No disallowance under rule 8D(2)(ii) as interest-free own funds exceeds investment

ACIT Vs Lodha Developers Limited (ITAT Mumbai) ITAT Mumbai held that disallowance of interest expenditure under Rule 8D(2)(ii) of the Income Tax Rules is not sustainable since the assessee’s own interest-free funds were substantially higher than the investment. Accordingly, appeal of revenue dismissed and order of CIT(A) upheld. Facts- The assessee is a company engaged in the business of real estate construction and development. Post scrutiny assessment, AO made addition towards ERP / Software Expenses – Rs. 1,06,60,841/-; Disallowance under Section 14A read with Rule 8D – Rs. 7...