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2016 (5) TMI 1278 - ITAT KOLKATA

2016 (5) TMI 1278 - ITAT KOLKATA - TMI - Disallowance u/s 14A read with rule 8D - Held that:- We find that the assessee has got sufficient own funds in the form of share capital and Reserves and Surplus, which is much more than the investments made by the assessee and hence, it can be safely concluded that the investments were made only out of the own funds of the assessee - The hon'ble Bombay High Court in CIT v. Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT ] has he .....

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fic reference to books of account of the assessee. In the instant case, the Ld. AO had not recorded the satisfaction in the required manner as per Rule 8D(1) of the Rules. Hence, we hold that Ld. AO is not entitled to mechanically apply rule 8D(2) of the Rules without recording satisfaction in terms of Rule 8D(1) of the Rules - Decided in favour of assessee - C.O. No. 65/Kol/2014 In I.T.A No.721/Kol/2014 - Dated:- 11-5-2016 - Shri N. V. Vasudevan, JM & Shri M. Balaganesh, AM] For the Appella .....

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ss Objection preferred by assessee is delayed by two days. It was explained by the Ld. AR that the Director was out of station on the due date and hence, the appeal could not be filed within time and immediately on his return to office, signature was obtained on the cross objection and filed the same before the Tribunal. We are convinced with the explanation given by the Ld. AR for the delay and accordingly, we hereby condone the delay and admit the Cross Objection. 3. We find that the assessee .....

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Co. Ltd. Vs. CIT reported in (1998) 229 ITR 383 (SC) , we admit the additional ground raised by the assessee for the purpose of adjudication. 5. The assessee has raised the following grounds: 1. For that the appeal is barred by limitation and therefore liable to be dismissed as such. 2. For that the Ld. C.I.T(A) was perfectly justified in deleting the addition of ₹ 13,24,582/ - when the AO did not record any satisfaction and mechanically applied the provisions of sec. 14A read with Rule 80 .....

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assessee has derived dividend income from shares and mutual funds amounting to ₹ 19,21,520/- and tax free interest income of ₹ 2,11,741/-. The assessee voluntarily disallowed a sum of ₹ 6,38,553/- u/s. 14A of the Act as expenditure incurred for the purpose of earning exempt income. The Ld AO without recording any satisfaction in terms of Rule 8D(1) of the I. T. Rules, 1962 (hereinafter referred to as the Rules ) having regard to the accounts of the assessee, proceeded to direc .....

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hat the assessee had sufficient own funds to make investments in shares and mutual funds. He also argued that it is not the case of the Ld. AO that the borrowed funds have been diverted for non-business purposes, which is quite evident from the fact that no disallowance of interest u/s. 36(1)(iii) of the Act has been made by the AO in the assessment. Secondly, he argued that no satisfaction was recorded by the AO in terms of Rule 8D(1) of the Rules and accordingly, no disallowance u/s. 14A of th .....

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ch is much more than the investments made by the assessee and hence, it can be safely concluded that the investments were made only out of the own funds of the assessee. In this respect, we place reliance on the recent decision of Hon ble Karnataka High Court in the case of CIT Vs. Microlabs Ltd. reported in (2016) 383 ITR 490 (Kar), wherein it was held that - We have heard the rival submissions. A copy of the availability of funds and investments made was filed before us which is at pages 38 to .....

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at investments have been made out of interest-free funds and no disallowance under section 14A towards any interest expenditure can be made. This view was again confirmed by the hon'ble Bombay High Court in CIT v. HDFC Bank Ltd., I. T. A. No. 330 of 2012, judgment dated July 23, 2014 - [2014] 366 ITR 505 (Bom) wherein it was held that when investments are made out of common pool of funds and non-interest bearing funds were more than the investments in tax-free securities, no disallowance of .....

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n the issue is already covered by a decision of the High Court of Bombay with which we concur, we do not find any substantial question of law would arise for consideration as canvassed. 6. In view of the above observations, the appeal is dismissed. 8. Apropos, the non-recording of satisfaction by the Ld. AO in terms of Rule 8D(1) of the Rules, we hold that the Ld. AO is supposed to record his satisfaction as to how the disallowance made by the assessee in the return of income is incorrect with s .....

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