TMI Blog2016 (9) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... shares that gave tax free income at ₹ 1.03 Crores which is much more lower than the interest free funds available. Hence, this being the position, we are of the view that the assessee’s case is squarely covered by the decision of the Hon’ble Bombay High Court in the case of HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT ] wherein held if there were funds available both interest-free and over draft and/or loans taken, then a presumption would arise that investments would be out of the interest-free funds generated or available with the company if the interest-free funds were sufficient to meet the investment. - Decided in favour of assessee Disallowance of depreciation on motor car - car is registered in the name of one of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010-11 vide his order u/s 143(3) of the Income Tax Act, 1961 (hereinafter the Act ) dated 22-03-2013. 2. The first issue in this appeal of the assessee is against the order of the CIT (A) confirming the disallowance of expenses relatable to exempted income by invoking the provisions of Section 14A of the Act read with Rule 8D (2) (ii) of the Income Tax Rules, 1962 (hereinafter the Rules ) at ₹ 10,49,330/-. 3. Briefly stated facts are that the assessee has earned dividend income of ₹ 3,95,624/- and claimed the same as exempt. Admittedly, this income does not form part of the total income. The AO by invoking the provisions of Section 14A of the Act read with Rule 8D of the Rules made disallowance of total expenses of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment available with the assessee is at ₹ 20,32,39,068/- and out of the same, the assessee has made investment in shares at ₹ 1,03,32,925/- from where the assessee has earned dividend income. It was also explained by the assessee that current year s profit was to the tune of ₹ 2,39,17,686/-. Before the CIT (A) the assessee also contended that the AO has not dealt with the submissions of availability of funds and investment in shares vis- -vis the nexus of investment. According to him, the AO applied Rule 8D of the Rules mechanically and without recording of any satisfaction. The learned Counsel for the assessee before the CIT (A) also relied on the decision of the Hon ble Bombay High Court in the case of CIT Vs Reliance Ut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee s own share capital as well as reserves and surplus is more than ₹ 20 Crores as against the investments in shares that gave tax free income at ₹ 1.03 Crores which is much more lower than the interest free funds available. Hence, this being the position, we are of the view that the assessee s case is squarely covered by the decision of the Hon ble Bombay High Court in the case of HDFC Bank Ltd. (supra) wherein the Hon ble High Court has held as under:- If there be interest-free funds available to an assessee sufficient to meet its investments and at the same time the assessee had raised a loan it can be presumed that the investments were from the interest-free funds available. In our opinion, the Supreme Court in East ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable with the company if the interest-free funds were sufficient to meet the investment. In this case this presumption is established considering the finding of fact both by the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal. (emphasis supplied) Respectfully following the above decision of the Hon ble Bombay High Court in the case of HDFC Bank Ltd. (supra), we allow the ground of appeal of the assessee. 5. The next issue in this appeal of the assessee is against the order of the CIT (A) confirming the action of the AO in disallowing depreciation of ₹ 5,61,644/- on motor car by holding that the car is registered in the name of one of the directors and legal ownership is not in the name of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not registered in assessee s name . Following the above decision of the Hon ble Bombay High Court in the case of Dilip Singh Sardarsingh Bagga (supra) we allow the claim of the assessee. This ground of assessee s appeal is allowed. 8. The third issue raised by the assessee is as regards to the disallowance of expenses qua exempted income while computing book profit u/s 115 JB of the Act. We have already adjudicated this issue in the first ground and deleted the disallowance. Accordingly, while computing book profit u/s 115 JB of the Act, the same decision will apply. Resultantly, this ground of appeal of the assessee stands allowed. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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