TMI Blog2014 (1) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... s also interest bearing funds in the form of loan, then it can be presumed that the investment had been made from interest free funds available – The issue has been restored for fresh adjudication. - ITA No. 4620/Mum./2011, ITA No. 7284/Mum./2011 - - - Dated:- 24-1-2014 - Shri R. C. Sharma And Shri Amit Shukla,JJ. For the Petitioner : Mr. O. P. Singh For the Respondent : Mr. Jayesh Dadia ORDER Per Amit Shukla, J. M. The present appeals have been preferred by the assessee challenging the impugned order 9th May 2011, for the assessment year 2008-09 and order dated 20th September 2011, for the assessment year 2009-10, passed by the learned Commissioner (Appeals)-XXI, Mumbai, for the quantum of assessment passed under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been sold in the financial year 2009-10 on which the assessee has paid long term capital gain. Hence, it cannot be said that the income from investment has yielded exempt income rather the assessee has paid taxes on sale of shares. It was further pointed out that the assessee also had own funds which is reflected in the balance sheet. The Assessing Officer rejected the assessee's contention and held that the disallowance under section 14A has to be made under rule 8D as the same is effective from the assessment year 2008-09. Accordingly, he computed the disallowance under rule 8D at Rs. 26,12,396 as per the working given at Page-4 of the assessment order. 4. Before the learned Commissioner (Appeals), it was submitted that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment from these funds and no disallowance of interest can be made while working the disallowance under section 8D. In support of his contention, he strongly relied upon the decision of the Hon'ble Jurisdictional High Court in CIT v/s Reliance Utilities and Power Ltd., [2009] 313 ITR 340 (Bom.) and the decision of Hon'ble Gujarat High Court in CIT v/s UTI Bank Ltd., [2013] 215 Taxman 8 (Guj.). In these decisions, the aforesaid proposition has been clearly upheld that if the assessee had sufficient interest free funds to meet its tax free investment yielding exempt income, then it could be presumed that such investments have been made from interest free funds and not loan funds. Thus, he submitted that the interest component should be remo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Reliance Utilities and Power Ltd. (supra) has clearly held that if there are interest free funds available to the assessee which is sufficient to meet its investment and at the same time the assessee has also interest bearing funds in the form of loan, then it can be presumed that the investment had been made from interest free funds available. This proposition of the Hon'ble Jurisdictional High Court has also been referred and relied upon by the Hon'ble Gujarat High Court in UTI Bank Ltd. (supra). This binding precedence has to be kept in mind while working the disallowance under section rule 8D. Accordingly, we set aside the impugned orders passed by the learned Commissioner (Appeals) for the assessment year 2008-09 and 2009-10 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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