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TMI Blog2024 (10) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... n this case observation of the Hon ble Supreme Court is aptly apply here. Therefore, we conclude that in this case interest free funds are sufficiently available with the assessee for investment. Hence, we delete the part disallowance by the CIT(A) u/s 14A and direct the AO to recompute the income accordingly. Assessee appeal allowed. - Hon ble Shri Manu Kumar Giri, Judicial Member And Hon ble Shri S.R. Raghunatha, Accountant Member For the Appellant : Shri Raghavan Ramabadran, Adv For the Respondent : Shri R. Clement Ramesh Kumar, IRS, CIT ORDER PER MANU KUMAR GIRI (JUDICIAL MEMBER) These two appeals filed by the assessee are directed against the separate orders of the Ld. Commissioner of Income Tax(Appeals)(NFAC) Delhi [CIT(A)] both dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant duly e- filed the submissions from time to time. A Draft Assessment Order dated 30.03.2021 u/s 144C of the Act was passed making the following additions: i. Disallowance of Additional Depreciation on Plant and Machinery Rs. 59,30,65,350/- ii. Disallowance of Insurance Spare Consumption Rs. 3,13,46,772/- iii. Disallowance u/s 14A r.w. Rule 8D Rs 24,21,37,000/-. During FY 2017-18, the Assessee earned dividend income to the tune of Rs. 19,47,35,738/- from NLC Tamilnadu Power Limited ('NTPL'). The investments in NTPL were made in multiple tranches from FY 2005-06 to FY 2016-17. After FY 2016-17, no additional investments were made in NTPL. All through the above-mentioned years, the Assessee had sufficient own funds to make the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 174.53 31.03.2010 178.00 10,324.67 31.03.2009 88.35 9,469.23 31.03.2006 0.65 7,998.79 Total 1947.36 It is humbly submitted that the where there are funds available both interest free and interest bearing, then the presumption would arise that investment would be out of interest free funds available with the Assessee. Therefore, once there is a presumption that interest free funds were utilized for making exempt investment, assessee would not be expected to establish the same and it would be for the Revenue to establish the contrary. Where the Revenue fails to establish the same, disallowance under Section 14A could not have been made. The Assessee wishes to rely on PCIT v. Ashok Apparels (P.) Ltd., (2019 106 taxmann.com 63 (Bombay) for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties that during FY 2017-18, the assessee earned dividend income to the tune of Rs. 19,47,35,738/- from the NLC Tamilnadu Power Limited ( NTPL ). It is also not disputed that the investments are made in multiple trenches between FY 2005-06 to FY 2016-17. The only dispute is that whether investments are out of own funds of assessee or from borrowed funds. 8. We find it necessary to reproduce here the relevant portion of the Hon ble Supreme Court judgment in the case of South Indian Bank Ltd. Vs Commissioner of Income Tax [2021] 438 ITR 1 (SC) dated 09.09.2021 which held as under: 17. In a situation where the assessee has mixed fund (made up partly of interest free funds and partly of interest bearing funds) and payment is made out of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest free funds available to assessee were sufficient to meet its investment it will be presumed that investments were made from such interest free funds. 19. In HDFC Bank Ltd. Vs. Deputy Commissioner of Income Tax4, the assessee was a Scheduled Bank and the issue therein also pertained to disallowance under Section 14A. In this case, the Bombay High Court even while remanding the case back to Tribunal for adjudicating afresh observed (relying on its own previous judgment in same assessee s case for a different Assessment Year) that, if assessee possesses sufficient interest free funds as against investment in tax free securities then, there is a presumption that investment which has been made in tax free securities, has come out of interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich obligate the assessee to maintain separate accounts which might justify proportionate disallowance. 29. In the above context, the following saying of Adam Smith in his seminal work The Wealth of Nations may aptly be quoted: The tax which each individual is bound to pay ought to be certain and not arbitrary. The time of payment, the manner of payment, the quantity to be paid ought all to be clear and plain to the contributor and to every other person. Echoing what was said by the 18th century economist, it needs to be observed here that in taxation regime, there is no room for presumption and nothing can be taken to be implied. The tax an individual or a corporate is required to pay, is a matter of planning for a tax payer and the Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X
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