TMI Blog2016 (9) TMI 1594X X X X Extracts X X X X X X X X Extracts X X X X ..... capital of an amount of ₹ 60,48,00,000/- and reserves and surplus amounting to ₹ 2,09,36,78,634/-as at 31-03-2009 against which investments in shares stood at ₹ 1,28,67,27,471/- as at 31-03-2009. In the same unsigned chart it is also reflected an amount of ₹ 34,92,98,780/- under the head profits earned during the year as per P L A/c, while dividend received stood at ₹ 8,47,63,455/- . - no audited financial statements are submitted by the assessee . We , however, agree with the proposition and contentions of the assessee that presumption will apply that the assessee has made investment in shares out of its own surplus funds unless contrary is brought on record keeping in view the decision of Reliance Utilities and Power Ltd., [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC bank Limited [ 2016 (3) TMI 755 - BOMBAY HIGH COURT] Hence keeping in view the factual matrix of the case as set out above, the disallowance of interest made by the A.O. under Section 14A of the Act read with Rule 8D(2)(ii) of Income Tax Rules, 1962 is not sustainable and ordered to be deleted subject to limited verification by the AO about the correctness of figures of net owned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ership firms. On perusal of the Balance Sheet of the assessee company, it was observed by the AO that the assessee has invested an amount of ₹ 1,49,42,31,141/- in the shares of various companies whereby the assessee has received dividend amounting to ₹ 8,47,63,456/- and the same was claimed as an exempt income u/s 10(34) of the Act. It was also observed by the AO that the assessee is paying interest on borrowed funds which is debited to the P L account as an expenditure. The assessee was asked as to why interest relatable to borrowed funds used in making investment in shares should not be disallowed u/s.14A of the Act read with Rule 8D of the income Tax Rules, 1962. In reply, the assessee submitted that the assessee company has sufficient non-interest bearing funds available and hence no disallowance of interest is called for. The assessee also submitted that the additions made by the A.O. in earlier years were deleted by the Hon ble High Court/ITAT/CIT(A) up to the assessment year 2007-08. The A.O. observed that assessee has made investment in shares of group companies with an purpose of earning dividend and to help the management in having controlling interest in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and deleted the addition w.r.t. interest expenditure disallowed by the Revenue. The ld. CIT(A) considered the submissions of the assessee and observed that the A.O. after verification of the facts submitted by the assessee has recorded his satisfaction and the A.O. has rightly made the disallowance u/s 14A of the Act read with Rule 8D of Income Tax Rules,1962. The action of the A.O. was , therefore, confirmed by the ld. CIT(A) vide appellate orders dated 06-11- 2012. 6. Aggrieved by the appellate orders dated 06-11-2012 of the ld. CIT(A) , the assessee is in appeal before the Tribunal. 7. The ld. Counsel for the assessee at the outset submitted that the issue is covered in favour of the assessee by the decision of the Tribunal in assessee s own case for the assessment year 2008-09 in ITA No.6900/Mum/2011 vide orders dated 4th April, 2016 whereby the Tribunal has recorded a finding of fact that the assessee has its own share capital and reserves and surplus which is sufficient to cover investment made by the assessee in the shares, and there was no evidence to prove that borrowed funds were utilized for making investment in shares and hence it is to be presumed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sufficient to make investment in shares. We have gone through the orders of authorities below. There is no finding of fact recorded in the orders of authorities below that assessee has its own surplus funds available in this year which are sufficient to make the investment. However, an unsigned chart has been submitted by the ld. Counsel for the assessee before the Tribunal whereby it is submitted that there is share capital of an amount of ₹ 60,48,00,000/- and reserves and surplus amounting to ₹ 2,09,36,78,634/-as at 31-03-2009 against which investments in shares stood at ₹ 1,28,67,27,471/- as at 31-03-2009. In the same unsigned chart it is also reflected an amount of ₹ 34,92,98,780/- under the head profits earned during the year as per P L A/c, while dividend received stood at ₹ 8,47,63,455/- . However, no audited financial statements are submitted by the assessee . We , however, agree with the proposition and contentions of the assessee that presumption will apply that the assessee has made investment in shares out of its own surplus funds unless contrary is brought on record keeping in view the decision of the Hon ble Bombay High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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