Where assessee had not taken any loans in the relevant year when investments in tax-free securities were made, and its own funds and other non-interest-bearing funds were more than the investments, it was to be presumed that investments were made out of interest-free funds; accordingly, no disallowance under section 14A read with rule 8D was warranted. (AY. 2009-10)
PCIT v. Morgan Stanley India Capital Pvt Ltd [2025] 177 taxmann.com 699 (Bom) (HC)
S.14A: Disallowance of expenditure-Exempt income-Interest-free funds-Non-interest-bearing funds were more than the investment made in tax-free securities; it would be presumed that the investment made by the assessee would be from its interest-free funds and, thus, no disallowance under section 14A could be made-Order of Tribunal affirmed. [S.260A, Rule 8D]
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