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2013 (3) TMI 667 - AT - Income TaxDisallowance u/s 14A read with Rule 8D - Held that:- No part of interest can be considered to have been incurred towards investment fetching exempt income. Once there is no deduction for interest expenditure in this regard, there cannot be any question of making any disallowance u/s 14A. We, therefore, order for the deletion of addition u/s 14A to the extent of ₹ 59.79 lakh on account of interest in relation to investment in tax free bonds. Working out disallowance u/s 14A - as per assessee AO also included the amount invested by the assessee in share capital of certain firms, interest from which was offered for taxation - Held that:- Special Bench of the Tribunal in the case of Vishnu Anand Mahajan v. ACIT [2012 (6) TMI 297 - ITAT, Ahmedabad] has discussed the issue when there is receipt of interest from the firm chargeable to tax and share in the profits which is exempt. In this order the Special Bench has laid down a mechanism for working out the disallowance u/s 14A. The Assessing Officer is directed to work out the second part of disallowance as per Rule 8D afresh in the light of the afore-noted order of the Special Bench after allowing a reasonable opportunity of being heard to the assessee.
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