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TMI Blog2013 (2) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... bearing fund invested in the shares yielded no dividend income - As decided in Shree Shyamkamal Finance & Leasing Co. (P) Ltd v. ITO[2007 (10) TMI 446 - ITAT MUMBAI ], when interest bearing funds are invested in shares which yielded no dividend income, interest paid on such loan cannot be disallowed by invoking section 14A. Disallowance towards interest expenses applying the provisions of section 36(1)(iii) - Assessee had established a new unit where it invested a sum of Rs.11.09 lacs – Disallowed by CIT on the ground that the same should have been capitalized as per the amendment by the Finance Act 2003 holding that the said amendment was retrospective – Held that:- Interest on the borrowed fund was allowable deduction if the same was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is assistance examined the orders of the adjudicating the authorities. It appears that for the assessment year 2000-01, the assessee company had invested Rs.1 crore from borrowed funds in equity of one M/s.Pankaj Extrusion Ltd. which was for the purpose of earning dividend income. Neither investment was made in the assessment year under consideration nor dividend received in the earlier year on such investment. The order of the Tribunal is challenged on the ground that anomalous position cannot occur while treating the same investment in different years whereby if the dividend is declared in a particular year, interest paid on the invested amount would be disallowed and if no dividend is declared, the interest would be allowed as deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h loans cannot be disallowed by invoking the provisions of section 14A. As it emerges clearly from the record that the material which had been placed before the Tribunal had been relied upon for its conclusion. A sum of Rs.15 lacs was the interest on the borrowed fund invested from the dividend income which could not have been disallowed invoking the provisions of section 14A as in the year under consideration no dividend income was received nor investment made and thus, we find no infirmity considering facts in particular in the conclusion arrived at by the Tribunal which deleted the disallowance of Rs.15 lacs as that would not be the expenditure earning exempted income, let alone the same being the part of total income. Hence, this issue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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