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2017 (12) TMI 408 - ITAT DELHIAddition u/s 14A - Held that:- The AO has not pointed out any defect in the computation made by the assessee company and as such, provisions contained u/s 14A read with Rule 8D are not attracted. Because sub-section (2) & (3) of section 14A with Rule 8D of the Rules has only prescribed a formula for determination of an expenditure to earn the income which does not form part of the total income under the Act, which can only be invoked if the AO is not satisfied with the claim of the assessee. Furthermore, CIT (A) erred in sustaining the disallowance of ₹ 68,433/- by restricting the same to 10% of the exempt income even despite agreeing with the assessee company that no satisfaction has been recorded by the AO that nil expenses has been incurred to earn tax free dividend income rather proceeded to sustain the addition of ₹ 68,433/- on the basis of surmises and guesswork which is not sustainable. In the given circumstances, the contentions raised by ld. DR are not sustainable. Appeal filed by the Revenue challenging to restrict the disallowance u/s 14A read with Rule 8D from ₹ 43,67,640/- to ₹ 68,433/- is dismissed being without merit.
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