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TMI Blog2019 (4) TMI 1900X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO - approach of adopting net worth cannot be accepted as interest free available funds available with the assessee should be given set off against the investments and then only the proportionate interest needs to be disallowed as per the computation of disallowance made by the assessee mentioned elsewhere. Secondly, as mentioned elsewhere, Rule 8D of the Rules is not applicable for the year under consideration and, therefore, no weightage can be given to the methodology given u/r 8D of the Rules for the year under consideration. Similar methodology has been accepted by the revenue in earlier A.Ys and following the Rule of Consistency, as enunciated in the case of Radha Soami Satsang [ 1991 (11) TMI 2 - SUPREME COURT] the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax Act, 1961 [hereinafter referred to as 'the Act'. r.w.r. 8D of the Rules, 1962. 3. The solitary grievance of the Revenue is that the CIT(A) erred in deleting the addition made on account of disallowance of interest u/s 14A of the Act to the extent of ₹ 7.30 crores. 4. Since the underlying facts in issues in both these appeals are common and were heard together, they are being disposed off by this common order for the sake of convenience and brevity. 5. The representatives of both the sides were heard at length and the case records carefully perused. 6. Facts on record reveal that the appellant company was mainly involved in the business of non-banking finances. During the year under consideration, the appellant com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or which the investment into shares is made by an assessee may not be relevant. No doubt, the assessee like Maxopp Investment Limited may have made the investment in order to gain control of the investee company. However, that does not appear to be a relevant factor in determining the issue at hand. Fact remains that such dividend income is non-taxable. In this scenario, if expenditure is incurred on earning the dividend income, that much of the expenditure which is attributable to the dividend income has to be disallowed and cannot be treated as business expenditure. Keeping this objective behind Section14A of the Act in mind, the said provision has to be interpreted, particularly, the word 'in relation to the income' that does not form pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a settled proposition of law that if the assessee has interest free funds available with it, then, it can be safely presumed that investments have been made out of interest free funds available. We, therefore, do not find any merit in the computation of disallowance of interest made by the Assessing Officer. Firstly, the approach of adopting net worth cannot be accepted as interest free available funds available with the assessee should be given set off against the investments and then only the proportionate interest needs to be disallowed as per the computation of disallowance made by the assessee mentioned elsewhere. Secondly, as mentioned elsewhere, Rule 8D of the Rules is not applicable for the year under consideration and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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