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2015 (6) TMI 994 - AT - Income TaxDisallowance u.s 14A - permissible limit - Held that:- In the instant case, the income from dividend has been shown at ₹ 1,11,564, the disallowance under section 14 A read with Rule 8 D worked out by the Assessing officer comes to ₹ 4,09,675/-. Thus it is clear that the AO has disallowed the entire ‘tax exempt income’ which is not permissible in view of the judgment of Joint Investment Pvt Ltd. Vs. CIT [2015 (3) TMI 155 - DELHI HIGH COURT]. The Hon’ble Delhi High Court held that the window for disallowance is indicated in section 14A, and is only to the extent of disallowing expenditure “ incurred by he assessee in relation to the tax exempt income”. The disallowance under section 14 A read with Rule 8 D as worked out by the AO is not in accordance with law and as such working is not sustainable. In view of the above observations, think it is appropriate to set aside the order of the Ld. CIT(A) on this issue and remit the matter to the file of AO with a direction to decide the issue a fresh in accordance with law after affording due and reasonable opportunity of being heard to the assessee. - Decided partly in favour of assessee for Statistical purposes.
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