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TMI Blog2019 (5) TMI 1446X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable with the assessee, if the interest free funds were sufficient to meet the investments. In the case of Principal CIT vs Rasoi Ltd. [ 2017 (2) TMI 863 - CALCUTTA HIGH COURT] . In view of the aforesaid legal position we direct the Assessing officer to examine the assessee`s own funds and reserves and if the AO finds that the interest free funds were sufficient to meet the investments, no disallowance would be made under Rule 8D(2) (ii) of The Rules. As far as Rule 8D(2)(iii) of the Rules is concerned, it has been held in the case of DCIT vs REI Agro Ltd. [ 2013 (5) TMI 582 - ITAT KOLKATA] that it is only the investment which yielded tax free income that should be considered for working out the average value of investment while applyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the order passed by the Commissioner of Incometax (Appeals)-3, Kolkata in Appeal No. 11405/CIT(A)-3,Kol/Ward-8(3)/16-17 ,dated 28-06-2018, which in turn arises out of an order passed by the Assessing Officer u/s. 143(3) of the Income-Tax Act, 1961 (in short, the 'Act'), dated 28- 03-2016. 2. Grounds of appeal raised by the Assessee are as follows:- 1. That the Ld CIT(A)-3 grossly erred in fact as well as in law in confirming the addition of ₹ 99,774/-/- made by the Ld AO u/s 14A read with Rule 8D. 2. That the Ld CIT(A) - 3 Kolkata erred in fact as well as in law in confirming addition of ₹ 15,83,078/- on account of interest paid to loan creditors on the ground that the said loan creditors were held to be not genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the AO finds that the interest free funds were sufficient to meet the investments, no disallowance would be made under Rule 8D(2) (ii) of The Rules. As far as Rule 8D(2)(iii) of the Rules is concerned, it has been held by the Coordinate Bench of ITAT Kolkata in the case of DCIT vs REI Agro Ltd. in ITA No.1811/Kol/2012 dated 14.05.2013 that it is only the investment which yielded tax free income that should be considered for working out the average value of investment while applying the Rule 8D(2)(iii) of the Rules. This order of the tribunal has been confirmed by the decision of Hon'ble Calcutta High Court in G.A. No.3022 of 2013 Judgement dated 23.12.2013. In view of the aforesaid legal position we direct the Assessing Officer to exclu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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