9911796707
TMI Blog2016 (3) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 81,37,289/-. 2. Brief facts are that, the assessee company is an Authorized Dealer of Cat-II, registered with Reserve Bank of India, which is mainly in the business of sale of foreign currencies, foreign money exchange etc. During the year, the assessee had earned a dividend income of Rs. 38,18,832/- which was claimed as exempt in computation of total income. The assessee has not computed any disallowance for earning of the exempt income. In response to the show cause notice, assessee submitted that entire investments were made out of assessee's own interest free funds, therefore, no direct or indirect expenses were incurred. However, the AO computed the disallowance as per formula laid down under Rule 8D. 3. Before the CIT(A), the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reliance Money Manager Mutual Fund On 25.03.2008 (69,00,00,000) Redemption others (14,00,00,000) Closing balance as on 31.3.2008 41,03,289 Reliance Money Manager Mutual Fund (Institutional option dividend plan) Particulars No. of Units Rate Balance (Rs) Purchased out of redemption proceeds of HSBC MF 6,89,216.774 1,001.1364 69,00,00,000 Dividend reinvestment 877.279 1,001.1364 8,78,276 6,90,094.053 69,08,78,276 Redemption - Closing balance as on 31.3.2008 6,90,094.053 1,001.1364 69,08,78,275 Thus, he submitted that no interest expenditure can be disallowed. This fund flow statement, he corroborated from the bank statement also which has been placed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee funds available with the assessee. Thus, we agree with the contention of the assessee that no disallowance on account of interest can be made u/s 14A. Otherwise also Ld. Counsel has specifically pointed out before us, the source of investments, which were from interest free funds. Thus, on these facts also, no disallowance of interest can be made. Now, coming to the indirect expenses, we find that assessee has debited sum of Rs. 8.92 crores on the 'employees costs' which majorly constituted "salary" of the employees. As pointed out by the Ld. Senior Counsel, the only activity in relation to the investment carried out by the assessee was Switching of one HSBC Mutual Fund account to Reliance Mutual Fund account. Thus, if at all any indirec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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