Interest cannot be disallowed if assessee had ample funds at the time of investing in subsidiary companies

Interest paid on borrowed funds cannot be disallowed when the assessee had ample funds at the time of investing in the equity of subsidiary companies Mid- Day Multimedia Ltd Vs Dy. CIT (ITAT Mumbai)- The provisions of rule 8D of the Rules which have been notified with effect from March 24, 2008, would apply with effect from assessment year 2008-09. Even prior to assessment year 2008-09, when rule 8D was not applicable, the AO had to enforce the provisions of sub-section (1) of section 14A. For that purpose, the AO is duty bound to determine the expenditure which has been incurred in relation t...