TMI Blog2020 (9) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... investment held by assessee during the year under consideration. Thus, additions as were made by AO which was later sustained by learned CIT(A) by disallowing interest expenditure invoking provisions of Section 14A read with Rule 8D(2)(ii) of the 1962 Rules is not sustainable in the eyes of law which we order deletion. Our decision is supported by decision of Reliance Utilities and Power Limited . [ 2009 (1) TMI 4 - BOMBAY HIGH COURT], M/S RELIANCE INDUSTRIES LTD [ 2019 (1) TMI 757 - SUPREME COURT] HDFC BANK LTD. [ 2016 (3) TMI 755 - BOMBAY HIGH COURT] - Decided in favour of assessee. - ITA No. 1736/Chny/2019 - - - Dated:- 19-8-2020 - SHRI GEORGE MATH AN, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER Appellant by : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also provides that the investments which yielded exempt income only needs to be taken for computation purposes under Rule 8D(ii). c) The Commissioner of Income tax (Appeals) has incorrectly invoked the clause (2)(ii) of Rule 8D by considering the entire interest expenditure without appreciating the fact that investments were made out of own funds and not borrowed funds. There is no specific interest expenditure which has been incurred for earning the dividend income. d) The Commissioner of Income tax (Appeals) ought to have appreciated the fact that the Appellant has earned interest income which has been offered to tax in the return of Income. Even assuming Rule 8D(ii) is to be invoked, only the net interest expense is to be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibutable to any particular receipt (A) 3081476 Investment opening balance 112471516 Investment closing balance 0 Total of opening and closing investment 112471516 Average Investment (B) 56235758 Opening Asset Balance 189699835 Closing Asset Balance 146556135 Total of opening and closing asset 336255970 Average value of asset (C) 168127985 4. The assessee bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the year under consideration , which led to restricting disallowance of expenditure to the tune of ₹ 11,576/- by learned CIT(A) as against disallowance of ₹ 2,81,179/- made by the AO. This issue has also attained finality. It is not brought to the notice of the Bench by learned DR during the course of hearing that Revenue is aggrieved by the relief given by learned CIT(A) with respect to aforesaid two disallowances u/s 14A of the 1961 Act read with Rule 8D(2)(i) and 8D(2)(iii) of the 1962 Rules. The only issue which is now agitated by assessee before tribunal is with respect to disallowance of interest expenditure to the tune of ₹ 10,30,698/- as was made by AO while framing scrutiny assessment which was later susta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plea was taken before the authorities below that no part of interest bearing borrowings were utilized for making investments and it is only interest free owned funds which were deployed for making investments. Thus, it was submitted that no disallowance of interest expenditure by invoking provisions of Section 14A of the 1961 Act read with Rule 8D(2)(ii) of the 1962 Rules can be made. Our attention was drawn to the appellate order of learned CIT(A) as well to the audited financial statement of the assessee which is placed on record by the assessee before the tribunal. It was submitted that the assessee has paid interest of ₹ 30,81,476/- during the year under consideration and assessee has earned interest income of ₹ 29,95,856/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the previous were to the tune of Rs. Nil as at 31.03.2011 , which gives average investment of ₹ 5,62,35,758/- held by the assessee during the year under consideration . The assessee has sold/redeemed its entire investment portfolio during the year under consideration. It is the contention of the assessee even before authorities below that the interest bearing borrowings were utilized for business purposes and not for making investments. The authorities below have not given any finding to contradict/rebut this plea of the assessee. In any case, the assessee s own interest free funds which were deployed by the assessee in business ( share capital-losses) were to the tune of ₹ 1234.83 lacs as at 31.03.2010 and ₹ 1083.75 la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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