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2021 (10) TMI 438 - AT - Income TaxDisallowance of expenses relatable to exempt income by invoking the provisions of section 14A read with Rule 8D - Sufficiency of own funds - HELD THAT:- Assessee stated that issue is squarely covered by the decision of Hon’ble Bombay High Court in the case of CIT vs. HDFC Bank [2014 (8) TMI 119 - BOMBAY HIGH COURT] - DR could not controvert the above facts - once the assessee has own funds more than the investment, no disallowance under Rule 8D(2)(ii) of the Rules can be made unless and until the Assessing Officer has able to prove the direct nexus. Hence, we delete the disallowance and reverse the orders of the lower authorities on this issue. Second disallowance of administrative expenses under Rule 8D(2)(iii) assessee stated that the total expenditure claimed in the profit and loss account is only 87,596/- and disallowance at the most can be restricted to this amount only. When this was pointed out to the learned Sr. DR, he could not controvert the same. Hence, we direct the Assessing Officer to restrict the disallowance under Rule 8D(2)(iii) of the Rules at ₹ 87,596/-. This issue of assessee’s appeal is partly allowed.
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