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2017 (1) TMI 1441 - AT - Income TaxAddition u/s 14A r.w.r. 8D - calculation of disallowance - Held that:- In this instance facts before us, assessee has not made any disallowance in respect of expenditure, that may be attributable to the earning of exempt income. Admittedly assessee has earned dividend to an extent of ₹ 39,87,672/-, from the investments made. The methodology of calculation adopted by Ld. AO in the order, shows that all these elements were present in his mind, that he did not expressly record his satisfaction in these circumstances, would not per se justify in concluding that he was not satisfied to reject the AO’s conclusion. To insist that the AO should pay such lip service regardless of the substantial compliance with the provisions would, destroy the mandate of Section 14A. We dismiss the additional ground raised by assessee. In respect of the merits of the case it is observed that the assessee has submitted a calculation of disallowance under Section 14A read with rule 8D at page 4 of the paper book. As from the balance sheet and profit and loss accounts, it is observed that there is no fresh investment that has been made by the assessee during the year under consideration and that the dividend income has been earned from the old investments. We agre with the submission of Ld. AR that interest received on loans advanced is much more than the interest paid on the loans taken and that an amount of ₹ 4 crores advanced to Pearey Lal & Sons (E.P) Ltd., maybe a excluded, as the interest earned from the advance cannot be attributed to the dividend income earned by the assessee. We therefore do not agree with the Ld.CIT(A), in confirming the entire disallowance made by Ld.AO, and restrict the disallowance as computed by the assessee to an extent of ₹ 8,54,102/-.
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