TMI Blog2022 (1) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... est invoking Rule 8D(ii) of the Rules was warranted. For that we rely on case of Reliance Utilities Powers Ltd. [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] wherein held that when the assessee is possessed of mixed funds which includes its own funds in sufficient quantity, the presumption is that its own funds were utilised for the advances is to be drawn. The aforesaid view of the Hon'ble Bombay High Court has been approved by the Hon'ble Supreme Court in the case of South Indian Bank Vs. CIT [ 2009 (1) TMI 4 - BOMBAY HIGH COURT] - Therefore, Rule 8D(2)(ii) is not applicable in this case. Ergo the assessee succeeds and therefore, the disallowance made by the AO applying Rule 8D(2)(ii) is deleted. - I.T.A. No. 147/Kol/2020 - - - D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions and gone through the facts and circumstances of the case. It has been brought to our notice by the Ld. AR of the assessee Shri P.J. Bhide that the assessee is aggrieved by the action of the AO to have made addition under Rule 8D(2)(ii) of the Rules which action has been confirmed by the Ld. CIT(A) which is challenged before us. So let us have a look at how the AO has made disallowance of ₹ 88,40,333/- under Rule 8D(2)(ii) of the Rules wherein the AO has made the disallowance as under: '...... (i)........... (ii) Disallowance of Interest : = AxB/C Where a = Amount of expenditure by way of interest other than the amount of interest included in point No. (i) incurred during the previous year. B = T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents in various assets which are exempted or otherwise were held at the cost of ₹ 30,22,78,525/-. So, from these facts according to Ld. AR, it would be clear that the investments have been made by the assessee out of his own capital, so no disallowance under Rule 8D(2)(ii) of the Rules were warranted. According to Ld. AR, the AO on the basis of surmises and conjectures have attributed the interest expenditure to the tune of ₹ 2,99,02,007/- for earning the exempt income mainly because assessee was not maintaining separate books for earning exempt/taxable income. According to Ld. AR, the Ld. CIT(A) erred in confirming this action of AO. Therefore, he wants us to delete the disallowance/addition made by AO under Rule 8D(2)(ii) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's case. So, we have to examine the veracity of this claim of the assessee and in this regard we note that the assessee had credit balance in capital account to the tune of ₹ 75,87,14,540/- at the beginning of the year as against which he held investment in various forms to the tune of ₹ 36,90,93,546/-. And at the end of the year as on 31.03.2013, the assessee's capital Account showed a credit balance of ₹ 78,76,47,193.25 as against which his investments in various assets which are exempted or otherwise were held at the cost of ₹ 30,22,78,525/-. So, from these facts it is discernable that the assessee had enough capital to make investments which yielded exempt income. In the light of the aforesaid fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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