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2014 (12) TMI 1010 - AT - Income TaxDeletion made u/s 14A – expenses attributable to earning exempt income or not - Held that:- In Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax [2011 (11) TMI 267 - Delhi High Court] it has held that Rule 8D is applicable from AY 2008-09, that does not mean that prior to the introduction of this Rule, no amount can be considered as incurred for the purpose of earning tax free income - The disallowance has to be made, first examining the accounts of the assessee and if the AO is satisfied that the accounts do not depict true picture, then he can work out the disallowance on the basis of a reasonable and acceptable method of apportionment - CIT (A) ought to have not deleted the disallowance in Toto, rather ought to have examined whether any disallowance is possible or not - she should have examined whether any expenditure attributable to earning exempt income can be identified for disallowance u/s 14A of the Act - the order of the CIT (A) is not sustainable – thus, the order is set aside and the matter is remitted back to the AO for re-adjudication. CIT in an order u/s 263 had made a clear direction that the amount disallowed u/s 14A would be adjusted in the book profit - if any disallowance is being made by the AO, in the regular course of assessment, then that disallowance would be included in the book profit, to be computed for the purpose of section 115JB - only the amount of computation can be replaced, because the Commissioner took it from the original assessment order which has been set aside – Decided in favour of assessee.
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