2018 (2) TMI 428

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..... Rules. 2. Learned Counsel for the assessee submits that assessee received dividend income of Rs..5,20,000/- during this Assessment Year and in the computation of income assessee himself disallowed Rs..6,15,628/- suo-motu towards expenditure incurred for earning such dividend income. Learned Counsel for the assessee submits that the Assessing Officer by invoking the provisions of section 14A r.w. Rule 8D computed the disallowance under Rule 8D2(iii) of the I.T. Rules at Rs..1,02,54,975/- being 0.5% of the average value of investments and since the assessee itself disallowed Rs..6,15,628/- in the computation of income the same was reduced from Rs..1,02,54,975/- and the balance disallowance of Rs..96,39,337/- was made by the Assessing Offic....

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....td. v. DCIT in ITA.No. 5048/Mum/2016 by order dated 31.10.2017 held that disallowance u/s. 14A r.w. Rule 8D cannot exceed the exempt income observing as under: - "7. We have heard the rival submissions, perused the orders of the authorities below and the case laws relied upon. The Assessing Officer computed the disallowance u/s. 14A r.w. Rule 8D at Rs..38,43,918/- and the Ld.CIT(A) recomputed the disallowance at Rs..5,10,601/- which comprises of Rs..3,42,870/- under Rule 8D(2)(ii) and Rs. 1,67,731/- under Rule 8D(2)(iii). This calculation of the Ld.CIT(A) appears to be proper and justified. 8. Further, it has been held in various cases that the disallowance u/s. 14A r.w. Rule 8D cannot exceed the exempt income. The Hon'ble Punjab an....

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....sed the Assessment Order and find that the assessee earned exempt income of Rs. 1,70,000/- only during this Assessment Year and the Assessing Officer by invoking the provision of Section 14A made disallowance at Rs. 54,66,813/-. The Hon'ble Delhi High Court in the case of Joint Investment Private Limited in ITA.No. 117/15 dated 25.02.2015 held that by no stretch of imagination can section 14A or Rule 8D be interpreted so as to mean that entire tax exempt income is to be disallowed. Similarly, Punjab and Haryana High court in the case of PCIT v. Empire Package Private Limited in ITA.No. 415/2015 held that disallowance should not exceed exempt income. In the case on hand since the assessee received dividend income of Rs. 1,70,000/- as recorde....