2015 (4) TMI 224 - DELHI HIGH COURT

Disallowance under Section 14A - Held that:- The AO, instead of adopting the average value of investment of which income is not part of the total income i.e. the value of tax exempt investment, chose to factor in the total investment itself. Even though the CIT(Appeals) noticed the exact value of the investment which yielded taxable income, he did not correct the error but chose to apply his own equity. Given the record that had to be done so to substitute the figure of ₹ 38,61,09,287/- with the figure of ₹ 3,53,26,800/- and thereafter arrive at the exact disallowance of .05%.

In view of the above reasoning, the findings of the ITAT and the lower authorities are hereby set aside. The appeal is allowed and the matter is remitted to work out the tax effect to the AO who shall do so after giving due notice to the party. - Decided in favour of assessee for statical purposes.