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2022 (1) TMI 366 - AT - Income TaxDisallowance u/s 14A read with Rule 8D(2) - as pleaded that in proprietary concern, no investments were made by the assessee and that all the investments were made only in the personal activities of the assessee - HELD THAT:- AO did not heed to the contentions of the assessee and directly proceeded to make disallowance by applying computation mechanism provided in 2nd and 3rd limb of Rule 8D(2) of the Rules and arrived at the disallowance and after reducing the voluntary disallowance made by the assessee, the net disallowance was made under section 14A of the Act in the assessment. This action of the AO was upheld by the ld. CIT(A). We find that the law is now very well by the decision of Hon’ble Supreme Court in the case of Maxopp Investments [2018 (3) TMI 805 - SUPREME COURT] wherein it has been held that disallowance under section 14A of the Act cannot exceed exempt income. There is no dispute that the exempt income derived by the assessee is only ₹ 8,64,141/-. The assessee before us is not seeking any reduction for disallowance of expenses made voluntarily in the sum of Rs, 14,57,932/- which itself is more than the exempt income. Hence, there is no need to make any further disallowance under section 14A of the Act. Accordingly, the grounds raised by the assessee are allowed.
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