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2022 (4) TMI 971 - AT - Income TaxSet–off of brought forward long term capital loss against the long term capital gain on sale of depreciable assets - HELD THAT:- We find that the Hon'ble Jurisdictional High Court in ACE Builders Pvt. Ltd. [2005 (3) TMI 36 - BOMBAY HIGH COURT] while holding that section 50 of the Act is a deeming provision and the fiction created under the section is confined to computation of capital gain only and this section cannot convert long term capital asset into short term capital asset. In view of the aforesaid decision rendered by the Hon'ble Jurisdictional High Court and also affirmed by the Hon'ble Supreme Court V.S. DEMPO COMPANY LTD. [2016 (10) TMI 62 - SUPREME COURT] we do not find any infirmity in the impugned order passed by the learned CIT(A) allowing set–off of carried forward long term capital loss against long term capital gain arising during the year. As a result, ground no.1, raised in Revenue’s appeal is dismissed. Disallowance under section 14A r/w rule 8D - HELD THAT:- We find that the Hon'ble Jurisdictional High Court in HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] held that where assessee’s own funds and other non–interest bearing funds were more than the investment in tax free securities, no disallowance under section 14A of the Act can be made. We further find that recently Hon'ble Supreme Court in South Indian Bank Ltd. [2021 (9) TMI 566 - SUPREME COURT] held that disallowance under section 14A of the Act would not be warranted where interest free own funds exceeds the investment in tax free securities and in such a case the investment would be presumed to be made out of assessee’s own funds. In another decision, the Hon'ble Jurisdictional High Court in Nirved Traders Pvt. Ltd. [2019 (4) TMI 1738 - BOMBAY HIGH COURT] held that the disallowance of expenditure in relation to exempt income cannot exceed the exempt income earned by the assessee. We find no infirmity in the impugned order passed by the learned CIT(A) deleting the disallowance made by the Assessing Officer under section 14A r/w rule 8D of the Rules. As a result, ground no.2, raised in Revenue’s appeal is dismissed.
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