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2015 (8) TMI 118 - AT - Income TaxDisallowance is called for u/s 14A - assessee has submitted that when the working under rule 8D gives contradictory result to the actual fact then the provisions of Rule 8D cannot be applied for the purpose of disallowance under section 14A - Held that:- Having regard to the facts that the disallowance made by the AO by applying Rule 8D exceeds the amount of total expenditure debited by the assessee to the profit and loss account, we are of the view that for the purpose of disallowance u/s 14A, the computation made under Rule 8D cannot be accepted. So far as the provisions of Rule 8D(2)(iii) are concerned, the same cannot be applied in the case of assessee when the disallowance made u/s 14A on account of administrative expenses exceed the total expenditure debited on this account to the profit and loss account. Hence, Rule 8D cannot be applied for making disallowance u/s 14A on account of administrative expenses. The ld. AR submitted that the disallowance on account of interest expenditure is strategic one and the investment in question strategic in nature and not made with the intention of earning exempt income because the investment have been made in the sister concern and for commercial expediency. The authorities below have not examined this issue by considering fact that the investment in question are in the sister concern and are in the nature of strategic investment. However, the assessee itself has made a disallowance of ₹ 62.17 lakhs under section 14A which covers the interest expenditure of ₹ 50,58,468/- for the assessment year 2008-09, therefore, no further disallowance is called for u/s 14A. Similarly for the assessment year 2009-10, the assessee made suo motu disallowance ₹ 50.58 laksh u/s 14A no further disallowance is called for. - Decided in favour of assessee.
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