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2014 (1) TMI 1035 - AT - Income TaxDisallowance u/s 14A - Held that:- On observing the application of the funds of the assessee, it would be evident that the company is mainly utilizing its funds for the purpose of investment in the equity shares - When the company is existing mainly for the purpose of investing in shares, it cannot be said that the expenditure was incurred wholly and exclusively for earning of interest income only in which the investment is of less than 5% of the assessee's funds - The only reasonable and logical conclusion can be to allocate the expenditure between the exempt income and non-exempt income – The Ao has computed disallowance by applying Rule 8D which is applicable w.e.f. A.Y. 2008-09 - Since the actual expenditure incurred by the assessee was only Rs. 4,27,376/- out of which a sum of Rs. 7,000/- was separately disallowed by the Assessing Officer - The disallowance should be restricted to Rs. 4,20,376 - The assessee has not pointed out any mistake in the working of disallowance under Rule 8D by the Assessing Officer - The disallowance under Rule 8D as worked out as per the formula given in the Rules was more than the actual expenditure, the Assessing Officer has rightly restricted the disallowance to the expenditure actually incurred by the assessee - Decided against assessee.
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