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2012 (3) TMI 509 - AT - Income TaxDisallowance u/s. 14A - Held that:- As seen from the details of the P&L account filed by assessee receipts were to the tune of ₹ 1.79 crores whereas the expenditure was only ₹ 13.69 lakhs, out of which ₹ 10 lakhs was donation. Out of the balance expenditure, the professional fees were to comply with certification charges and ROC matters and only an amount of ₹ 2.75 lakhs was paid for due diligence which has no relation to earning of exempt income. Only an amount of ₹ 55,183/-was paid as bank charges for clearance of various cheques in business activity. AO simply invoked Rule 8D disallowing the amount u/s. 14A without examining whether there is any nexus with the amount claimed as exempt income. Moreover, the disallowance made is more than the expenditure claimed in the P&L account. Therefore, we are unable to uphold the orders of AO and Ld. CIT(A) on this issue. Considering that an amount of ₹ 77,63,301/- was earned by way of dividend, a token amount of ₹ 5,000/- was only considered as expenditure incurred towards earning exempt income, out of the total claim of expenditure in the P&L account. Accordingly, disallowance is restricted to an amount of ₹ 5,000/-. The AO is directed to allow the balance expenditure as claimed. The grounds raised by the assessee are accordingly, partly allowed.
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