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2021 (6) TMI 174 - AT - Income TaxDisallowance under section 14A r.w.r. 8D - interest expenditure considered for disallowance - HELD THAT:- CIT(A) deleted the disallowances by following the order of ITAT, Ahmedabad ITO Vs. Karnavati Petrochem P.Ltd.[2014 (1) TMI 920 - ITAT AHMEDABAD] wherein it was held that when the interest income was more than the interest expenses, and the assessee was having net positive interest income, the interest expenditure could not be considered for disallowance under section 14A - We find that the ld. CIT(A) also examined the reserve and surplus fund available with the assessee company, which is more than the investment made by assessee for earning exempt income. No contrary fact or law is brought to our notice by the Revenue to take a different view. Therefore, the ground of appeal raised by revenue in its appeal for A.Y. 2009-10 is dismissed. Administrative expenses addition - CIT(A) has restricted the same at 0.5% of average value of investment, as per Rule 8D(2)(iii) - We find that the assessee has claimed that no expenditure was incurred for earning exempt income, therefore, the assessee prayed since the same being on higher side, a reasonable disallowance be made. ld.CIT(A) has determined the administrative same on adhoc basis, and no nexus has been made between the expenditure incurred and the exempt income. Therefore, to meet the ends of justice, we restrict the disallowance to ₹ 1,50,000/- in each assessment year under appeal. This ground is accordingly allowed.
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