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TMI Blog2022 (3) TMI 1568X X X X Extracts X X X X X X X X Extracts X X X X ..... 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). Our foresaid view is fortified by the judgment of South Indian Bank Ltd. Vs. CIT ( 2021 (9) TMI 566 - SUPREME COURT ) as observed where interest-free own funds available with the assessee exceeded their investment in tax free securities, then, it would be presumed that investments were made by the assessee out of its own funds and no disallowance would be warranted u/s.14A r.w Rule 8D(2)(ii) of the Income Tax Rules, 1962 on the ground that separate accounts were not maintained by the assessee for investments and other expenditure incurred for earning of tax free income. Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther erred in confi9rming the addition of Rs.3,99,790/- made by the learned Assessing Officer u/s.14A though the provisions of section 14A as well as Rule 8D were not applicable. The disallowance of Rs.3,99,790/- is not according to the law and be deleted. 3. The learned Commissioner of Income Tax (Appeals) further erred in not allowing TDS credit of Rs.3,375/- which is unjustified and be allowed." 2. Succinctly stated, the assessee which is a co-operative bank, had filed its return of income for the assessment year 2012-13 on 29.09.2012, declaring an income of Rs.1,07,17,370/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 3. During the course of the assessment proceedings, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile for, the assesee had sufficient interest free own funds of Rs.6,16,95,322.05/-. In order to fortify his aforesaid claim the Ld. AR had drawn our attention to the "balance sheet" of the assessee society for the year under consideration (Page 1A - 2 of the APB). Backed by his aforesaid contentions, it was submitted by the Ld. AR that now when the assessee had sufficient interest free funds available with it, therefore, disallowance made by the Assessing Officer of the interest expenditure u/s.14A r.w Rule 8D(2)(ii) of the Income Tax Rules, 1962 could not be sustained and was liable to be struck down. 7. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure incurred for earning of tax free income. 8. Backed by our aforesaid observations, we are unable to persuade ourselves to sustain the disallowance of interest expenditure of Rs.3,99,790/- made by the Assessing Officer u/s.14A r.w Rule 8D(2)(ii) of the Income Tax Rules, 1962 which is accordingly vacated. Thus, the Ground of appeal No.2 raised by the assessee is allowed in terms of our aforesaid observations. 9. It is further claimed by the Ld. AR that the Assessing Officer had erred in not allowing TDS credit of Rs.3,375/-. As the said fact would require necessary verification, therefore, we direct the Assessing Officer to look into the aforesaid issue. In case, credit of the aforesaid amount of tax deducted at source had not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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