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2021 (1) TMI 633 - AT - Income TaxDisallowance u/s 14A read with Rule 8D(2) - assessee had made suo moto disallowance - assessee pleaded before the ld CIT-A that it had sufficient own funds and hence there cannot be any disallowance of any interest under the second limb of Rule 8D(2) of the Rules - HELD THAT:- Once sufficient own funds are available with the assessee for making investments, then there cannot be any disallowance of interest under second limb of Rule 8D(2) of the Rules, eventhough the same was erroneously made by the assessee in the return of income. We are conscious of the fact that this direction may eventually go to reduce the returned income of the assessee and in that regard, we hold that the revenue is authorised to collect taxes in accordance with law as per Article 265 of the Constitution of India and not based on the consent or acceptance of the assessee either in the return or during the course of assessment or appellate proceedings. There is no estoppel against the statute. In view of our aforesaid decision directing the ld AO to delete the disallowance of interest under second limb of Rule 8D(2) of the Rules, the alternative ground raised by the assessee on without prejudice basis that only the net interest is to be considered for working out the disallowance, need not be gone into and accordingly not adjudicated herein. Disallowance of indirect expenses under third limb of Rule 8D(2) of the Rules, we direct the ld AO to consider only those investments which had actually yielded exempt income for working out the disallowance thereon by placing reliance on the decision in the case of Vireet Investments [2017 (6) TMI 1124 - ITAT DELHI] - AO is directed to recompute accordingly and further reduce the disallowance already made by the assessee in the return under the third limb thereon. The grounds raised by the assessee as well as the revenue are disposed off in the aforesaid terms.- Decided in favour of assessee.
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