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TMI Blog2023 (6) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted, however, since, the assessee has gained an exempt income of Rs. 46,500/- during the relevant earlier year which was taken as Rs. 1,94,593/- by the ld. AO, this fact needs verification and thus, we restore the issue to the files of ld. AO, for the limited purpose - Appeal of the revenue is partly allowed for statistical purposes. - ITA No. 101/RPR/2021 - - - Dated:- 14-6-2023 - Shri Ravish Sood, JM And Shri Arun Khodpia, AM For the Assessee : Shri G. S. Agarwal, CA For the Revenue : None ORDER PER ARUN KHODPIA, AM : The present appeal is directed against the order of ld. CIT(A)-3, Bhopal dated 01.09.2021 for the Assessment Year 2013-14. In this appeal of revenue following grounds were raised. 1. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the revenue, however, since, the matter is heard at length previously on 24th April, 2023 and was adjourned only for verification of amount of exempted dividend income declared by the assessee before the ld. AO. Since, now, the assessment records were available before us and the issue was already represented by the revenue in the previous hearing, we are of the view that the appeal should be adjudicated on the basis of material available before us. 6. To start with the proceedings, ld. AR has been directed to briefly apprise the facts, in response, the ld. AR has drawn our attention to file 1, 2 3 of the paper book wherein the compilation of share capital, free reserve and investment, company wise details of investment for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch would suffice to source the investment made by the assessee in the aforementioned exempt income yielding assets. In the backdrop of the aforesaid facts, we are of the considered view, that as stated by the Ld. AR, and rightly so, now when the assessee society had sufficient interest-free own funds available with it which would sufficiently justify the investment made in the exempt income yielding assets, therefore, no part of the interest expenditure could have validly been disallowed u/s. 14A r.w Rule 8D(2)(ii) of the Income Tax Rules, 1962. Our aforesaid view is fortified by the judgment of the Hon ble Supreme Court in the case of South Indian Bank Ltd. Vs. CIT (2021) 438 ITR 1 (SC). In the aforesaid judgment, it was observed by the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipur Trib.) as held: Section 14A of Income-tax Act, 1961- Expenditure incurred in relation to income not includible in total income-Assessment year 2011-12 Whether where own capital and free reserves of assessee-company were much more than investment made by assessee which was yielding exempt income to it, a presumption would arise that investment was made out of interest free funds generated or available with company and, thus, no disallowance under section 14A was to be made -Held, yes [Para 58] [In favour of assessee] 8. The ld. AR, to substantiate the facts of the present case, in light of the case laws relied upon and the ratio of law laid down by the referred case laws have submitted that disallowance made under rule 14A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance u/s 14A is made, the same shall be restricted to Rs. 46,500/- only. 9. We have considered the contentions of ld. AR, perused the material available on record, have kept in our consideration the submissions of revenue in the earlier hearing and perused the case laws referred to and relied upon in the instant case, it is settled principle of law now that in a case where there were no utilization of interest bearing funds for making the investment to earn exempted income, no other expenses incurred to earn the exempted income and no exempted income was earned during the relevant assessment year then disallowance u/s 14A read with rule 8D cannot be made. On perusal of facts of the present case which were presented before us by the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X
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