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2012 (7) TMI 244 - ITAT, DELHIDis-allowance u/s 14A of expenditure incurred in earning dividend income - application of Rule 8D - AY 07-08 - Revenue contesting restriction of dis-allowance by CIT(A) - Held that:- It has been held in case of Godrej & Boyce Manufacturing Co. Ltd. vs. DCIT (2010 (8) TMI 15 (HC)) that provisions of Rule 8D would apply with effect from AY 2008-09. In the case before us the AY involved is AY 2007-08. Therefore, Rule 8D will not be applicable in the case of the assessee. However, disallowance can be made in relation to exempt income on reasonable basis. The assessee had himself disallowed Rs.1,73,98,255/- in the proportion of exempt and taxable income earned by way of dividend and interest income, which is reasonable. Since Rule 8D is not applicable for AY under consideration, the disallowance made by the assessee on proportionate basis of exempt income and taxable income in our considered opinion is justified - Decided against Revenue.
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