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2018 (4) TMI 1797 - AT - Income TaxRectification u/s 154 - additional grounds arise out of a rectification order passed by the AO - Adjustment to the international transactions of the Appellant with its Associated Enterprises - HELD THAT:- Though the assessee pleads that there is a merger, we are of the considered opinion that the proceedings made by the AO u/s 154/92CA(5) r.w.s. 92CA(3)/144C/143(3) of the Act dated 14.07.2017 is a separate proceedings and has to be separately challenged, as the assessee wishes to challenge as to whether the rectification in question carried out by the AO to the final assessment order are mistakes apparent on record or not. Such a challenge to the Sec.154 proceedings can be done only by filing separate appeal against the Sec.154 order. Hence we do not admit these additional grounds of appeal. The assessee is free to file an appeal against the order passed by the AO u/s 154 of the Act. The delay in filing shall be considered sympathetically as and when the appeal is filed before the Appellate Authority. Disallowance u/s 14A r.w.r. 8D - assessee submitted that the assessee has interest free fund in excess of the total investments in shares made, which had earned dividend income and that Rule 8D(2)(ii) of the IT Rules will not apply in view of the judgment of HDFC Bank Ltd.[2014 (8) TMI 119 - BOMBAY HIGH COURT] - HELD THAT:- We restrict the disallowance to the exempt income earned by the assesee i.e. ₹ 5,64,333/- by applying the judgment in the case of Joint Investment Pvt. Ltd. [2015 (3) TMI 155 - DELHI HIGH COURT] wherein held that the disallowance u/s 14A cannot exceed the amount of exempt income earned by the assessee.- We do not propose to go into those arguments, as it would involve a factual exercise which was not taken by the lower authorities. Suffice to say that this would not be taken as a precedent for the future years. The AO is directed to restrict the disallowance to ₹ 5,64,333/- only. In the result the assessee gets part relief. Appeal of the assessee is allowed in part.
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