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COMMISSIONER OF INCOME-TAX Versus SBI DHFL LTD.

2015 (11) TMI 399 - BOMBAY HIGH COURT

Disallowance made under section 14A - interest bearing borrowed funds were utilised by the assessee entirely for the purpose of its business and investment in tax-free bonds having been made by the assessee out of its own funds as submittted by revenue - ITAT allowed assessee claim - Held that:- The Commissioner of Income-tax (Appeals) and the Tribunal both held that there was no warrant for such an estimation. The Commissioner of Income-tax (Appeals) held that no interest expenditure can be all .....

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TMI 4 - HIGH COURT BOMBAY ]. The view taken also has been in consonance with the law laid down by this court in the case of Godrej and Boyce Mfg. Co. Ltd. v. Deputy CIT reported in [2010 (8) TMI 77 - BOMBAY HIGH COURT ] 328 ITR 81 (Bom).

In these circumstances, we find that merely because that there is a common pool of funds, a presumption that the investment yielding tax-free returns is made by the assessee out of its own funds cannot be raised. Such a view of the Tribunal, therefore .....

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s questions and grounds. The principal ground on which the Revenue was aggrieved was a relief that the assessee obtained and from the first appellate authority. The argument of the Revenue's representative and throughout appears to be that interest bearing borrowed funds were utilised by the assessee entirely for the purpose of its business and investment in tax-free bonds having been made by the assessee out of its own funds. The disallowance made under section 14A was uncalled for and that .....

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ime were 69.9 per cent. of the total funds, the utilisation of the borrowed funds for making tax-free bonds of ₹ 10.50 crores at ₹ 716.58 lakhs and the interest attributable to the said borrowed funds would have to be taken into account. The average rate of interest was applied by the Assessing Officer and which he proceeded to disallow in the assessment completed by him. 3. The Commissioner of Income-tax (Appeals) and the Tribunal both held that there was no warrant for such an esti .....

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aw laid down by this court in the case of CIT v. Reliance Utilities and Power Ltd. [2009] 313 ITR 340 (Bom). The view taken also has been in consonance with the law laid down by this court in the case of Godrej and Boyce Mfg. Co. Ltd. v. Deputy CIT reported in [2010] 328 ITR 81 (Bom). 4. In these circumstances, we find that merely because that there is a common pool of funds, a presumption that the investment yielding tax-free returns is made by the assessee out of its own funds cannot be raised .....

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