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TMI Blog2017 (11) TMI 1942X X X X Extracts X X X X X X X X Extracts X X X X ..... ooperative Bank, income from both of which is not exempt. Since own funds available with the assessee is in far excess of value of investment made in mutual funds, there is merit in the contentions of the assessee that the disallowance of interest expenditure is not called for, in view of the decision of HDFC Bank Ltd. [ 2016 (3) TMI 755 - BOMBAY HIGH COURT] . Accordingly, we set aside the order passed by the learned CIT(A) on this issue in all five years and direct the Assessing Officer to delete the disallowance of interest expenditure made u/s. 14A of the Act. For assessment year 2011-12, the AO is directed to compute the disallowance under Rule 8D(2)(iii) by adopting correct figures. Deemed dividend addition u/s. 2(22)(e) - AO noticed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeals and cross objections filed by the assessee relates to disallowance made u/s. 14A of the Act. The Assessing Officer noticed that the assessee has received exempt dividend and capital gains, but did not make any disallowance u/s. 14A of the Act. Hence the Assessing Officer computed disallowance u/s. 14A of the Act and accordingly disallowed the interest and administrative expenses by applying provisions of Rule 8D of the I.T. Rules in all the years. The learned CIT(A) also confirmed the same and hence the assessee has filed these appeals before us. 3. Learned AR submitted that the assessee has made investments in mutual funds. It is having sufficient own funds which is in far excess value of investments made in mutual funds. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not exempt. Since own funds available with the assessee is in far excess of value of investment made in mutual funds, there is merit in the contentions of the assessee that the disallowance of interest expenditure is not called for, in view of the decision of Hon'ble Bombay High Court rendered in the case of HDFC Bank Ltd. (supra). Accordingly, we set aside the order passed by the learned CIT(A) on this issue in all five years and direct the Assessing Officer to delete the disallowance of interest expenditure made u/s. 14A of the Act. For assessment year 2011-12, the AO is directed to compute the disallowance under Rule 8D(2)(iii) by adopting correct figures. 7. We shall now take up the appeals filed by the Revenue. The solitary issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Hon'ble Supreme Court has since decided identical issue in the case of CIT Vs. Madhur Housing and Development Company (Civil Appeal No. 3196 of 2013) has held that addition of deemed dividend u/s. 2(22)(e) of the Act can be made only in the hands of shareholders, meaning thereby, the decision rendered by Hon'ble Bombay high Court in the case of Impact containers P Ltd (supra) has been upheld by Hon'ble Supreme Court. Since the assessee is not a share holder of M/s Shirdi Chemicals P Ltd, the assessing officer was not right in law in invoking the provisions of sec. 2(22)(e) of the Act in its hands. Accordingly, we find no reason to interfere with the order passed by the learned CIT(A) on the legal issue. Since we have upheld the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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