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2019 (6) TMI 792 - AT - Income TaxExcessive disallowance u/s 14A r.w. Rule 8D(2)(iii) - HELD THAT:- Identical issue has been adjudicated by Delhi Special Bench in the case of ACIT vs. Vireet Investment (P.) Ltd [2017 (6) TMI 1124 - ITAT DELHI] wherein held that investments not yielding any income during the year has to be excluded while calculating the average investments and the disallowance has been to be worked out only thereafter on the basis of investment actually yielding tax free income. We therefore find substantial merit in the case of the assessee. We also observe that the assessee was entitled to claim revision of disallowance notwithstanding higher disallowance suo motu made in the return of income in the light of the decision of CIT vs. Pruthvi Brokers and Shareholders P. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] . We accordingly set aside the order of the CIT(A) and direct the AO to restrict the disallowance MAT computation - Excessive adjustments on account of disallowance u/s 14A under special provisions of Section 115JB - HELD THAT:- In the light of decision of Special Bench in Vireet Investment (supra) and in view of findings given by the co-ordinate bench in assessee’s own case concerning AY 2012-13 we find substantial merit in the plea of the assessee to restrict the adjustments in respect of disallowance relatable to exempt income notwithstanding higher adjustments made by the assessee. AO is directed to redo the computation of book profit u/s 115JB of the Act accordingly. The second issue is accordingly resolved in favour of the assessee. Computation of the annual value u/s 23 - Disallowance of bad debts in respect of unrealized rent - HELD THAT:- We find that the issue is squarely covered in favour of the assessee in view of the express statutory provision in terms of Explanation below Section 23 r.w. Rule 4 of the IT Rules, 1962. The Explanation clearly provides for deduction of unrealized rent while computing the annual value under s.23 of the Act. Rule 4 expounded the aforesaid Explanation whereby the unrealized rent lost as irrecoverable is required to be reduced from the chargeable annual value. It is not necessary that unrealized rent should be related to the same year. We therefore find merit in the plea of the assessee on this issue as well. The issue is thus resolved in favour of the assessee.
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