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2016 (11) TMI 1652 - ITAT KOLKATADisallowance u/s. 14A - whether the disallowance u/s. 14A could exceed the exempt income derived by the assessee? - HELD THAT:- Provisions of section 14A of the Act are very clear in considering expenditure which were incurred for earning any income which do not form part of total income. So going by the plain language of the section it could be safely concluded that the legislature intended only to disallow the expenditure that were incurred for earning exempt income. The legislature never intended to disallow the expenditure which is more than the exempt income derived by the assessee. We also draw support from the decision of the Hon’ble Delhi High Court in the case of Joint Investments Pvt. Ltd. Vs. CIT [2015 (3) TMI 155 - DELHI HIGH COURT] wherein it has been held that the disallowance u/s. 14A of the Act cannot exceed the exempt income. Respectfully following the said decision, we direct the AO to restrict the disallowance u/s. 14A of the Act to ₹ 102/- and allow the ground of appeal raised by the assessee. Appeal of the assessee is allowed.
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