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2016 (7) TMI 1252 - AT - Income TaxDisallowance u/s 14A - Held that:- Disallowance made out of interest expenditure and confirmed by the ld. CIT(A) is not sustainable as sufficient evidence thus was brought on record by the assessee company to establish that investment in shares was made by it out of its own funds and the borrowed funds were entirely utlised for the purpose of its business. As a matter of fact, even the authorities below have not disputed this position. So far as common administrative expenses u/s 14A of the Act are concerned, the Tribunal directed the Assessing Officer to verify this aspect from the assessment record of earlier assessment years and restricted the disallowance, out of common administrative expenses to 2% of the total exempt income and the ground was partly allowed. Thus, so far as, disallowance out of common administrative expenses u/s 14A of the Act is concerned, the ld. Assessing Officer is directed to follow the directions of the Tribunal as contained in the order for Assessment year 2005- 06 So far as, the strategic investment as no expenditure has been incurred for maintaining the 98% of the investment made in the subsidiary companies, therefore, in the absence of any finding that any expenditure has been incurred for earning the exempt income, the disallowance made by the AO is not justified, accordingly the same is deleted. Transactions with respect to own business demerger and consequent receipt of shares out of non-cash transactions direct the Assessing Officer to examine the claim of the assessee and decide afresh Disallowance u/s 14A while computing minimum alternate tax u/s 115JB - The argument on behalf of the assessee is that the amount should be restricted to 13.66 lakhs or 2% of the dividend income for calculating income for the purposes of section 115 JB - Held that:- Assessing Officer is directed to examine the claim of the assessee. Thus, this ground is allowed for statistical purposes.
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