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2014 (4) TMI 963 - AT - Income TaxDeemed dividend u/s 2(22)(e) of the Act – Loans received – Held that:- CIT(A) rightly was of the view that the loan/advance was not received by the assesssee company during the year and the AO was not justified in making the addition by invoking the deeming provisions of Section 2(22)(e) of the Act - CIT(A) had set aside the addition – revenue merely relied on the order of the AO - He could not point out any specific error in the order of CIT(A) - revenue could not controvert the finding of the CIT(A) that the amount of Rs. 8 lacs outstanding loan from M/s. Sarjan Financial Pvt. Ltd was the opening balance of the year – revenue could not bring any material to show that any amount was received by the assessee during the previous year relevant to the assessment year from M/s. Sarjan Financial Pvt Ltd as loan or advance – thus, there was no reason to interfere with the order of CIT(A) – Decided against Revenue. Disallowance u/s 14A of the Act – Restriction out of operating expenses – Held that:- The assessee earned dividend income - The assessee incurred operating expenses - According to the AO since the major income of the assessee was by way of dividend – thus, Rule 8D was not applicable to the assessee, he disallowed proportionate operating expenses by taking the proportionate total exempt income and total income - CIT(A) restricted the disallowance by working out the same in accordance with Rule 8D of the Income Tax Rule, 1962 – revenue could not show any provision of law which empowers the revenue to over-ride the provisions of Rule 8D while working out disallowance u/s 14A of the Act so as to make disallowance of an amount more than the amount worked out as per Rule 8D – there is no reason to interfere with the order of CIT(A) – Decided against Revenue.
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