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2019 (6) TMI 236 - ITAT AHMEDABADDisallowance u/s 14A r.w.r. 8D - suo motu disallowance made by the assessee itself - HELD THAT:- In the case of mutual funds, administrative and managerial expenses are factored in the investments itself. In such a scenario, the explanation offered by the assessee for non applicability of rule 8D(2)(iii) for rigid disallowance appears to be in congruity with market practice. Accordingly, we do not find it a fit case for resorting to double disallowance of similar expenditure taking shelter of Rule 8D(2)(iii) of the IT Rules. It will be pertinent here to note that a bare reading of Section 14A of the Act suggests that its applicability is not automatic. It is hedged by conditions prescribed therein. Section 14A inheres in it the concept of reasonableness. The formidable amount of expenditure as computed by the AO cannot be said to be attributable to tax free income generated from separately administered mutual funds by applying a straight jacket formula embodied in Rule 8D(2)(iii) of the IT Rules. Thus, we find considerable merit in the plea of the assessee for no additional disallowance over and above suo motu disallowance made by the assessee itself in this regard. Hence, we are disposed to adjudicate the issue in favour of the assessee. Thus, the order of the CIT(A) sustaining the disallowance u/s 14A deserves to be vacated. - Decided in favour of assessee.
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