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2018 (3) TMI 949 - AT - Income TaxDisallowance u/s 14A r.w.s. 8D(2)(iii) - no expenditure was incurred for earning exempt income - Held that:- We find that the AO is supposed to record satisfaction in an objective manner with cogent reasons having regard to the accounts of the assessee in order to refute the claim made by the assessee that no expenditure was incurred for earning exempt income. This is the mandate provided in section 14A(2) of the Act read with Rule 8D(1) of the Rules. Respectfully following the same we direct the ld. AO not to make any disallowance u/s 14A of the Act in the instant case. Accordingly, ground no. 1 raised by the assessee is allowed and ground no. 1 raised by the Revenue is dismissed. Disallowance of provision for leave encashment by applying the provision of 43B(f) - Held that:- We find that though the Hon’ble Calcutta High Court in the case of Exide Industries Ltd vs Union of India [2007 (6) TMI 175 - CALCUTTA High Court] struck down the provisions of section 43B(f) of the Act as unconstitutional, the revenue had carried the matter further to the Hon’ble Supreme Court [2008 (9) TMI 921 - SUPREME COURT] which had not stayed the judgment of the Calcutta High Court during Leave proceedings. But the Hon’ble Supreme Court had only passed an interim order on the impugned issue. Hence we deem it fit and appropriate , in the interest of justice and fair play, to set aside this issue to the file of the ld AO to pass orders based on the outcome of the main appeal on merits by the Hon’ble Supreme Court as stated supra. Accordingly Ground No. 2 raised by the assessee is allowed for statistical purposes.
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