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2016 (12) TMI 47 - ITAT MUMBAIDisallowance u/s 14A - Held that:- Assessing Officer has not furnished any reasons for rejecting the suo motu disallowance of ₹ 50,000/- computed by the assessee before invoking the formula contained in Rule 8D(2)(iii) to compute the disallowance. Notably, the phraseology of Sec. 14A(2) of the Act itself shows that the computation of disallowance prescribed in Rule 8D of the Rules can be resorted to if the Assessing Officer is not satisfied with the correctness of the claim made by assessee. In the present case, there is no satisfaction arrived at by the Assessing Officer. Be that as it may, following the ratio of our coordinate Bench in the case of Devkant Synthetics (India) Pvt. Ltd. (2015 (11) TMI 1067 - ITAT MUMBAI) the disallowance of expenses u/s 14A of the Act is restricted to 5% of the exempt income. The Assessing Officer is directed to retain the addition to the extent of 5% of exempt income after allowing credit for the suo motu disallowance of ₹ 50,000/- already made by the assessee. Thus, on this aspect, assessee partly succeeds.
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