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2022 (5) TMI 172 - ITAT KOLKATADisallowance u/s. 14A read with Rule 8D(2)(ii) & (ii) - submission of the Ld. AR that no disallowance of interest expenditure could have been made u/s. 14A of the Act read with Rule 8D(2)(ii) of the Rules as the investments were made out of the own funds of the assessee - HELD THAT:- As relying on case of CIT Vs. Reliance Utilities and Power Ltd.[2009 (1) TMI 4 - BOMBAY HIGH COURT] we hold that no disallowance of interest expenditure is warranted under Rule 8D(2)(ii) of the Rule r.w.s. 14A of the Act. Accordingly, the disallowance of Rs.2,84,43,090/- computed by the AO under Rule 8D(2)(ii) is deleted. Dividend income was earned from only one investment i.e. Metro Diary Limited - When there is a common pool of funds, presumption would arise that investments which yield tax free returns were made by the assessee out of its own funds. We also find that no new investment during the year has been made in the shares of Metro Dairy Ltd. as the opening value as on 01.04.2012 was Rs.9,60,50,074/- and closing value of investment as on 31.03.2013 was Rs.9,60,50,074/-. Accordingly, by taking the investments which yielded the exempt income for computing disallowance under Rule 8D(2)(iii) of the Rules @ 0.50% of the dividend earning investment of Rs.9,60,50,074/- comes to Rs.4,80,250/-. The assessee has already made a suo moto disallowance of Rs.2,04,697/- in its return, thus, balance amount of Rs.2,75,553/- (Rs.4,80,250-Rs.2,04,697) is sustained as disallowance u/s. 14A r.w.r. 8D(2)(iii) of the Act. The appeal of the assessee is, therefore, partly allowed.
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