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2017 (11) TMI 1953 - AT - Income TaxDisallowance u/s 14A - investments are made for the strategic purposes in - the associate and group companies to take over the control/management - whether the AO was right in disallowing expenditure incurred in relation to exempt income even though the assessee has not earned any exempt income for the year under consideration? - HELD THAT:- A similar issue has been considered by the co-ordinate bench in assessee’s own case for the assessment year 2010-11. The co-ordinate bench, after considering the relevant provisions and also relying upon the decision of Hon’ble Delhi High Court in the case of CIT vs Chemivest Ltd [2015 (9) TMI 238 - DELHI HIGH COURT] held that no disallowance u/s 14A can be made if there is no exempt income earned during the year. The co-ordinate bench further observed that there would be no adjustment of disallowance u/s 14A can be made on this score in the book profit u/s 115JB. We are of the view that there cannot be any disallowance u/s 14A r.w.r. 8D, if there is no exempt income earned during the relevant financial year. Therefore, we direct the AO to delete addition made u/s 14A r.w.r. 8D of I.T. Rules, 1962. We direct the AO to restrict disallowance u/s 14A to the extent of exempt income earned by the assessee. - Decided in favour of assessee.
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