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2016 (7) TMI 959 - BOMBAY HIGH COURT

2016 (7) TMI 959 - BOMBAY HIGH COURT - TMI - Disallowance of interest expenses u/s 14A - Held that:- It is an undisputed position in this case that interest free funds available with the assessee are much more than the investments made to earn exempt incomes as in the case of Reliance Utilities and Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT ). Thus, the presumption applies. Further, nothing has been shown to us to warrant taking a different view to that taken in Reliance Utilities and Power .....

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Income Tax Appellate Tribunal (the Tribunal). The impugned order is in respect of Assessment Year 200809. 2. The Revenue has urged the following question of law for our consideration : (i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the disallowance made by the Assessing Officer and confirmed by the CIT(A) of interest expenses amounting to ₹ 59.79 lakhs u/s 14A of the Income Tax Act? 3. During previous year relevant to the su .....

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and computed the disallowance at ₹ 76.71 lakhs on the investments made to earn the above exempt income. On first appeal, the order of the Assessing Officer was upheld by an order dated 21st June, 2011 passed the Commissioner of Income Tax [CIT(A)]. 4. On further appeal, the Tribunal observed that disallowance of ₹ 76.71 lakhs comprises two elements as under : (a) ₹ 59.79 lakhs as interest disallowed (b) ₹ 16.92 lakhs other expenses disallowed at 0.50% under Rule 8D of th .....

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s Court in Commissioner of Income Tax Vs. Reliance Utilities and Power Ltd. 313 ITR 340 to hold that if the interest free funds are available with the assessee and are sufficient to meet its investment, then it would be presumed that the investment have come out of its interest free funds. In the above view, the impugned order deleted the addition of ₹ 59.79 lakhs made in view of disallowance of expenses under Section 14A of the Act. 6. So far as second issue is concerned, the order of the .....

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