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2016 (9) TMI 1552 - ITAT KOLKATADisallowance u/s 14A - Assessee suo motto added expenditure relating to exempt income in the computation - HELD THAT:- The decision reported in COMMISSIONER OF INCOME TAX vs. HDFC BANK LTD (2014 (8) TMI 119 - BOMBAY HIGH COURT) applies on all fours. In that decision it was held that when assessee's capital, profit reserves, surplus and current account deposits were higher than the investment in tax-free securities, it would have to be presumed that investment made by the Assessee would be out of the interest-free funds available with Assessee, and the additions made by the AO under Rule 8D(2)(ii) by disallowing the expenditure, have to be deleted. When the assessee himself disallowed some amounts in respect of the expenses attributable to the exempt income, the learned AO assumes jurisdiction to invoke section 14A read with Rule 8D of the Rules only when he reaches a conclusion that the claim of expenditure made by the assessee is not correct. We conclude that own funds of the assessee are sufficiently in excess of investments and the legal requirement of the AO to record the reasons for resorting to Section 14A read with Rule 8D of the Rules in this matter are conspicuously absent. Viewing from any angle, we are convinced that there is no justification for the authorities below to sustain disallowing a sum of ₹ 8,87,670/- over and above which was added by the Assessee under section 14A of the Act read with Rule 8D of the Rules. We hold that the authorities below are not justified in disallowing a sum of ₹ 8,87,670/- over and above which was added by the Assessee under section 14A of the Act read with Rule 8D of the Rules, and any addition on such score has to be deleted. We order accordingly.
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