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2021 (9) TMI 66 - AT - Income TaxDisallowance u/s 14A r.w.s 8D - whether the assessing officer was under the obligation to reject the basis adopted by the assessee for disallowance of expenses against the exempted income before resorting to the provisions of Section 14A r.w.r. 8D? - HELD THAT:- As decided in own case [2020 (12) TMI 1112 - ITAT AHMEDABAD] assessee that investments which have been made through the involvement of the PMS providers should be ignored while working out the disallowance of the expenses under Rule 8D of Income Tax Rule. As because such investments were made on the advice of the PMS and for this purpose PMS was compensated by the assessee by way of fees paid to them which has already been disallowed by the assessee - further consideration of such investments for the purpose of disallowance of expenses u/s 14A r.w.r. 8D would lead to double disallowance which is unwanted under the provisions of law. As pertinent to note that the diminution in the value of investments should also be considered while working out the disallowance to be made under the provisions of Section 14A read with Rule 8D of Income Tax Rules - As because such benefit was extended by the AO in the assessment framed under Section 143(3) for the Assessment Year 2007-08 which was not disputed by the assessee. There being no change in the facts and circumstances or the provisions of law, in our considered view the principles of consistency should be followed by the Revenue - we direct the authorities below to extend the benefit of the assessee on account of diminution in the value of investments while working out the disallowance to be made under the provisions of Section 14A read with Rule 8D of Income Tax Rules - Appeal of the assessee is partly allowed.
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