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2012 (9) TMI 153 - AT - Income TaxDis-allowance u/s 14A of ad-hoc expenditure assumed for earning exempt dividend and interest income from shares and mutual funds & RBI tax free bonds - assessee contended that there is no provision under the law for such dis-allowance on an estimate and arbitrary basis for the AY 2007-08 - Held that:- It is observed that out of total income of Rs 29,75,609/-, a sum of Rs.21,66,023/- related to income from old investments and income from new investments is only to the tune of Rs.8,09,586/- and that too as dividend from mutual funds for which assessee need not to incur any expenses. Therefore, the disallowance @ 0.5% of total of average investment as per Rule 8D is not justified as a very small amount of new investment has been made during the year. Moreover, Rule 8D is not applicable for the year under consideration and assessee has not incurred any interest expenditure for earning of the exempt income. Hence, no disallowance of expenditure u/s 14A can be made in the present case - Decided in favor of assessee.
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