TMI Blog2020 (12) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... rom a common pool, and therefore, a portion of the interest disallowance is warranted. Hon ble jurisdictional High Court in the case of CIT v. Microlabs Ltd [ 2016 (4) TMI 219 - KARNATAKA HIGH COURT] had held that even in a situation where investments are from common pool, if non-interest bearing funds are more than the investments in tax free securities, no disallowance can be made u/s 14A of the I.T.Act r.w.r. 8D(2)(ii) - we delete the disallowance made by the A.O. u/s. 14A of the I.T.Act r.w.r 8D(2)(ii) - we delete the disallowance made by the A.O. u/s. 14A of the I.T.Act r.w.r 8D(2)(ii) of the I.T.Rules - Decided in favour of assessee. - ITA No.1700/Bang/2019 - - - Dated:- 4-11-2020 - Shri George George K, JM And Shri B.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected the contentions of the assessee that no portion of the borrowed funds was utilized for the purpose of investment and the assessee was having sufficient own interest free funds to cover up for the investment. 5. Aggrieved by the order of the assessment making further disallowance of ₹ 66,813, the assessee filed an appeal to the first appellate authority. Before the first appellate authority, the assessee raised several contentions. The main contention was that the assessee was having substantial interest free funds which far exceeds the investment considered by the A.O. for disallowance of proportionate interest expenses under Rule 8D(2)(ii) r.w.s. 14A of the I.T.Act. The CIT(A), however, rejected the contentions of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in the case of CIT v. Microlabs Ltd. [(2016) 383 ITR 490 (Kar.)] had held that even in a situation where investments are from common pool, if non-interest bearing funds are more than the investments in tax free securities, no disallowance can be made u/s 14A of the I.T.Act r.w.r. 8D(2)(ii) of the I.T.Rules. The Hon ble jurisdictional High Court while laying down the above ratio, had relied on the following judgments of the Hon ble Bombay High Court, viz., (i) CIT v. Reliance Utilities Power Ltd. 313 ITR 340 and (ii) CIT v. HDFC Bank Limited [(2014) 366 ITR 505 (Bom.)] . The ratio of the Hon ble jurisdictional High Court and the Hon ble Bombay High Court, cited supra, squarely applies to the facts of this case. Accordingly, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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