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TMI Blog2018 (9) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... s ₹ 18.04 crore. As against these interest free funds, the value of investments in shares is only ₹ 88,85,839/-. These figures are verifiable from the copy of balance sheet of the assessee for the assessment years as placed. Hon'ble Delhi High Court in the case of PCIT vs. Sintex Industries Ltd. (2017 (5) TMI 1160 - GUJARAT HIGH COURT) has held that where assessee had surplus funds against which minor investment was made, no question of making any disallowance or expenditure in respect of interest and administrative expenses u/s 14A arose - Decided in favour of assessee - ITA No. 410 & 411/Lkw/2016 - - - Dated:- 7-9-2018 - SHRI T. S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER Appellant b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited [2017] 397 ITR 113 (All) where the Hon'ble Allahabad High Court has also held that condition precedent for making disallowance u/s 14A is that Assessing Officer must not be satisfied with the correctness of the claim of the assessee in respect of expenditure in relation to income which does not form part of the total income. On merits Learned A. R. submitted that on merits also the disallowance u/s 14A was not warranted as the assessee had sufficient surplus funds which was far excess than the investment and in this respect our attention was invited to a chart showing the availability of surplus funds as well as the investment during these years. Learned A. R. submitted that the interest bearing funds were for term loan for vehicle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r for the assessment year 2008-09 are reproduced below: Further, it is observed that the assessee has made payment of interest of ₹ 1,24,18,650/- on the various loans and advances taken by it. Hence, the expenditure by way of interest during the previous year which is not directly attributable to any particular income or receipt will have to be computed as per Rule 8D(2)(ii) i.e. AXB/C where A stands for amount of expenditure by way of interest. B Stands for the average of value of investment, income from which does not from part of the total income and C stands for the average of total assets as appearing in the balance sheet of the assessee on the first day and the last day of the previous year. The total expenditure of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so make it clear that before applying the theory of apportionment, the AO needs to record satisfaction that having regard to the kind of the assessee, suo moto disallowance under Section 14A was not correct. It will be in those cases where the assessee in his return has himself apportioned but the AO was not accepting the said apportionment. In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such a satisfaction, nature of loan taken by the assessee for purchasing the shares/making the investment in shares is to be examined by the Assessing Officer. 5.2 We further find that Hon'ble Allahabad High Court in the case of CIT vs. UP Electronics Corporation Ltd. [2017] 397 ITR 113 (All) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 4th May 2017 has held that where assessee had surplus funds against which minor investment was made, no question of making any disallowance or expenditure in respect of interest and administrative expenses u/s 14A arose. The relevant findings of Hon'ble High Court are reproduced below: 9. Considering the aforesaid facts and circumstances, more particularly the fact that the assessee was already having its own surplus fund and that too to the extent of ₹ 2319.17 crores against which investment was made of ₹ 111.09 Crores, there was no question of making any disallowance of expenditure in respect of interest and administrative expenses under Section 14A of the Act, therefore, there was no question of any esti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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