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2019 (6) TMI 88 - AT - Income TaxDisallowance made u/s 14A r/w rule 8D, while computing the income under the normal provisions as well as u/s 115JB - HELD THAT:- The disallowance u/s 14A r/w rule 8D cannot exceed the quantum of exempt income earned during the year. No reason to interfere with the decision of CIT(A) in directing the AO to restrict the disallowance u/s 14A to the disallowance made by the assessee. Disallowance made while computing the book profit u/s 115JB - AO has made such disallowance by resorting to the provisions of section 14A r/w rule 8D - HELD THAT:- As per the ratio laid down by the Tribunal, Special Bench Delhi, in Vireet Investment [2017 (6) TMI 1124 - ITAT DELHI] AO while computing the book profit u/s 115JB cannot make any disallowance by making reference to the provisions of section 14A r/w rule 8D . AO retains the power to make disallowance of expenditure incurred for earning exempt income as per Explanation–1(f) of section 115JB of the Act. Therefore, the disallowance made by AO while computing book profit u/s 115JB(2) is unsustainable. Thus, AO is directed to examine and quantify the expenditure incurred by the assessee for earning exempt income in terms of Explanation–1(f) of section 115JB of the Act without taking aid of rule 8D(2) r/w section 14A. Grounds no. (i) and (ii) are dismissed and ground no. (iii) is partly allowed for statistical purposes.
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