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2016 (2) TMI 514 - AT - Income TaxDisallowance u/s 14A - Held that:- We find that the assessee had voluntarily disallowed a sum of ₹ 4,67,484/- u/s 14A of the Act with some basis. We find that the assesee does not have any debt funds and hence no interest is debited. The fact is that no investments were made during the previous year relevant to Asst Year 2009-10 out of the money borrowed from outside the company. Thus there is no element of interest cost involved in connection with investment made during the year. The Learned AO without controverting the said workings and without recording his satisfaction with cogent reasons as to why the said figure is incorrect, directly embarked on invoking Rule 8D(2) of the Rules. In our opinion, this action of the Learned AO is not in accordance with law. We hold that the satisfaction need to be recorded in terms of Rule 8D(1) by the Learned AO and not by the Learned CIT-A We also find lot of force in the alternative arguments of the Learned AR that only investments yielding exempt income should be considered for the purpose of disallowance u/s 14A read with Rule 8D of the Rules. - Decided in favour of assessee
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