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TMI Blog2023 (9) TMI 1496X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is more than the investment made for earning exempted income, by the assessee, the presumption is that, investment so made is out of interest free fund. Before us, there is no material to support the case of the Revenue that the assessee had utilized borrowed funds for investment for earning exempt income. Admittedly, similar claim of the assessee was allowed by the CIT (A) for the earlier year, and was accepted by the Revenue. The proposition that if interest free funds are more than that invested in shares and securities to earn exempt income, and that it was not proved that any borrowed funds were utilized for such investments, then the presumption is that the interest free funds were used for making investment and no disallowance u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of interest expenses u/s. 14A of the Act. 5. We have heard both the parties and gone through orders of the authorities below. 6. As the facts can be noticed from orders of the Revenue authorities, the AO noted the assessee had claimed exempt dividend income of Rs. 5,298/- on investment made by the assessee and also claimed interest expenses of Rs. 5,04,35,666/-. The AO construed the impugned investment made for earning exempt was made out of borrowed funds. The ld.AO, therefore, computed disallowance by invoking Rule 8D read with section 14A of the Act and worked out disallowance at Rs. 5,0435,666/-. This disallowance was challenged before the ld.CIT(A). 7. Before the ld. CIT(A), the assessee contended that the assessee has earne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions of both the parties, we find that the ld.CIT(A) was rightly deleted the impugned disallowance made by the AO under section 14A r.w.r 8D in the light of various judicial precedents on the issue that when interest free funds are available, which is more than the investment made for earning exempted income, by the assessee, the presumption is that, investment so made is out of interest free fund. Before us, there is no material to support the case of the Revenue that the assessee had utilized borrowed funds for investment for earning exempt income. Admittedly, similar claim of the assessee was allowed by the CIT (A) for the earlier year, and was accepted by the Revenue. Furthermore, the proposition that if interest free funds are more ..... X X X X Extracts X X X X X X X X Extracts X X X X
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