TMI Blog2011 (12) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is directed against the order of the CIT(A)-IV, Hyderabad dated 15.2.2010 and pertaining to the assessment year 2006-07, confirming the action of the Assessing Officer in disallowing ₹ 3,21,900/- out of interest debited to profit and loss account on the ground that such borrowings has been utilized for making Investments income from which is exempt from tax. 2. The Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 21,49,000/- in various companies during the years 1976-77 to 2000-01 from out of internal accruals and not from out of borrowed funds. It was further submitted that during the Asst. Year 2006-07 no fresh investments have been made. It was also submitted that the loan taken by the appellant came down to ₹ 3,47,73,777 at end of the Asst. Year as against loan of ₹ 3,81,66,639/- stoo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) dismissed the appeal of the Assessee observing as under: As regards the disallowance of interest expenses of ₹ 3,21,900/- it is seen that even though the investment in shares for the purpose of earning exempted dividend income had not been made out of borrowed funds, in the light of the decision of Hon ble Kerala High Court in the case of CIT vs VI Baby Co., (supra) it can be said t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares. Further it is also seen that the appellant has not challenged the average interest rate of 15% adopted by the assessing officer. Under the circumstances I agree with the view of the assessing officer regarding disallowance of proportionate interest of ₹ 3,21,900/- is therefore decided against the appellant. 5. Aggrieved the assessee is on appeal before us. It is the contention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment should be considered as having been made out of internal accruals and no part of the borrowals can be said to have been utilized for the purpose of investment. Unless the assessing officer proves that the borrowed fund have been actually been utilized for the purpose of making investment in shares, no adhoc disallowance can be made under Section 14A. The decision of the Punjab and Hariyana Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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