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2016 (2) TMI 236 - AT - Income TaxDisallowance u/s. 14A - Held that:- The assessee company has made investment from earlier years and received dividend income every year and demonstrated that funds utilized for investments are surplus funds or interest free funds. The assessee earned exempt income ;1,64,06,932/-. Since Rule 8D provisions was introduced with effect from 24.03.2008, which was prospective in operation and cannot be regarded as being retrospective as held by Delhi High Court in the case of Maxopp Investment Ltd vs. CIT [2011 (11) TMI 267 - Delhi High Court]. However, incurring certain administrative expenses cannot be ruled out. Accordingly, we direct the Assessing Officer to disallow 2% of exempt income as expenditure towards earning that income. - Decided in favour of assessee Disallowance of setting off of loss u/sec. 10AA against the normal business income - Held that:- The assessee is having two separate units and as per the provisions of Secs.70 and 71 set off of loss from one source against the income from any other source under same head of income is allowed except capital loss and relied on CBDT circular No.07/2013. We after analyzing the provisions of set off and Sec.10A, the assessee company loss from the SEZ unit has to carried forward and set off against profit of eligible units only. We draw support from the decision of Delhi High Court in the case of CIT vs. KEI Industries Ltd [2015 (3) TMI 618 - DELHI HIGH COURT], wherein it was held that loss suffered by the assessee in a unit entitled for exemption cannot be set off against income from any other unit not eligible for such exemption. In the present case by applying the above ratio, we are not inclined to interfere with the order of the Commissioner of Income Tax (Appeals) on this ground and accordingly dismiss the ground of the assessee. - Decided against assessee
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