Case Law Details
Pr. CIT Vs DLF Home Developers Ltd (Delhi High Court)
Delhi High Court held that tribunal rightly deleted disallowance made by AO u/s. 14A of the Income Tax Act read with rule 8D of the Income Tax Rules as assessee had sufficient interest-free funds available with it to make investment.
Facts- The present writ is preferred by the revenue on the sole issue contesting that the Tribunal has erred in deleting the disallowance amounting to Rs. 80,66,72,112/- made by AO under section 14A of the Income Tax Act read with rule 8D of the Income Tax Rules.
Notably, AO applied the provisions of Rule 8D(2)(ii) and (iii). Accordingly, under Rule 8D(2)(ii), Rs. 6,946.01 lakhs was disallowed towards interest expenditure, while Rs. 1,128.93 lakhs was disallowed as administrative expenses that would possibly have been incurred to earn exempt income by taking recourse to Rule 8D(2)(iii) read with Section 14A of the Act. In sum, the total amount disallowed by the AO was Rs. 80,66,72,112/, after deducting the suo motu disallowance made by the respondent/assessee amounting to Rs. 8,21,883/-.
Conclusion- Held that concededly, the interest-free funds available to the respondent/assessee were more than the investments made in the AY in issue. Furthermore, as noted by the Tribunal, the AO had not recorded his dissatisfaction [having regard the accounts of the respondent/assessee] before discarding the suo motu disallowance made by the respondent/assessee and triggering disallowance qua the respondent/assessee. This issue is no longer res integra insofar as this court is concerned.
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