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2017 (8) TMI 114 - ITAT DELHILease Equalization Amount - claim as allowable expenditure - difference in the actual lease amount that is accrued and the amount debited/credited to the P &L A/c due to the following of AS-19 - Held that:- Accepting the lease equalization charges adjustment in respect of the property taken on rent and rejecting the same in respect of the property given on rent does not fit it into any logic and it is not permissible for the Revenue to follow the rule of convenience i.e. wherever the amount is added back it is accepted and wherever the amount is reduced it is rejected. - Claim allowed. Disallowance u/s 14A - Held that:- We are of the considered opinion that insofar as the finding of the AO is that offering of 10% expenditure has no basis and cannot be accepted, is concerned it does not admit of any interference inasmuch as admittedly, no separate accounts are being maintained in respect of the expenditure incurred in respect of the income exempt from tax. The Hon’ble jurisdictional High Court in CIT VS. Holcim India P Ltd [2014 (9) TMI 434 - DELHI HIGH COURT] and Cheminvest Ltd Vs. CIT (2015 (9) TMI 238 - DELHI HIGH COURT) held that where no exempted income was earned by the assessee in the relevant assessment year no disallowance could be made under section 14A of the Act. Further, at the same time in view of the decision of the jurisdictional High Court in Joint Investments P. Ltd. vs. CIT (2015 (3) TMI 155 - DELHI HIGH COURT) disallowance of expenditure u/s 14A of the Act cannot exceed the amount of tax exempt income, as such disallowance of expenditure as against the exempt income cannot be sustained. We, therefore, direct the AO to limit the disallowance to the tax exempt income.
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