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2014 (4) TMI 1261 - AT - Income TaxAddition u/s 14A r.w.r. 8D - disallowance of expenses being attributable to the earning of exempt income - CIT (Appeals) restricted the said disallowance to ₹ 1 lac as the provisions of Rule 8D of the Income Tax Rules were not applicable to the concerned year - HELD THAT:- We find merit in the submissions made by the assessee that in view of non application of the provisions of Rule 8-D of the Income Tax Rules to the concerned assessment year, there is no merit in disallowance made by AO on the surmises that the assessee had borrowed funds in one hand and had invested in tax free assets on the other hand. We uphold the order of the CIT (Appeals) in disallowing ₹ 1 lac on account of administrative expenses as being attributable to the earning of tax free income. Similar disallowance of ₹ 1 lac in assessee’s hands was made in the preceding year and the order of the Tribunal has been upheld by the Hon'ble Punjab & Haryana High Court in CIT-I, Ludhiana Vs. M/s Vardhman Textiles[2013 (7) TMI 1127 - PUNJAB AND HARYANA HIGH COURT] Following the same we uphold the order of the CIT (Appeals) and dismiss the grounds of appeal raised by the Revenue.
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