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2021 (1) TMI 92 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - HELD THAT:- Interest paid is less than interest earned for the year. Therefore, we direct the Assessing Officer to delete the additions made towards interest expenses under Rule 8D(2)(ii) of IT Rules, 1962. As regards disallowance of other expenses under Rule 8D(2)(iii) @ 0.5% of average value of investments, law is very clear inasmuch as there is no scope for Assessing Officer to go for ad-hoc disallowance, when assessee has not maintained separate books of account for investments activity and business. When there is no separate books of account for both activities common expenditure relatable to investment activity and business activity has to be allocated on a systematic basis for which a separate method is prescribed under Rule 8D of IT Rules, 1962. In this case, the Assessing Officer has applied method provided under Rue 8D(2) (iii) @ 0.5% of average value of investments to compute disallowance of other expenses. We do not find any error in the findings recorded by the authorities below, which is in accordance with law and hence, we are inclined to uphold the order of the learned CIT(A) and reject the grounds taken by the assessee in respect of disallowance of other expenses under Rule 8D(2)(iii) of IT Rules, 1962. Appeal filed by the assessee is partly allowed.
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