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2017 (3) TMI 1480 - AT - Income TaxSection 14A Disallowance - investment income - interest paid by the Assessee Company on borrowed funds - Held that:- The Hon’ble Bombay High Court in CIT Vs. M/s. Delite Enterprises (2009 (2) TMI 498 - BOMBAY HIGH COURT) have held that where there is no income arising to the assessee on its investment, then no disallowance is to be made under section 14A of the Act i.e. interest expenses related to such tax profits are not to be disallowed under section 14A of the Act. Accordingly, we hold that in so far as the interest expenditure being attributable to such investments, against which the assessee had not received any exempt income, no disallowance of interest expenditure could be made under section 14A of the Act. Accordingly, we allow the claim of assessee in respect of interest expenditure of ₹ 21,52,504/- and allow the ground of appeal No.1 raised by the assessee. Balance interest expenditure - Held that:- Admittedly, the assessee had borrowed the funds but on the other hand, the assessee has sufficient interest free funds available with it, which is apparent from the copy of balance sheet filed by the assessee. The Hon’ble Bombay High Court in CIT Vs. HDFC Bank Ltd. (2014 (8) TMI 119 - BOMBAY HIGH COURT ) have clearly laid down that in such cases, where the assessee has sufficient capital available with it, no disallowance was to be made out of interest expenditure under section 14A of the Act. Applying the ratio laid down by the Hon’ble Bombay High Court, we hold that no disallowance is to be made out of balance interest expenditure of ₹ 5,80,523/-. The ground of appeal No.2 raised by the assessee is thus, allowed. Disallowance of part of administrative expenses under section 14A - Held that:- Applying th e ratio laid down by the Hon’ble Bombay High Court in the case of Godrej & Boyce Manufacturing Co. Ltd. (2010 (8) TMI 77 - BOMBAY HIGH COURT), we direct the Assessing Officer in restricting the disallowance under section 14A of the Act on account of administrative expenses to ₹ 50,000 /-. Accordingly, we partially allow the claim of assessee and ground of appeal No.3 raised by the assessee is thus, partly allowed. The grounds of appeal raised by the assessee are thus, partly allowed.
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