income is generated - sufficiency of own funds - CIT(A) partly allowed the appeal restricting the disallowance on the fresh investment made during the year - HELD THAT:- Assessee made investment in shares of group companies which are partly old investment carried forward from earlier years - interest free funds apart from borrowings are much more than its investment in shares and there is no nexus in between the fresh investment with the interest bearing borrowed funds. AO has also not denied the said facts. There being no income for shares hence obviously there are no administrative and other expenses incurred. In such facts of the case, no disallowance u/s 14A r.w. rule 8D is warranted as no borrowings were used in acquisition of these shares nor any administrative expenses etc. were incurred. The assessee also not earned exempt income and hence section 14A is inapplicable. See South Indian Bank Ltd. case [2021 (9) TMI 566 - SUPREME COURT] Assessee made the investments from its interest free funds/ income and it does not come under the purview of Section 14A to make disallowance by the lower authorities. Decided in favour of assessee.
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