2024 (3) TMI 826

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....ct") relevant to the Assessment Year 2014-15. 2. The interconnected issue raised by the assessee in ground numbers 1 to 6 is that the Ld. CIT(A) erred in confirming the order of the AO by sustaining the addition of Rs. 99,34,511/- under the provisions of section 14A r.w. Rule 8D of Income Tax Rules. 3. The AO during the assessment proceedings found that the assessee has shown exempted income of Rs. 1,08,650/- only but no disallowance against such exempted income was made under the provision of section 14A r.w. Rule 8D of Income tax Rules. Therefore, the AO made the disallowance u/s 14A r.w. rule 8D of Income Tax Rules for Rs. 88,01,957/- and Rs. 11,32,554/- on account of interest and administrative expenses aggregating to Rs. 99,34,511/- ....

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....ilder Construction private limited reported in 112 taxmann.com 322 has held as under: SLP dismissed against High Court ruling that disallowance under section 14A cannot exceed exempt income of relevant year. 8.2 Now coming to the facts of the case on hand, admittedly the exempted income is of Rs. 1,08,650/- only and therefore, respectfully following the judgments as discussed above, the disallowance cannot exceed the amount of exempted income. Hence, the ground of appeal of the assessee is partly allowed. 9. The next issue by the assessee in ground No. 7 is that the Ld. CIT(A) erred in confirming the order of the AO by making addition to the book profit u/s 115JB of the Act for the amount disallowed u/s 14A r.w. Rule 8D of Income tax Rule....

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....tion of the said order is reproduced below: "In view of above discussion, the computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to the computation as contemplated under section 14A, read with rule 8D of the Income-tax Rules, 1962." 14.1 The ratio laid down by the Hon'ble Tribunal is squarely applicable to the facts of the case on hand. Thus, it can be concluded that the disallowance made under section 14A r.w.r. 8D cannot be resorted while determining the expense as mentioned under clause (f) to explanation 1 to section 115JB of the Act. 14.2 However, it is pertinent to note that the disallowance needs to be made with respect to the exempted income in terms of the provisions of clause (f)....