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TMI Blog2012 (7) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... e and in law in deleting the addition of Rs.19,95,345/- made by the AO on account of dividend income. 2. Whether Ld. CIT(A) was correct on facts and circumstances of the case and in law in restricting the disallowance of interest u/s 14A to the extent of Rs.24,486/- against Rs,.14,91,934/- made by the AO." 2. The first issue for consideration relates to deleting the addition of Rs.19,96,345/- made by the Assessing Officer on account of dividend income. Facts of the case stated in brief are that during the financial year relevant to the assessment year under consideration the assessee had shown income of Rs.19,96,345/- as dividend income from mutual funds and claimed the same as exempt in terms of sec. 10(34) of the Income-tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that during the period of F.Y. 2005-06 there had been investment and redemption of units of HDFC Mutual Fund and as on 27th March, 2006, the balance with the aforesaid fund was nil. Thus the investment, redemption thereof and reinvestment of dividend income in units of HDFC Mutual Fund had taken place between the period from 26th May, 2005 and 27th March, 2006. Because of this reason the investment in HDFC Mutual Fund did not find place in the balance sheet ending 31st March, 2005 and 31st March, 2006 respectively. It was also submitted that similar was the position with respect to investment in HSBC Floating Rate Fund and ICICI Prudential Mutual Fund. All the details were filed before the AO in terms of rectification application u/s 154 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gone through the material available on record. From the order of the CIT(A) it is clear that the assessee has invested in mutual funds during the previous year under consideration. During the course of hearing the Revenue could not produce any evidence contrary to the findings recorded by the CIT(A). Since the assessee had invested in mutual funds during the year under consideration and had received dividend income which stands verified by the learned CIT(A) and in the absence of any contrary evidence having been brought on record, in our considered opinion the learned CIT(A) was justified in deleting the addition. Accordingly we do not find any infirmity in the order passed by the learned CIT(A) deleting the addition. 7. Next issue for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered the submissions made on behalf of the appellant company and the findings recorded by the Ld. AO. On consideration, I find that for the assessment year under consideration, the provisions of Rule 8D of the IT Rules, 1962 were not in operation. Therefore, I am in agreement with the Ld. Counsel for the appellant that the issue of disallowance u/s 14A of the Act was to be decided on the basis of reasonableness and individual facts of the case. The Ld. Counsel has rightly pointed out that out of total claim of Rs.1769405/-, a separate disallowance of Rs.1692466/- has been made by the AO on account of interest free advances of Rs.73745900/- given to the sister concerns. Therefore, for the purposes of section 14A, the interest of Rs.16924 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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