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2024 (2) TMI 691 - ITAT MUMBAIDisallowance u/s 14A r.w.r. 8D - assessee on its own has made the disallowance u/s 14A - sufficiency of own funds - HELD THAT:- It is clear that the assessee has more interest free funds available with it in the form of share capital and reserves and surplus then the amount of investment made which yielded tax free income during the year. Therefore, the presumption would be available in favour of the assessee that amount of investment made in such exempt income yielding investments are made of interest free funds available. Therefore, there could not have been any disallowance under rule 8D (2) (ii)of the income tax rules 1962 under section 14 A of the Act. Such a finding was given in the case of the assessee for assessment year 2014 – 15 by the coordinate bench [2023 (10) TMI 1361 - ITAT MUMBAI]. The same is also covered by the decision of South Indian bank Ltd [2021 (9) TMI 566 - SUPREME COURT]. Accordingly, we hold that such disallowance made by the learned assessing officer is not correct. The learned assessing officer is directed to delete the same. While working out disallowance u/s 14A of administrative expenses u/r 8D (2) (iii) made AO could have been made only after taking only those investments which have yielded exempt income during the year - This is also supported by the decision of Cargo motors private limited [2022 (10) TMI 571 - DELHI HIGH COURT] wherein it has been held that for the purpose of making disallowance of expenses under section 14A as per rule 8D only those investments were to be considered for computing average value of investments which yielded exempt income during the year. Therefore, both the grounds in the appeal of the assessee are allowed. Disallowance u/s 14A of the act cannot be applied more than exempt income earned during the year for the impugned assessment year. MAT computation u/s 115JB - Disallowance made by AO u/s 14 A by invoking the provisions of rule 8D of the act could also be imputed under the computation of book profit under section 115JB has already been decided in case of Vireet Investments P Ltd [2017 (6) TMI 1124 - ITAT DELHI]. Same is now also covered in favour of the assessee by the decision of Gujarat Fluorochemicals Ltd [ [2023 (12) TMI 713 - GUJARAT HIGH COURT] - accordingly we do not find any merit in the appeal of the learned assessing officer.
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