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2021 (7) TMI 1074 - ITAT BANGALOREDisallowance u/s 14A r.w.r. 8D - AO noticed that the assessee has earned share income from firms and claimed the same as exempt u/s 10(2A) and the assessee did not make any disallowance u/s 14A - A.R. submitted that the assessee did not incur any expenditure for earning the exempt income - HELD THAT:- Exempt income constitutes fraction of total revenue. With regard to the interest expenses, it is submitted that they have been incurred in respect of project specific loans and no part of the said loans have been diverted to partnership firms. It is in the common knowledge of everyone, the project specific loans can be used for the specific projects and further the usage of loans will also monitored by the bank. Accordingly, in the absence of any material to show that the project specific loan has been diverted for investment in partnership firms, the disallowance out of interest expenditure is not called for - we are of the view that there is no necessity to apply the provisions of rule 8D. Addition of other expenses - Assessee has claimed other expenses of ₹ 14.13 crores, out of which only ₹ 48.52 lakhs alone can be said to be common expenses. A.R submitted that the services and facilities used by assessee from other concerns and also by the other concerns from the assessee have been quantified and cross charged. Hence, overall supervision of the activities of partnership firms by the assessee would be relevant for sec.14A of the Act. Major income of the assessee is from property development, we are of the view that the disallowance u/s 14A of the Act can be made at an adhoc figure of ₹ 2.00 lakhs and the same, in our view, would meet the requirements of section 14A of the Act. We set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to restrict the disallowance to two lakhs rupees u/s 14A of the Act. - Decided partly in favour of assessee.
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