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TMI Blog2016 (8) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... ning its income at Rs. 27, 69, 170/-. 2. The solitary ground of appeal is about confirming the disallowance of Rs. 50. 64 lakhs, made u/s. 14A of the Act. During the assessment proceedings, the AO found that the assessee had shown dividend income of Rs. 25. 99 lakhs, that the same was claimed as exempt income, that it did not make any disallowance u/s. 14 A of the Act, that the assessee had made investment to the tune of Rs. 12. 26 crores, that it had incurred interest expenditure of Rs. 2. 76 crores on the funds borrowed during the year. He asked the assessee to explain as to why disallowance u/s. 14 A r. w. Rule 8D of the Income Tax Rules, 1962 (Rules) should not be calculated. Vide its letter dated 9/12/201 and 12/12/2011 the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded the identical issue against the assessee. He referred to the case of the Damani Estate and finance Private Ltd. , And held that where there was no separate an exclusive establishment mending for the purpose of managing investments that yield exempt income of presumption was required to be made that common office facilities available were also utilised for the purpose of investment activities, that there was an underlying presumption under the Rule 8D of the Rules. Finally, he upheld the disallowance made by the AO. 4. During the course of hearing before us, the Authorised Representative(AR) contended that the loan was taken for the business purposes, that the borrowed funds were not utilised for making investment resulting in exempt in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure. The presumption, as held by the various honorable High Courts, is that the assessee utilised its own funds for making investments. In the case under consideration the AO had not brought on record any fact proving that the loan taken by the assessee was not used for the business purposes. If the assessee had utilised the borrowed funds for its business and not for the investment, there was no justification for invoking the provisions of section 14A of the Act. Therefore, we hold that the order of the FAA confirming the disallowance of Rs. 43. 42 lakhs under the head interest expenses cannot be endorsed. As far as the disallowance made under the head 0. 5% of the average investment is concerned, we would like mention that same should be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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