TMI Blog2023 (11) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... come earned by the assessee - HELD THAT:- The Gujarat High Court in numerous decisions has consistently taken the position that if interest-free funds available with the assessee exceed the investments made in funds yielding exempt income, then no disallowance is called for under section 14A of the Act. In the case of Hitachi Home and Life Solutions (I) Ltd. [ 2013 (7) TMI 359 - GUJARAT HIGH COURT] held that where assessee's interest free funds exceeded investment made for earning exempted dividend income, disallowance under section 14A was not justified. Also in case of Gujarat Fluoro chemicals Ltd. [ 2020 (10) TMI 252 - GUJARAT HIGH COURT] again reiterated that where interest free funds available with assessee were far more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er grounds presented with the permission of your honor at the time of hearing. 3. The brief facts of the case are that during the course of assessment, the Assessing Officer observed that assessee had paid interest of Rs. 1,02,07,025/- on unsecured loans during the year under consideration. Further, the Assessing Officer observed that at the same time, the assessee had earned exempt income in the form of dividend amounting to Rs. 4,93, 268/- from shares and mutual funds. As per the Assessing Officer, the provisions of section 14A of the Act are applicable to the case of the assessee. The Assessing Officer, on the basis of material available on record, worked out the disallowance at Rs. 10,19,529/- u/s. 14A of the Act since as per the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest of Rs. 1,02,07,025/- and as a result of which she had net taxable interest income of Rs. 38,75,849/- (i.e. Rs. 1,40,82,874/- - Rs, 38,75,849/-). The appellant in her submission has furnished the details of sources of fund and application of fund in the form of a chart which is reflected on page no. 1 of such submission. The appellant has submitted that she had her own fund and which was almost 4.55 times more than the fund invested and income of which was exempted. But this submission of the appellant is not found to be tenable as stated above. The appellant herself has admitted that she had invested her own fund along with the borrowed fund on which she had got more taxable income from interest. Thus the fact is that the appellant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest free funds to the tune of Rs. 5.69 crores. It was also submitted that the assessee had earned interest income of Rs. 1,40,82,874/- and she had paid interest of Rs. 1,02,07,057/- as a result of which she had offered net taxable interest income of Rs. 38,75,849/- (Rs. 1,40,82,874/- less Rs. 38,75,849/-). The ld. counsel for the assessee submitted that the assessee was having own interest free funds which were almost 4.55 times more than the funds invested and income on which was exempted. The ld. counsel for the assessee submitted that it is well settled law that once the interest free funds available with the assessee are in excess of investments made by the assessee to earn exempt, then it has be presumed that assessee s own interest f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds available with assessee were much larger as compared to investment, disallowance of assessee's claim for interest expenditure by applying section 14A was incorrect. In case of Gujarat Fluoro chemicals Ltd.[2020] 120 taxmann.com 433 (Gujarat) , the Gujarat High Court again reiterated that where interest free funds available with assessee were far more than gross investment, it could safely be harboured that interest bearing funds was not invested by assessee and, thus, no disallowance under section 14A to be made. In view of the consistent position taken by the Gujarat High Court, as applied to the facts instant case, in our considered view, no disallowance is called for in respect of interest expenses under section 14A of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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