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TMI Blog2019 (6) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Therefore, there is no reason to disbelieve the availability of own funds. Accordingly, there is no case of disallowance of interest u/s 36(1)(iii) for diversion of funds towards business purposes. The second line of argument of the assessee was that there was no exempt income received by the assessee in the impugned assessment year, hence, there is no case for disallowance of expenditure relatable to section 14A. Now this issue is settled and this Tribunal in the case of ACN Infotech(India) Pvt. Ltd., Visakhapatnam [ 2018 (12) TMI 58 - ITAT VISAKHAPATNAM] has held that in the absence of exempt income, there is no case for disallowance u/s 14A In the instant case, the assessee did not earn any dividend income and this fact was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rowed the funds of ₹ 38,70,27,806/- and paid the interest of ₹ 5,62,15,618/- for the assessment year under consideration. The AO has called for explanation from the assessee as to why the interest relating to the investments made should not be disallowed u/s 14A r.w.s. 36 of the Act and in response to the show cause notice, the assessee has furnished the explanation stating that he had the opening capital of ₹ 7,82,95,736/- and received the advances to the extent of ₹ 15,50,00,000/- towards sale of agricultural land and a sum of ₹ 5,00,00,000/- towards sale of godown, aggregating to a sum of ₹ 28,32,95,736/- as own funds which do not bear the interest, hence, submitted that the investments were made out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erns out of own funds. The Ld.AR submitted that the assessee had own funds to the extent of ₹ 28.33 crores including advances and opening balance. Therefore, there is no question for disallowance u/s 36(iii), since, the own funds are utilized for the purpose of making investments. Accordingly, the Ld.AR argued that the orders of the lower authorities are to be set aside and allow the appeal of the assessee. 6. On the other hand, the Ld.DR supported the orders of the lower authorities. 7. We have heard both the parties and perused the material placed on record. During the assessment proceedings, the assessee submitted that it had utilized the own funds for the purpose of making investments. The AO had acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. We have heard both the parties and perused the material placed on record. The assessee has made the investments in the company towards share capital and the AU has disallowed the expenditure relating to the investment made in the shares since the shares yield exempt income u/s 14A. However, the Ld.AR submitted that there was no exempt income earned by the assessee during the impugned assessment year. Thus, there is no case for disallowance under Rule 8D of IT Rules. The fact that there was no dividend income earned by the assessee is not in dispute. On the similar facts, this Tribunal in the case of Vasanta Traders Vs. ITO, Ward-2(1), Guntur by an order dated 04.05.2018 held that no disallowance is called for in the abse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by this Tribunal in the case of M/s Rashtriya Ispat Nigam Ltd., Visakhapatnam for the assessment year 2004-05 in ITA No.13/Viz/2013 in para No.36 of the cited order. Since the facts are identical, respectfully following the view taken by Coordinate Bench, we hold that no disallowance is called for u/s 14A in the absence of exempt income. Accordingly, we confirm the order of the Ld.CIT(A) and dismiss the appeal of the revenue. Since the facts are identical, respectfully following the view taken by the coordinate bench, we hold that in the absence of the exempt income, there is no case for making the disallowance u/s 14A of the Act Accordingly, we set aside the order of the Ld.CIT(A) and allow the appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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