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TMI Blog2020 (4) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... tments were out of own funds - interest disallowance u/r 8D(2)(ii) would not be warranted. Therefore, we delete the same. Direct expenditure u/r 8D(2)(i) - Disallowance u/s 14A made while computing Book Profits u/s 115JB - Assessee has identified direct expenditure in the shape of demat charges and securities transactions charges and offered suo-moto disallowance of the same in its computation of income. These expenses are directly relatable to earning of exempt income and the same has already been disallowed by the assessee while computing its income under normal provisions. However, the same has not been added back while computing Book Profits u/s115JB. Keeping in view the clause (f) to explanation-1 to Section 115JB (2), the same wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance made under Section 14A of the Income Tax act, 1961 to the extent of exempted income earned of ₹ 23,56,611/-. Further, the same was added to total Income while calculating Minimum Alternate Tax under Section 115JB of the Income Tax Act, 1961. 2. The Appellant prays that the disallowance of ₹ 23,56,611/- to be deleted. As evident, the sole subject matter of appeal is disallowance u/s. 14A. 2.2 Briefly stated, the assessee being resident corporate assessee stated to be engaged in financing trading of fabrics was assessed for year under consideration u/s. 143(3) on 04/12/2015 wherein i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. The Ld. CIT(A) also confirmed the action of Ld.AO in making the said disallowance while computing Book Profits u/s 115JB. Aggrieved, the assessee is under further appeal before us. 4. The Ld. Authorized Representative for Assessee (AR), submitted that own funds far exceeded the investments made by the assessee and unless the nexus of borrowed funds with that of investments made by the assessee was established, interest disallowance would not be justified. Reliance was placed on the binding decision of Hon ble Bombay High Court rendered in CIT V/s HDFC Bank Ltd. (49 Taxmann.com 335) Reliance Utilities Power Ltd. (313 ITR 340) for the submissions that a presumption was to be drawn in assessee s favor that the investments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e laws, which are binding in nature, squarely apply to facts of the case. Therefore, we hold that on given factual matrix, interest disallowance u/r 8D(2)(ii) would not be warranted. Therefore, we delete the same. 6. So far as the disallowance of direct expenditure u/r 8D(2)(i) is concerned, we find that the assessee has identified direct expenditure in the shape of demat charges and securities transactions charges for ₹ 53,389/- and offered suo-moto disallowance of the same in its computation of income. These expenses are directly relatable to earning of exempt income and the same has already been disallowed by the assessee while computing its income under normal provisions. However, the same has not been added back while computin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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