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2018 (12) TMI 984 - AT - Income TaxDisallowance made on rule 8D R.W.S. 14A - CIT(A) deleted the impugned disallowance made u/s 14A - Held that:- Disallowance u/s 14A of the Act is not called for in the case of the assessee as there is no dividend income earned during the year and the assessee’s case is squarely covered in the judgment of Hon’ble Gujarat High Court in the case of CIT V/s Corrtech Energy (P) Ltd (2014 (3) TMI 856 - GUJARAT HIGH COURT) wherein the Hon’ble High Court has held that “where the assessee has not made any claim for any exemption then in such situation the disallowance u/s 14A of the Act have no application”. Perusal of the audited balance sheet of the assessee shows that as on 31.03.2012 the total of the share capital and reserve and surplus at the end of the year stands at ₹ 39,28,44,695/- and against these interest free funds available with the assessee, the average value of investment is ₹ 29,83,62,600/-, which means that the average investments are less than the interest free fund available with the assessee. Further there is no specific satisfaction by the Ld.A.O which could prove that interest bearing funds have been applied for the investments in group concerns for non business purposes. Also see CIT V/s HDFC Bank Ltd (2014 (8) TMI 119 - BOMBAY HIGH COURT) wherein the assessee’s capital, profit, reserve surplus and current account deposits were higher than the investment in tax free securities, then it would have to be presumed that investment made by the assessee would be out of the available interest free funds - no disallowance u/s 14A was called for by the Ld.A.O - Decided in favour of assessee Disallowance of expenses - Disallowance has been merely made on the observation that some of the expenditure are incurred in cash and some vouchers are self made - held that:- Surprisingly there is no specific observation by the Ld.A.O which could prove that the assessee has claimed the expenses with a motive to evade the tax nor any observation has been made by the Ld.A.O for challenging the genuineness of the particular expenditure. In these given facts and circumstances merely making a ad-hoc disallowance of ₹ 2,00,000/- and completely disregarding the audited financial statements was certainly not justified on the part of Ld.A.O. Therefore we find no infirmity in the finding of Ld. CIT(A) deleting the disallowance - Decided in favour of assessee
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