TMI Blog2016 (6) TMI 1474X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in relation to the tax exempt income . This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. For the above reasons, the impugned order of the ITAT is set aside. The question of law is answered in favour of the assessee. Thus we set aside the orders of the authorities below with the direction to the Assessing Officer to consider the above High Court judgments cited above and decide the issue in view thereof. Appeal is allowed for statistical purposes only. - SHRI D.T. GARASIA, HON BLE JUDICIAL MEMBER For the Appellant : Shri S.S. Deshpande For the Respondent : Shri Mohd. Javed ORDER This is an appeal preferred by the assessee agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funds were more than the investment in the tax free securities, it would be presumed that the investment made would be out of interest free funds. Further reliance was made to the judgment of various Tribunals in the case of Rainy Investment Pvt. Ltd. vs. ACIT; ITA No. 5491/Mum/2011 and the CIT vs. Trade Apartment in ITA No. 1277/Kol/2011, Morgan Stanley India Securities vs. ACIT; ITA No. 5072/Mum/2015 as also the decision in the case of ITO vs. Karnawati Petrochemicals Pvt. Ltd.; ITA No. 2228/Ahd/2012 wherein it has been held that netting of interest receipts and payments have to be considered. Moreover, the learned counsel for the assessee submitted that on the same issue, the Hon'ble Delhi High Court in the case of Joint Investments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITAT. The third, and in the opinion of this court, important anomaly which we cannot be unmindful is that whereas the entire tax exempt income is Rs. 48,90,000/-, the disallowance ultimately directed works out to nearly 110% of that sum, i.e., Rs. 52,56,197/-. By no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure incurred by the assessee in relation to the tax exempt income . This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. 10. For the above reasons, the impugned order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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