Where own funds exceeds investment, no disallowance of interest can be made u/s 14A

Gujarat State Energy Generation Ltd. Vs ACIT (ITAT Ahmedabad)

Held that if the assessee can demonstrate the availability of surplus interest free funds for making investments that are generating tax free income, disallowance under Section 14A of the Act would not be justified. In this case, the own fund of the assessee exceeds the amount of investment. Accordingly presumption can be drawn that the borrowed fund was not utilised for such investments, hence, there cannot be any disallowance of any interest expenses.

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