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2023 (7) TMI 557

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..... disallowance made u/s. 14A r.w.r.8D to the amount of actual exempt income earned by the assessee during the year. Appeal of the assessee is partly allowed. - ITA No. 86/RPR/2022 - - - Dated:- 11-7-2023 - Shri Ravish Sood, JM And Shri Arun Khodpia, AM For the Assessee : Shri Prafulla Pendse, CA For the Revenue : Shri Choudhary N.C.Roy, Sr. DR ORDER PER ARUN KHODPIA, AM : The present appeal by the assessee is directed against the order passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 21.03.2022 for the assessment year 2014-2015, on the following grounds:- 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in sustaining disallowance of Rs. 5,72,606/- made .....

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..... penses amounting to Rs. 51,508/- in aggregating the total disallowance was Rs. 5,72,606/-. 3. Dissatisfied with the said disallowance, the assessee preferred an appeal before the ld. CIT(A) but the contention of the assessee was rejected and the addition made by the ld. AO was confirmed by the ld. CIT(A). 4. The assessee assailed this issue before us by filing the present appeal. 5. Ld. AR submitted that since there was no exempted income earned by the assessee during the relevant assessment year, therefore, as per the settled legal position no disallowance/addition can be made u/s. 14A r.w.rule 8D. It was further submitted by the ld. AR that by overshight while preparing the return of income an amount of Rs. 2990/- was put as exem .....

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..... ddition made under section 14A - High Court upheld order of Tribunal holding that amount of disallowance under section 14A could be restricted to amount of exempt income only and not a higher figure - Whether on facts, SLP filed against decision of High Court was to be dismissed - Held, yes [Para 1 ][l n favour of assessee] iii) Pr.CIT Vs. Reliance Chemotex Industries Ltd., [2022] 138 taxmann.com 199 (Calcutta), wherein the hon ble High Court has held as under :- Section 14A of the Income-tax Act, 1961 - Expenditure incurred in relation to income not includible in total income (General) - Assessment year 2010-11 - Whether disallowance under section 14A cannot exceed exempt income - Held, yes [Para 5] [In favour of assessee] iv) .....

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..... were presented before us by the ld. AR and the substance of the same is reproduced in the forgoing paras of this order in the form of statements of investment, interest etc. filed by the ld. AR, since in the case before us, it was established that no interest bearing funds were used for investment to earn exempted income, no other expenses were incurred to achieve exempted income, the interest paid also has no nexus with the amount of investment in question, however, an exempt income of Rs. 46,500/- was earned by the assessee in the form of dividend earned from long term investments. Therefore, we are of the considered view that disallowance u/s 14A read with rule 8D was not in accordance with law and therefore, the same is liable to be de .....

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