DCIT CEN CIR 3(3), MUMBAI vs. SHAREKHAN FINANCIAL SERVICES P.LTD, MUMBAI

The Revenue is aggrieved by the decision of learned CIT(A) in deleting the interest disallowance made u/r. 8D(2)(ii)of the I.T. Rules read with section 14A of the I.T. Act.

The assessee is engaged in the business of financial services. During the year under consideration the assessee has received dividend income and claimed the same as exempt. The assessee disallowed a sum of ` 6,000/- u/s. 14A of the Act read with rule 8D of the I.T. Rules. The Assessing Officer, however, computed the disallowance by applying Rule 8D of the I.T. Rules at ` 65.69 lakhs, which included interest disallowance of ` 63.09 lakhs. Before learned CIT(A) the assessee submitted that interest free funds available with it is in excess of the investment made by it and hence no disallowance of interest

We have heard the parties and perused the record. Learned Departmental Representative submitted that the assessee did not establish the nexus between the interest free funds and investment made by it. On the contrary, AR submitted that above said contention of the assessee have been duly considered by Hon'ble Bombay High Court in the case of HDFC Bank Ltd (366 ITR 505 and 383 ITR 529).

We have also gone through the copy of balance-sheet filed by the assessee. Perusal of the same would show that the interest-free fund available with the assessee is in excess of the amount of investment made by it during the year under consideration and also in the immediately preceding year. We notice that learned CIT(A) has duly taken note of these facts and mentioned the same in para 5 of his order. Hence in view of the decision rendered by Hon'ble Bombay High Court in the case of HDFC Bank Ltd. (supra), we do not find any infirmity in the decision rendered by learned CIT(A) on this issue.

In the result, appeal filed by the Revenue is dismissed.