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TMI Blog2013 (10) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the assessee, the Hon'ble Bombay High Court has held that when the own funds and borrowed funds are maintained in a mixed manner, a presumption can be drawn that the own funds are utilized by the assessee for making the investments etc. as per its own wish – Keeping in view the ratio of above judgment disallowance u/s 14A is not sustainable – Decided in favor of Assessee. Applicability of Rule 8D read with Section 14A of the Income Tax Act for computation of disallowability – Held that:- Reliance has been placed upon the judgment in the case of Godrej Boyce Mfg. Co. Ltd [2010 (8) TMI 77 - BOMBAY HIGH COURT] - Rule 8D is applicable only prospectively from A.Y. 2008-09 - Disallowance made by the A.O. u/s 14A of the Act is restri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count. On appeal, the ld. CIT(A) confirmed the said disallowance. On further appeal, the Tribunal restored this issue to the file of the A.O. with a direction to decide the same afresh after verifying the contention of the assessee that the advance tax liability was paid by it out of own funds and not from the borrowed funds. Since the assessee could not establish to the satisfaction of the A.O. that the advance tax liability was paid out of its own funds, the disallowance on account of interest was again made by the A.O. in the assessment completed during the course of set aside proceeding u/s 143(3) r.w.s. 254 of the Act. Against the said assessment, the assessee again preferred an appeal before the ld. CIT(A) who confirmed the disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 313 ITR 340 (Bom) cited by the ld. Counsel for the assessee, the Hon'ble Bombay High Court has held that when the own funds and borrowed funds are maintained in a mixed manner, a presumption can be drawn that the own funds are utilized by the assessee for making the investments etc. as per its own wish. Keeping in view the ratio of the decision of the Hon'ble jurisdictional High Court in the case of Reliance Utilities and Power Ltd. (supra) and having regard to the facts of the case, we are of the view that the disallowance made by the A.O. and confirmed by the ld. CIT(A) on account of interest is not sustainable and deleting the same, we allow the appeal of the assessee. 5. The solitary issue raised in the appeal of the Revenue relates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also perused the relevant material available on record. As held by the Hon'ble Bombay High Court in the case of Godrej Boyce Mfg. Co. Ltd. (supra), Rule 8D is applicable only prospectively from A.Y. 2008-09. As further held by the Hon'ble Bombay High Court, the disallowance u/s 14A for the years prior to A.Y. 2008-09 is required to be made u/s 14A of the Act on some reasonable basis. As noted by the ld. CIT(A) in his impugned order, a similar disallowance made by the A.O. in A.Y. 2000-01 by applying Rule 8D had been restricted by the ld. CIT(A) to 5% of the exempt dividend income and the same was upheld by the Tribunal being fair and reasonable. Keeping in view the decision of the Hon'ble Bombay High Court in the case of Godrej Boyce Mfg. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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