DCIT Vs Hero Cycles Ltd (ITAT Chandigarh)
ITAT Chandigarh held that disallowance under section 14A of the Income Tax Act set aside since own funds and reserves of the assessee are more than sufficient to cover the investment made during the year. Accordingly, appeal of revenue dismissed.
Facts- During the course of assessment, AO worked out the disallowance under section 14A of the Act at Rs.14,15,10,213/-. CIT(A) after considering the submissions of the assessee, deleted the disallowance made by AO. Being aggrieved, department has preferred the present appeal. The grievance of the Department relates to the deletion of disallowance made by AO by invoking the provisions of Section 14A of the Income Tax Act, 1961.
Conclusion- In the present case it is noticed that an identical issue has been decided by the ITAT in assessee’s favour in the earlier AYs 2008-09 to 2011-12, wherein, it was held that own funds and reserves of the assessee are more than sufficient to cover the investment made during the year. In such a scenario, it can be very conveniently presumed that all the investment have been made out of own funds. Therefore, in such circumstances, no disallowance under section 14A of the Act on account of interest can be made.
