TMI Blog2018 (10) TMI 1773X X X X Extracts X X X X X X X X Extracts X X X X ..... he disallowance made by the AO by invoking provisions of section 14A of the I.T.Act r.w. rules 8D(2)(iii) of the I.T.Rules. Disallowance of indirect interest expenditure by invoking the provisions of section 14A r.w. rules 8D(2)(ii) admittedly, interest on borrowed funds used for business purposes cannot be computed for disallowance u/s 14A r.w. rule 8D(2)(ii) of the I.T.Rules. It is the duty of the assessee to prove that interest was incurred on borrowings are used for the specific business purpose and non-interest bearing funds were utilized for making investments which has given rise to exempted income. The assessee to prove that it is having its own funds to make investment which had yielded exempted income, necessarily has to furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T. Rules. 3. Brief facts of the case are as follows:- The assessee is a firm. The assessments for the assessment years 2008-2009 to 2013-2014 were completed by disallowing expenditure incurred by invoking the provisions of section 14A of the I.T.Act r.w.r. 8D of the I.T.Rules. The Assessing Officer invoked rule 8D(2)(ii) as well as rule 8D(2)(iii) of the I.T.Rules for making the disallowances. 4. Aggrieved by the assessment orders completed for the assessment years 2008-2009 to 2013-2014, the assessee preferred appeals before the first appellate authority. The CIT(A) passed a consolidated order confirming the disallowance made u/s 14A of the I.T.Act r.w. rule 8D(2). The CIT(A), however, restricted the disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the Assessing Officer by invoking provisions of section 14A of the I.T.Act r.w. rules 8D(2)(iii) of the I.T.Rules. 6.1 Insofar as the disallowance of indirect interest expenditure by invoking the provisions of section 14A of the I.T.Act r.w. rules 8D(2)(ii) of the I.T.Rules, is concerned, the contention of the assessee is that it is having interest free funds in the form of reserves and advances from associate concern and no part of the interest bearing funds were diverted for making investments which had yield exempted income. However, this particular contention of the assessee was not demonstrated neither before the Assessing Officer nor before the CIT(A). Admittedly, interest on borrowed funds used for business purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X
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