TMI Blog2013 (10) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Bombay High Court in CIT vs. Reliance Utilities and Power Ltd [2009 (1) TMI 4 - HIGH COURT BOMBAY] held that if there are funds available, both interest-free and overdraft and/or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the company, if the interest free funds were sufficient to meet the investments – Decided in favor of Assessee. - I.T. A. No. 2230/AHD/2010 - - - Dated:- 20-9-2013 - Shri Mukul Kr. Shrawat, J.M. And Shri Anil Chaturvedi, A.M.,JJ. For the Appellant : Shri T. P. Hemani. A. R. For the Respondent : Shri J. P. Jangid. Sr. D.R. ORDER Per Shri Anil Chaturvedi,A. M. 1. This appeal is filed by the Assessee against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Assessing Officer in respect of short credit of interest income. 4. Gr. No 1 2 are interconnected and are wrt disallowance u/s 14A: 5. On perusal of the Profit and Loss account, Assessing Officer noticed that Assessee has earned share dividend of Rs. 44,68,289/- and claimed exemption on it u/s 10(34). AO also noticed that Assessee had paid interest of Rs 2,24,41,516/-. Assessee was asked to justify its claim for not disallowing expenditure u/s 14A. Assessee interalia submitted that investments have been made from own funds and not from borrowed funds and further provisions of Rule 8D were not applicable to the year under consideration and therefore no disallowance of interest was called for. AO did not accept the contentions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforesaid investments were made in earlier years and no investments were made during the year under consideration. On the contrary at the year end the investments have decreased by Rs 3.05 crore. He therefore submitted that since the Assessee had substantial interest free funds at its disposal and in the absence of nexus between the borrowings and investments, no disallowance u/s 14A was called for. He further placed reliance on the decision of Reliance Utilities Ltd 313 ITR 340, Woolcombers of India Ltd vs CIT 134 ITR 219 (Cal), Hero Cycles 323 ITR 158 and other decisions. He further submitted that in Assessee's own case for AY 2005- 06 (ITA No 3958/Ahd/2008) disallowance made u/s 14A was deleted. He further submitted that the Assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in the case of Godrej Boyce (2010) 328 ITR 81 (Bom) has held that provisions of Rule 8D are applicable from A.Y. 2008-09 and not in earlier years. In the Assessee's own case for AY 2005-06, the co-ordinate Bench of Tribunal in ITA No 3958/Ahd/2008 order dated 17.6.2011 has decided the issue in favour of Assessee by holding as under: 18. We have heard the parties. In view of the fact that assessee had sufficient profit, capital and reserves which are more than investment made by the assessee in mutual fund, it cannot be presumed that investment in mutual fund made by the assessee were out of interest bearing borrowed funds. Hon. Supreme Court in the case of Munjal Sales Corporation vs. CIT (2008) 298 ITR 298 (SC) held that where ..... X X X X Extracts X X X X X X X X Extracts X X X X
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