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2016 (6) TMI 1474 - AT - Income TaxAddition u/s 14A r.w.r. 8D - computation or disallowance made of expenses incurred in earning exempt income - mandation of recording satisfaction before making addition - HELD THAT:- As decided in Joint Investment Pvt. Ltd [2015 (3) TMI 155 - DELHI HIGH COURT] By no stretch of imagination can Section 14A or Rule 8D be interpreted so as to mean that the entire tax exempt income is to be disallowed. The window for disallowance is indicated in Section 14A, and is only to the extent of disallowing expenditure “incurred by the assessee in relation to the tax exempt income”. This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. For the above reasons, the impugned order of the ITAT is set aside. The question of law is answered in favour of the assessee. Thus we set aside the orders of the authorities below with the direction to the Assessing Officer to consider the above High Court judgments cited above and decide the issue in view thereof. Appeal is allowed for statistical purposes only.
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