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TMI Blog2021 (3) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... with the assessee are in excess of investments and then the investments are presumed to be out of interest free funds,. We find that Hon'ble Bombay High Court in the case of HDFC . [ 2014 (9) TMI 1042 - BOMBAY HIGH COURT] held that there is now no need for the assessee to establish with evidence that the amounts which has been invested in the tax free securities have come out of interest free funds available with it. This is because once the assessee is possessed of interest free funds sufficient to make the investment in tax free securities, it is presumed that it has been paid for out of the interest free funds - we are of the view that no disallowance of interest under Rule 8D(2)(ii) is called for in the present case. Disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06/2016-17/GZB/Aligarh granted partial relief to the assessee. Aggrieved by the order of CIT(A), assessee is now before us and has raised the following grounds of appeals: 1. Because the assessment order is arbitrary, without enquiry surmisical, speculative against law and facts of case. 2. Because the addition of ₹ 496529.00 u/s. 14A is wrong as the assessee has not incurred any expenditure for earning of dividend income. 3. Because the appellant very modesty prays to reserve his right to add, amend or modify the grounds of appeal. 4. Before us, at the outset, Learned AR submitted that the sole controversy that requires adjudication is with respect to the disallowance u/s. 14A of the Act. 5. During the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the investments are out of interest free funds and not borrowed funds and therefore no disallowance of interest under Rule 8D(2)(ii) is called for. He thereafter submitted that if at all any disallowance is to be made, it is to be restricted to the disallowance under Rule 8D(2)(iii) amounting to ₹ 50,565/-. He further submitted that no disallowance u/s. 14A has been made in earlier years. He therefore submitted that the disallowance made by the AO to be deleted. 7. Learned DR on the other hand supported the order of lower authorities and further submitted that on the plea of the assessee that since no disallowance has been made in the earlier year no disallowance in the year is called for, it is a settled law that the principles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee are in excess of investments and then the investments are presumed to be out of interest free funds, we find that Hon'ble Bombay High Court in the case of HDFC vs. DCIT reported in (2016) 383 ITR 529 has observed as under: 15. It is clear that for the first time in the case of HDFC Bank Ltd. (Supra) that this Court took a view that the presumption which has been laid down in Reliance Utilities and Power Ltd. (Supra) with regard to investment in tax free securities coming out of assessee's own funds in case the same are in excess of the investments made in the securities (notwithstanding the fact that the assessee concerned may also have taken some funds on interest) applies, when applying Section 14A of the Act. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Counsel for the Revenue urged that on the facts of this case no fault can be found with the order of the Tribunal. It is submitted that, the petitioner was not able to establish before the Assessing Officer and the CIT(A) that the amounts invested in the interest free securities came out of interest free funds available with the petitioner. In that view of the matter, it is submitted by him that the order of this Court in HDFC Bank Ltd. (Supra) would not apply to the facts of the present case. We are unable to understand the above submission. The Assessing Officer passed the Assessment order on 22nd December, 2010 under section 143(3) of the Act. The CIT(A) passed an order on 21st November, 2011 dismissing the petitioner's appeal. On ..... X X X X Extracts X X X X X X X X Extracts X X X X
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