Allowing the appeal of the assessee the Tribunal held that; If there were funds available both interest-free and over draft and / or loans taken, then a presumption would arise that investments would be out of interest-free fund generated or available with company, if interest-free funds were sufficient to meet investments. Followed, CIT v. Reliance Utilities and Power Ltd. (2009) 313 ITR 340 (Bom) (HC) and Wool combers of India Ltd.’s case (1982) 134 ITR 219 ( Cal) (HC). (AY. 2008 – 2009)
Bennett Coleman & Co. Ltd. v. Addl. CIT (2018) 164 DTR 145 / 168 ITD 631 / 192 TTJ 377 (Mum.)(Trib.)
S. 14A : Disallowance of expenditure-Exempt income-If there were funds available both interest-free and over draft and/or loans taken, then a presumption would arise that investments would be out of interest-free fund generated or available with company, if interest-free funds were sufficient to meet investments. [R. 8D]