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2020 (10) TMI 1168 - HC - Income TaxDisallowance u/s 14A r.w.r. 8D - Non recording of satisfaction by AO - HELD THAT:- Assessing Officer has not rendered any finding with regard to incorrectness of the claim of the assessee either with regard to its accounts or with regard to the fact that he is not satisfied with the claim of the assessee in respect of such expenditure in relation to exempt income as is required in accordance with Section 14A(2) of the Act for making a disallowance under Rule 8D. Thus, from perusal of the relevant extract of the order passed by the Assessing Officer, the tribunal has rightly concluded that the Assessing Officer has not recorded the satisfaction with regard to the claim of the assessee for disallowance under Section 14A read with Rule 8D(2) - Decided in favour of assessee. Disallowance under Rule 8D(2)(II) while making the disallowance under Section 14A - whether interest expenses incurred cannot be directly attributed to any particular income or receipt, provision of rule 8D(2)(ii) automatically becomes applicable? - HELD THAT:- In The 'CIT VS. RELIANCE UTILITIES AND POWER LTD.', [2009 (1) TMI 4 - BOMBAY HIGH COURT] has held that where interest free funds exceed the value of investments, it can safely be inferred that investments have been made out of interest free funds and no disallowance under Section 14A towards any interest expenditure can be made. Similar view was taken in CIT VS. HDFC BANK LTD., [2014 (8) TMI 119 - BOMBAY HIGH COURT] On perusal of the balance sheet the finding has been recorded that assessee has received an amount of ₹ 146.52 Crores as advances from customers, which are interest free and the reserves and surpluses are to the tune of ₹ 882,67 Crores. Thus, it has been held that all the aforesaid amounts are interest free funds and are sufficient to make tax free investments and therefore, the finding of the Assessing Officer that overdraft facility was directly used for making tax exempt investments have been reversed. The tribunal has affirmed the aforesaid finding. Thus, concurrent findings of fact have been recorded on the aforesaid issue, which could not be demonstrated to be perverse. Therefore, no interference is called with the aforesaid concurrent findings of fact in this appeal under Section 260A - Decided in favour of assessee. Disallowance u/s 36(1)(iii) - tribunal deleted addition holding that the advances to its subsidiaries were in the normal course of business, for business purposes - whether the funds from the overdraft account were utilized to make interest - free advances for acquiring lands, property advances? - HELD THAT:- The assessee had to pay advances to the land owner for the purposes of entering into Joint Development Agreement for development of real estate projects, therefore, the advances are business advances and cannot be treated as non business or capital advances. The tribunal has held that reserves and surplus earned by assessee company is approximately to the extent of ₹ 994.92 Crores as against total advances and deposits of ₹ 248.24 Crores. Thus, the tribunal has found that the assessee's own fund are far in excess of advances and deposits made during the year and has held that CIT (Appeals) has rightly deleted the disallowance of interest. The aforesaid concurrent findings of fact are based on meticulous appreciation of evidence on record and by no stretch of imagination can be said to be perverse. - Decided in favour of assessee.
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