TMI Blog2015 (10) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... vestments in Birla Sun Life Cash Plus, in LIC Mutual Fund Income Plus Fund and LIC MF Liquid Fund. The initial investment is made from cash generated from operating activities which was ₹ 24,74,14,673/- as per cash flow statement forming part of annual report. After making above initial investments the assessee have made various redemptions in respective plans during the years from such redemption proceed only new purchases of investments have been made. It appears that no borrowings had been used for investing in Mutual funds from which income not forming part of total income have been earned. Therefore the interest cost which had been used by ACIT - (OSD) should be excluded while applying Rule 8D. In view of the above discussion, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come which does not form part of the total income, as in the assessee's case the A.O. has applied Rule 8D arbitrarily without considering the facts. As per section 14A(2), the Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, having regard to the accounts of the assesse, if the Assessing Officer is not satisfied with the correctness of the claim of the assessee in respect of such expenditure. As per the ld. A.R. assessee had sufficient internal accruals for making such investment, therefore, no disallowance on account of interest expenditure was warranted. It was further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A.R., the same should not be taken into account while computing the disallowance under Rule 8D(2)(iii) of the I.T. Rules. Accordingly we direct the A.O. to exclude such strategic investment while computing disallowances under Rule 8D. 6. From the record we also found that the assessee had made fresh investments of ₹ 3,20,00,000/- Birla Sun Life Cash Plus on 10-04-2008, ₹ 5,00,000/- ₹ 3,60,00,000/- on 01-10-2008 and 10-10-2008 respectively in LIC Mutual Fund Income Plus Fund and ₹ 1,60,00,000/- LIC MF Liquid Fund on 09-01-2009 totaling to ₹ 8,40,00,000/-. The initial investment is made from cash generated from operating activities which was ₹ 24,74,14,673/- as per cash flow statement forming part of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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