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2016 (10) TMI 323 - ITAT KOLKATADisallowance u/s 14A - fair and reasonable amount for the purpose of making disallowance u/s.14A - Held that:- As during the course of assessment proceedings AO noticed that assessee has earned dividend income of ₹ 1,65,924/- and claimed the same as exempt u/s. 10(34) of the Act. The AO required the assessee to furnish the details of expenditure incurred for earning this dividend income. The assessee in reply stated that no expenditure has been incurred to earn the said dividend income. The AO was not convinced with the reply of the assessee and made disallowance by making calculation by applying Rule 8D of the Rules. The Tribunal supra held that the AO has not examined the accounts of the assessee and there is no satisfaction recorded by the AO about the correctness of the claim of the assessee and without the same he invoked Rule 8D of the Rules. While holding the action of AO invoking the Rule 8D is bad under law, the Tribunal taken support from the ratio of the Hon'ble Delhi High Court in the case of Maxopp Investment Ltd and Others v. CIT [2011 (11) TMI 267 - Delhi High Court]. The facts in the aforementioned case are clearly applicable to the facts of the case, In view of the same, we hold that the AO did not verify the accounts and claim of the assesse while applying Rule 8D and computing expenditure thereon, and, therefore, the order of the CIT-A is quashed and the grounds raised by the assesse are allowed.
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