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2018 (5) TMI 1020 - AT - Income TaxDisallowance u/s 14A r.w.r.8D - suo moto disallowance - Held that:- While computing such disallowance, the amount already disallowed by the assessee in the sum of ₹ 5,13,033/- should be reduced. We also hold that the disallowance of indirect expenses under the third limb, cannot by any stretch of imagination exceed the total indirect expenses debited by the assessee in its profit and loss account. The total indirect expenses debited by the assessee in the profit and loss account is ₹ 52,91,969/-. In view of this we hereby direct the AO to re-compute the disallowance under the third limb of Rule 8D(2) by considering 0.5% of the dividend bearing investments as reduced by ₹ 5,13,033/- subject to maximum of total indirect expenses of ₹ 52,91,969/- under the normal provisions of the Act. Accordingly grounds raised by the assessee are allowed for statistical purposes. Disallowance u/s 14A made while computing the book profits u/s 115JB - MAT - Held that:- This issue is now settled by the recent Special Bench decision of Delhi Tribunal in the case of ACIT vs Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] wherein it was held that no disallowance u/s 14A of the Act could be made by resorting to computation mechanism provided under Rule 8D of the rules. The ld. AO should make disallowance u/s 14A having regard to the books of account on some rational basis as expenditure incurred for earning exempt income in terms of clause (f) of section 115JB of the Act. The disallowance already made by the assessee in the sum of ₹ 5,13,033/- should be made u/s 14A while computing book profits u/s 115JB of the Act. We direct the AO accordingly.
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