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2015 (9) TMI 1343 - AT - Income TaxDisallowance u/s 14A - Held that:- No justifiable reason to interfere with the conclusion drawn by the CIT(A). Notably, the disallowance computed by the Assessing Officer based on Rule 8D of the Rules is not tenable in as much as Rule 8D is applicable only w.e.f. assessment year 2008-09 as laid down by the Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg. Company Ltd. vs. DCIT (2010 (8) TMI 77 - BOMBAY HIGH COURT ). Nevertheless, the provisions of section 14A of the Act, require disallowance of expenses related to the earning of exempt income. In this context, the Assessing Officer has not made any effort to demonstrate that the estimation of such expenditure at ₹ 3800/- made during the original assessment proceedings was unreasonable. The CIT(A), on the other hand, has noted that estimation of such expenditure at ₹ 3800/- made in the course of original proceedings was reasonable, a finding which has not been shown to be untenable by the Revenue before us. Therefore, we find no justifiable reason to interfere with the ultimate conclusion drawn by CIT(A) for assessment year 2005-06, which is hereby affirmed. - Decided against revenue. Disallowance of interest expenditure - Held that:- CIT(A) has directed the Assessing Officer to examine whether the investments made in mutual funds were out of non-interest bearing funds or not; and if the Assessing Officer found it to be made out non-interest bearing funds, he has been further directed to exclude such investments in mutual funds from the total tax free investments as well as total assets for the purposes of calculation of interest disallowable in terms of clause (ii) of Rule 8D(2) of the Rules. The aforesaid direction of CIT(A), in our view is unexceptional and no error has been brought out by the Revenue on this aspect. In the same manner, with respect to quantification of disallowance out of administrative expenditure is concerned, on this aspect also we find no error on the part of the CIT(A) in directing the Assessing Officer to determine the disallowance on a reasonable basis following the judgement of the Hon’ble Bombay High Court in the case of Godrej & Boyce Mfg. Company Ltd.(supra).- Decided against revenue.
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