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TMI Blog2018 (7) TMI 1868X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee relates to disallowance of interest expenditure amounting to Rs. 3,66,259/- u/s 14A of the IT Act, 1961. 3. The facts, in nutshell, are that the assessee made an investment of Rs. 1,38,11,181/- towards purchase of agricultural land. Therefore, the Assessing Officer took a view that the assessee has or will earn exempt income on account of agriculture produce. He, therefore, invoking the provisions of section 14A of the Act, made disallowance of Rs. 3,66,259/-. On appeal, the learned Commissioner of Income Tax (Appeals) confirmed the action of the Assessing Officer. Now the assessee is in appeal before the Tribunal. 4. Before us, the learned counsel for the assessee relied upon the decision of the Hon'ble High Court of Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee, no disallowance u/s 14A of the Act was called for. In this view of the matter, the orders of the authorities below are set aside and the ground of appeal taken by the assessee is allowed. 5. Ground no. 2 relating to levy of interest u/s 234B and 234C of the Act is consequential in nature and, therefore, it requires no adjudication. ITA No. 976/Ind/2016 6. In this appeal, ground no. 1 relates to disallowance of interest amounting to Rs. 1,38,128/-on advances made to directors. 7. Brief facts of the case are that the Assessing Officer observed that on one hand the assessee during the relevant assessment year had taken loans from one of the directors, Shri Pradeep Kakni and paid interest @ 14% amounting to Rs. 3,86,758/- a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aft and/or loans are taken, then a presumption would arise that investments would be out of the inty free fund generated or available with the company, if the interest free funds are sufficient to meet the investments. In the instant case said presumption was established considering the findings of fact, both by the Commissioner (Appeals) and the Tribunal (Para 10)" 10. We, therefore, in the given facts and circumstances of the case and in view of the judgment referred to above, are of the considered view that the Assessing Officer has not brought out sufficient details on record for alleged interest disallowance whereas the assessee has been successful in demonstrating that in view of having sufficient interest free capital and reserve, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer Limited (313 ITR 340) has categorically held as under :- "If there are funds available both, interest free and over draft and/or loans are taken, then a presumption would arise that investments would be out of the inty free fund generated or available with the company, if the interest free funds are sufficient to meet the investments. In the instant case said presumption was established considering the findings of fact, both by the Commissioner (Appeals) and the Tribunal (Para 10)" Further in case of CIT vs. HDFC Bank 366 ITR 505(Bom) it is held that where assessee's own funds and other non interest bearing funds were more than investment in tax free securities, impugned order passed by Assessing Officer disallowing apart of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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