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2016 (12) TMI 1246 - ITAT DELHIDisallowance u/s 14A - Held that:- It is seen that the assessee has claimed that expenditure amounting to ₹ 31,154/- had been incurred in relation to earning of exempt income. The Assessing Officer did not bring any evidence on record to relate the expenditure incurred with the amount of exempt income on one hand and relate the exempt income to the investments yielding exempt income on the other. He simply proceeded to calculate the disallowance under Rule 8D. In the absence of such evidence, it was patently wrong on the part of the Assessing Officer to compute disallowance u/s 14A of the Act by mechanically applying Rule 8D. The Assessing Officer has adopted the formula for estimating expenditure on the basis of investments but the justification for calculating the average investment is missing. Disallowance u/s 14A was made without due deliberation and analysis by the Assessing Officer and the Ld. CIT (A) was also patently wrong in confirming the disallowance. We, therefore, restore the issue to the file of the Assessing Officer for calculating the quantum of disallowance afresh after considering all the aspects as envisaged in section 14A and Rule 8D after giving due opportunity to the assessee to represent its case. The grounds pertaining to the issue of disallowance u/s 14A are accordingly allowed for statistical purposes.
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