Case Law Details
DCIT Vs Hero Moto Corp. Ltd (ITAT Delhi)
In so far as the interest aspect is concerned, it is vivid from the assessee’s balance sheet that total investments at the end of the year stand at Rs.167.74 crore. The assessee’s capital along with reserve and surpluses stand at Rs.448.33 crore. This shows that the assessee’s Shareholders’ funds is far in excess of the investment made in securities yielding exempt income. The Hon’ble Bombay High Court in CIT vs. Reliance Utilities and Power Ltd. (2009) 313 ITR 340 (Bom), has held that if there are interest free funds available with the assessee sufficient to meet its investment and, at the same time, loan has been raised, it can be presumed that the investments were from interest free funds and, resultantly, no disallowance of interest can be made. Recently, the Hon’ble Bombay High Court in CIT vs. HDFC Bank Ltd. (2014) 366 ITR 505 (Bom), has held that no disallowance of interest can be made u/s 14A if the assessee’s own capital is more than the investments fetching exempt income. Similar view has been taken by the Hon’ble Gujarat High Court in the case of CIT vs. Suzlon Energy Ltd. (2013) 354 ITR 630 (Guj). In view of the above judgments, it is patent that the disallowance u/s 14A on account of interest was not rightly made by the AO.
FULL TEXT OF THE ITAT JUDGEMENT
These two cross appeals – one by the assessee and the other by the Revenue – arise out of the order passed by the CIT(A) on 23.7.2013 in relation to the assessment years 2000-01.
2. The only issue raised by the Revenue in its appeal is against restricting the addition u/s 14A of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) from Rs.1,43,06,087/- to Rs.26.21 lac. The assessee is also aggrieved against the sustenance of addition u/s 14A to the level upheld in the first appeal.
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