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2014 (8) TMI 1025 - AT - Income TaxDisallowance of exemption claimed u/s 10(1) - CIT(A) allowed the claim - Held that:- There is no infirmity in the order of the CIT(A) in allowing the exemption claimed by the assessee u/s 10(1) of the Act relying not only by the orders of the Tribunal in assessee’s own case for the preceding assessment years but also by the decision of the Hon’ble jurisdictional High Court in assessee’s own case for the assessment year 2008-09. Accordingly, we uphold the order of the CIT(A) on this issue by dismissing the grounds raised by the department. - Decided in favour of assessee Disallowance of expenditure for earning of exempted income in terms with section 14A r.w.r 8D - - CIT(A) allowed the claim - Held that:- In the present case, admittedly assessee has not disallowed any expenditure u/s 14A read with Rule 8D(2) by claiming that it has not incurred any expenditure for earning exempt income. Ld. CIT(A) has accepted assessee’s claim by concluding that investments in mutual funds have been made out of surplus fund and no borrowed fund has been used. However, perusal of the assessment order clearly reveals that AO in terms with section 14A(3) has worked out expenditure deemed to be incurred by the assessee @ 0.5% of the investment as provided under rule 8D(2)(iii). Therefore, it is immaterial whether or not assessee has actually incurred any expenditure for earning exempt income. The provisions contained u/s 14A read with Rule 8D being clear and unambiguous, cannot be interpreted differently. The AO having computed the disallowance strictly in terms with section 14A(3) read with Rule 8D(2)(iii), the same, in our view needs to be sustained. Accordingly, we set aside the order of ld. CIT(A) on this issue and sustain the addition of ₹ 1,77,371 made by AO. - Decided in favour of revenue
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