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TMI Blog2015 (10) TMI 1888X X X X Extracts X X X X X X X X Extracts X X X X ..... e made on the component of interest amount of Rs. 2,66,89,000/- out of total disallowance under section 14A of the Act. 2. Brief facts are that the Assessing Officer while completing the assessment disallowed Rs. 3,02,07,000/- under section 14A as expenses attributable for earning dividend income of Rs. 13,95,75,006/-. The said amount of Rs. 3,02,07,000/- comprises of interest of Rs. 2,66,89,000/- under Rule 8D(ii) and Rs. 35,18,000/- being 0.5% of average investments under Rule 8D(2)(iii). On appeal, Commissioner of Income Tax (Appeals) deleted the interest component of Rs. 2,66,89,000/- holding that none of the borrowed funds have been used directly or indirectly for making investments, all the investments were made in earlier years and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance to the extent of Rs. 35,18,000/- and deleting the interest component of Rs. 2,66,89,000/- observing as under:- "5.2.2 The AR of the appellant also drawn to my attention the order passed by CIT(A) in ITA No.39 & 394/2011-12 dated 28.03.2013 for the A.Y. 2009-10 in the appellant's own case wherein the disallowance of interest expense under rule 8D(ii) was deleted by my predecessor on the ground that own funds were deployed for making investments. I have considered the findings of the AO as well as the submissions made by the AR of the appellant on this issue carefully. I have also gone through the Commissioner (Appeals) order for the Asst. Year 2009- 10 in ITA Nos 39&394/2011-12 dated 28.03.2013 relied on by the appellant. I find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, undisputedly the assesee's capital, profit and reserve, surplus and current account deposits were higher than the investment in the tax free securities. In view of this factual position, as per the judgement of this Court in the case of Reliance Utilities and Power Ltd.(supra), it would have to be presumed that investment made by the assessee would be out of interest free funds available with the assesee." Applying the above principles to the facts of the case, it is presumed that the appellant had made investments only out of the surplus funds available from the earlier years. Respectfully following the decision of the High Court of Bombay in the case of HDFC Bank Ltd. cited (supra), decision of the learned CIT(Appeals) in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure for earning the exempt income u/s 14A is treated as partly allowed." 7. On going through the above order of the Commissioner of Income Tax (Appeals), we do not find any valid reason to interfere with his findings in partly deleting the disallowance made under section 14A of the Act. The Revenue also did not rebut the findings of the Commissioner of Income Tax (Appeals) with evidences. Thus, we sustain the order of the Commissioner of Income Tax (Appeals) and reject the grounds of appeal raised by the Revenue. 8. As we have sustained the order of the Commissioner of Income Tax (Appeals), the cross objection filed by the assessee challenging the impugned order in sustaining the disallowance to the extent of 0.5% of average investments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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