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TMI Blog2016 (7) TMI 1040X X X X Extracts X X X X X X X X Extracts X X X X ..... Act"). 2. The only issue in this appeal of the assessee is against the order of the learned CIT (A) confirming the action of the AO in disallowing expenses relatable to earning exempted income by invoking the provisions of Section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 (hereinafter referred to as "the Rules"). 3. Briefly stated, the facts that the AO during the course of assessment proceedings noticed that the assessee has earned exempt income being dividend of Rs. 12,35,406/- and interest on PPF at Rs. 78,619/-. According to the AO, the assessee has claimed expenses relating to interest and finance charges to the tune of Rs. 42,54,630/- out of total expenses of Rs. 70,50,098/-. According to the AO the assessee wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be presumed that the interest free funds were utilized in making such investments. This contention of the assessee cannot be accepted and no such presumption can be made. The assessee has to show with clear evidence that all investments which come under the purview of sec. 14A have been actually made from out of the interest free funds have been utilized for such purposes. It is only to address the situation where no such correlation can be made that Rule 8D(2)(ii) has been brought into the statute. In view of the above and in view of the fact that the assessee has furnished no evidence to show that only the interest free funds claimed to be available with her have been utilized for making investments which come under the purview of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 42,391 The learned Counsel for the assessee also filed the details of expenditure of interest not attributable to any particular income for the reasons that assessee's non-interest bearing funds are more than of investment in shares, hence, there can be no disallowance invoking the provisions of Rule 8D(2) (ii) of the Rules. In this respect, he filed the following details:- "Expenditure by way of interest not attributable to any particular income Particulars Amount I Non Interest bearing funds a) Capital amount 2,23,54,176 b) Advance for purchase of shares 1,60,00,000 c) Payable to partnership firm - ADD investments 1,80,36,420 Total 5,63,90,596 II Investment in shares Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst that she had a capital as at 31.03.2009 of Rs. 2,23,54,176/- advance for purchase of shares from Mr. Deepak Dalal (Husband) of Rs. 1,60,00,000/- and amount payable to partnership firm of Rs. 1,80,36,420/-, totally amounting to Rs. 5,63,90,596/-. It has been submitted by the assessee that considering the above position, there ought not to be any disallowance under Rule 8D(2)(ii) in as much as the capital and non interest bearing funds available with the appellant is far in excess of the investments in quoted equity shares and public provident fund that have yielded dividend income and interest income respectively, which are exempted from tax ......". In view of the above, the learned Counsel for the assessee submitted that complete det ..... X X X X Extracts X X X X X X X X Extracts X X X X
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