TMI Blog2012 (10) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of High Court we are of the view that in the present case no interference is called for in the order of CIT (A) with respect to the disallowance pertaining to disallowance of interest amounting to ₹ 15,50,415/-. With respect to the disallowance of ₹ 1,39,125/-on account of administrative expenses, the factual position is that the assessee has stated it has not incurred any administrative expenditure A.O. has also not given a finding to the effect that the assessee has incurred expenditure towards exempt income. - I.T. A. No. 729/AHD/2012, C.O.No.97/AHD/2012 - - - Dated:- 5-10-2012 - SHRI G.C.GUPTA VICE PRESIDENT SHRI ANIL CHATURVEDI, A.M.) For the Appellant : Mr. O.P. Bhateja,Sr. D.R. For the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate concerns are in the associate who supply service and therefore the investment is for business purposes. It was further submitted that the shares were acquired during F.Y. 2003-04 out of own funds and therefore, rule 8D r.w.s. 14A is not applicable. The A.O. did not accept the contentions of the assessee. He was of the view that since investments exist during the year and it has been made with the intention to earn dividend it is immaterial as to whether the assessee has earned any exempt income during the year or not. Accordingly, A.O. computed the disallowance u/s. 14A and made total disallowance of ₹ 16,89,270/- comprising of interest disallowance of ₹ 15,50,145/- and of administrative cost of ₹ 1,39,125/-. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, as regards the disallowance u/s.14A read with Rule 8D so far as it pertains to expenditure, I find that the assessee has not maintained any separate record for expenditure incurred in respect of the shares. Secondly, the appellant cannot deny that there were no administrative expenses incurred for the investments. In view of this, the A.O. was justified to follow Rule 8D r.w.s.14A of the I.T. Act,1961. Therefore, the addition of ₹ 1,39,125/- is sustained in view of the above discussion. 5. Aggrieved by the order of CIT (A), both the parties are now in appeal before us. The Revenue is in appeal for deletion of ₹ 15,50,415/- on account of interest expenditure and the assessee for disallowance of ₹ 1,39,125/- sustaine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plus was depicted from A.Y. 2004- 04 to A.Y. 2008-09. From the table he pointed out that the assessee was always having surplus funds and had no new investments made after A.Y. 2004-05. 8. Ld. A.R. further pointed out that the Hon ble ITAT in ITA No.4237/AHD/2007 dated 31-5-2011 had accepted the fact that the assessee was having sufficient interest free funds, and the investments were of ₹ 55.25 lakhs for the year ending 31-3-2003 and also on 31-3- 2004. On these facts ITAT had held that in the absence of any direct nexus between the investments in shares and interest bearing borrowed funds and in the absence of finding that the funds have been diverted from operations and the own funds were not available with the assessee for inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch of ITAT was its own funds and not borrowed funds. The assessee has also demonstrated that no new investments have been made after F.Y. 2002-03 in that company. It has also demonstrated through its balance sheet that the assessee was having sufficient interest free funds in the form of surplus in the profit and loss account, accumulated depreciation. Hon ble Bombay High Court in the case of CIT vs. Reliance Utility (supra) has held that if the interest free funds are available to an assessee sufficient to meet with investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest free funds available. In the present case before us considering the finding of co-ordinate Bench and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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