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2019 (5) TMI 1522 - AT - Income TaxRectification u/s 254 - disallowing the exemption under section 10(23G) of the Act in respect of interest income earned by bank - HELD THAT:- As decided in assessee's own case [2013 (8) TMI 1107 - ITAT MUMBAI] and HDFC BANK LTD. [2014 (8) TMI 119 - BOMBAY HIGH COURT] we hold that deduction for the interest cost incurred was to be taken only in relation to earmarked borrowings utilized by the assessee for the purpose of granting loans to the enterprises, interest income whereof is exempt u/s 10(23G) of the Act for the purpose of computing net interest income eligible for deduction u/s 10(23G) of the Act. Quantifying the disallowance of expenditure u/s 14A - HELD THAT:- Mistake pointed out by the assessee that for AY 2007-08, the following ground No. 1(f) and 2(f) have not been adjudicated, which are regarding quantifying the disallowance of expenditure in relation to exempt income under Rule 8D(2)(iii) of the Act in respect to expenditure on account of salaries and allowances, conveyance, communication expenses and printing and stationary. We noted that this ground has not been adjudicated but it was contended by assessee that even in the earlier years the Tribunal has consistently made disallowance of expenses relatable to exempt income at the rate of 1% of the exempt income. She argued that the same decision should be made in AY 2007-08. We direct the AO to compute the disallowance of expenses relatable to exempt income at the rate of 1% of the exempt income because in this year Rule 8D will not apply and Rule 8D(2) will apply only for and from AY 2008-09 only. In term of the above, these Misc. applications are allowed.
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