TMI Blog2016 (12) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... n the shares and securities out of interest free funds. In view of the facts and circumstances of the case, we are of the considered opinion that the case of the assessee is squarely coved by the decision of the Hon’ble jurisdictional High Court and accordingly, we set aside the order of the ld. CIT(A) and direct the AO to delete the addition as made under rule 8D(2(ii) of the Rules. - I.T.A. No.2030/Mum/2015 - - - Dated:- 30-11-2016 - SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR,(AM) For The Appellant : Shri N R Agrawal For The Respondent : Shri Pratap Singh ORDER Per RAJESH KUMAR, Accountant Member : This is an appeal filed by the assessee and is directed against the order of the Ld. CIT(A)-28, Mumbai dated 3.2.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded the same to the income of the assessee. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority, who also confirmed the action of the AO qua the addition made u/s 14A read with rule 8D of the Rules by observing and holding as under : 2.5 I have considered the facts of the case and the submissions made by assessee. The assessee has basically contended that since his capital as 31.03.2009 and as on 31.03.2010 was more than the investments made, it should be presumed that the investments are out of the interest free capital of the assessee in view of the judgement of the Hon'ble Bombay High Court in the case of HDFC Bank Ltd (supra) and Reliance Utilities and Power Ltd. (supra). I fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has investment in shares and debentures of ₹ 1.76 crores and in stock-in-trade of ₹ 1.41 crores. The assessee has secured loans of ₹ 1.55 crores and unsecured loans of ₹ 3.19 crores. Clearly, part of the interest bearing loans has been utilized for making investments in shares and debentures. Although, as at 31.03.2010, the interest bearing loans have come down drastically, it is clear that part of the loans on which interest has been paid during the year also relates to the investments made which is being carried forward from the earlier year. Hence, the contention of the assessee that only interest-free funds have been utilized for the purpose of investments in shares and debentures cannot be accepted: T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance worked out by the A.O. as per the method prescribed in Rule 8D(2)(iii) is also upheld as the assessee has not shown that no part of the administrative expenditure can be attributed to the activity of earning tax free income and also for the fact that he has not contested such disallowance made the A.O. in his submissions in the appellate proceeding. In view of the aforesaid reasons, the ground of appeal filed by the assessee is dismissed 4. The ld. AR vehemently submitted before us that the assessee s own funds were for more than the investment made in the shares and securities income of which was claimed as exempt income under the Act. The ld. AR submitted that total capital balance as per the audited balance sheet as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the balance sheet on 31.3.2010 filed at page 3 of the paper book that the assessee s own interest free funds were ₹ 3,44,28,517/- against the investment in shares and securities of ₹ 1,77,34,233/-. We are of the considered opinion that the case of the assessee is squarely covered by the ratio laid down by the Hon ble Jurisdictional High Court in the case of HDFC BANK LTD(supra), in which the Hon ble High Court has held that in case interest free funds are more than the investments made in the shares and securities which yielded exempt income then the presumption would be that investments were made in the shares and securities out of interest free funds. In view of the facts and circumstances of the case, we are of the consider ..... X X X X Extracts X X X X X X X X Extracts X X X X
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