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TMI Blog2019 (1) TMI 1938X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 14A would have no application. We also find that in the case of CIT Vs. Holcim India P. Ltd. [ 2014 (9) TMI 434 - DELHI HIGH COURT] has held that where no dividend income was earned by assessee, disallowance u/s. 14A is not warranted. Further the Balance Sheet of assessee reveals that the availability of interest free funds in the form of Share Capital and Reserves and Surplus is much more than the investment held by the assessee. On the issue of availability of free funds being more than investment, we find that Hon ble Bombay High Court in the case of HDFC [ 2016 (3) TMI 755 - BOMBAY HIGH COURT] Before us Revenue has not pointed any contrary binding decision nor has demonstrated that the aforesaid decision has been set aside or overru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O. and confirmed by CIT(A) is unjustified, unwarranted and uncalled for. 2. The assessee reserves the rights to add, amend or alter any grounds of appeal at the time of hearing." 3. During the course of assessment proceedings on perusing the Balance sheet the Assessing Officer noted that the assessee had invested ₹ 1.28 crore in the shares of Nakoda Ispat Ltd. The assessee was asked to explain as to why provisions of section 14A should not be invoked since the income from shares is exempt from tax. Apart from making other submissions, assessee also submitted that assessee has not earned any exempt income and therefore provisions of section 14A are not applicable. The submissions of assessee were not found acceptable to A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not for earning income but out of business expediency and the investment was sourced from own funds. However the provisions of section 14A does not differentiate between an investment out of business expediency and also it does not exclude investment made out of own funds. The addition has been made not u/s. 40A(2)(b) to disallow excessive interest paid on borrowed funds due to the reason the interest free amounts have been advanced. The own funds vs borrowed funds defence will be applicable in that situation. But such a contention have no value in respect of disallowance u/s. 14A which is made on the reasoning that any expenses directly or indirectly related to exempt income must be disallowed in computing taxable income. Therefore, the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 14A would have no application. We also find that Hon'ble Delhi High Court in the case of CIT Vs. Holcim India P. Ltd. (2014) 90 CCH 81 (Delhi) has held that where no dividend income was earned by assessee, disallowance u/s. 14A is not warranted. Further the Balance Sheet of assessee reveals that the availability of interest free funds in the form of Share Capital and Reserves and Surplus is much more than the investment held by the assessee. On the issue of availability of free funds being more than investment, we find that Hon'ble Bombay High Court in the case of HDFC Vs. DCIT reported in (2016) 383 ITR 529 (Bom) has observed as under: "15. It is clear that for the first time in the case of HDFC Bank Ltd. (Supra) that thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be made out by the impugned order. Thus, impugned order has proceeded on a fundamentally erroneous basis as the ratio decidendi of the order in Godrej and Boyce manufacturing Co. Ltd. (Supra) had nothing to do with the rest of presumption canvassed by the petitioner before the Tribunal on the basis of the ratio of the decision of this Court in HDFC Bank Ltd. (Supra). 16. At the hearing Mr. Suresh Kumar, Learned 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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