TMI Blog2015 (10) TMI 1888X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in making disallowance on the component of interest. AO has correctly applied the provisions of sec.14A read with Rule 8D and applied 0.5% of average investments which work out to ₹ 35,18,000/- which is reasonable and justifiable. This ground of appeal, as it relates to disallowance of 0.5% of average investments as expenditure is confirmed 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. 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 susta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier years and the company has sufficient own funds for making investments. The Revenue came up in appeal before us challenging the order of the Commissioner of Income Tax (Appeals) in deleting the interest component of ₹ 2,66,89,000/- made under section 14A of the Act. 3. The assessee filed cross objection for sustaining the disallowance to the extent of 0.5% of average investments disallowed under section 14A read with Rule 8D(2)(iii) of the Act. 4. Departmental Representative vehemently supports the order of the Assessing Officer in disallowing ₹ 3.02 crores invoking provisions of section 14A read with Rule 8D of the Act. 5. Counsel for the assessee reiterated the submissions made before the Commissioner of Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 28.03.2013 relied on by the appellant. I find that there is considerable force in the submissions of the appellant. The appellant submitted that none of the borrowed funds have been used directly or indirectly for making the investments. The appellant also submitted that for all the investments made in earlier years, the company has sufficient own funds for making the investments. The appellant has clearly established with the financial statements for the period from 2001-02 to 2009-10 that (a) it had sufficient funds to make the investments (b) It had sufficient profits in the earlier years when the investments were made (c) And in all the years the borrowed funds were utilized for the purpose of the business and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of HDFC Bank Ltd. cited (supra), decision of the learned CIT(Appeals) in the appellant's own case for the A.Y. 2009-10, I am fully convinced that the AO has legally erred in making disallowance on the component of interest. Under the facts and circumstances of the case and legal position, I am of the considerate view that there can be no disallowance in so far as interest of borrowings is concerned u/s 14A. The AO, therefore, is directed to delete the interest amount of ₹ 2,66,89,000/- out of the total amount of ₹ 3,02,07,000/-. Hence, this ground of appeal is allowed. 5.2.3 During the course of appellate proceedings, the AR of the appellant was required to give explanation as to basis of allocation of expense of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X
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