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TMI Blog2013 (12) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... ool of funds it is presumed that investment yielding tax free returns is made by the assessee out of its own funds – Decided against Revenue. - I.T.A. No. 8645 /Mum/2010 - - - Dated:- 31-1-2013 - Shri P. M. Jagtap And Dr. S. T. M. Pavalan,JJ. For the Appellant : Shri Mohit Jain For the Respondent : Shri S. R. Bhandari ORDER Per P.M. Jagtap, A.M. This appeal is preferred by the Revenue against the order of learned CIT(Appeals)-4, Mumbai dated 03-09-2010 whereby he deleted the disallowance of interest amounting to Rs.42,20,600/- made by the AO u/s 14A. 2. The assessee in the present case is a Company which is carrying on business as primary dealer in Government Securities and Money Market Operations. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as worked out by him at Rs.42.206 lakhs by applying the average rate of interest of 5.89%. The amount of interest so worked out was disallowed by him u/s 14A in the assessment completed u/s 143(3) vide an order dated 30-01-2006. 3. Against the order passed by the AO u/s 143(3), an appeal was preferred by the assessee before the learned CIT(Appeals) and it was submitted on behalf of the assessee before him that own funds in the form of share capital and reserve aggregating to Rs.703 crores were available at the relevant time to make the investment in tax free bonds. It was also submitted that the assessee as per the RBI Regulation was prohibited from borrowings for any purpose other than its core business of trading in securities. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in tax free funds was made by the assessee out of its own funds and there being no interest expenditure incurred in relation to the earning of tax free income, disallowance on account of interest u/s 14A was not justified. In our opinion, the decision of the learned CIT(Appeals) giving relief to the assessee on this issue is well founded and is duly supported by the decision of Hon'ble Bombay High Court in the case of Reliance Utilities Power Ltd. 313 ITR 314 wherein it was held that when there is a common pool of funds, presumption is that the investment yielding tax free returns is made by the assessee out of its own funds. Keeping in view the decision of Hon'ble jurisdictional High Court in the case of Reliance Utilities and Power Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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