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2015 (7) TMI 775 - AT - Income TaxDisallowance made u/s 14A - Held that:- The assessee was having its own interest free funds which is morethan the investments in question. Further, there was no disallowance on account of interest expenditure u/s 14A for the earlier assessment years. We note that the AO has took the opening balance of investments at 9.30 Crores and closing at 14.85 Crores therefore, keeping in view of the availability of assessee’s own fund we find that the assessee has established the claim that the no borrowed funds was used for the purpose of investments. Therefore, disallowance by the AO on interest expenditure u/s 14A is not justified. Accordingly, we delete the disallowance made by the AO u/s 14A on account of interest expenditure. Disallowance of the general administrative expenses under rule 8D(2)(iii) - AO has computed the disallowance being 0.5% of the average investments - Held that:- It is not disputed that the assessee has received dividend income on which the expenditure incurred by various venture capital funds has already been disallowed and the amount received by the assessee is net amount. Therefore, for the purpose of disallowance u/s 14A expenditure already disallowed from the dividend income prior to the allocation to the assessee is required to be taken into account. In the facts and circumstances of the case, we direct the AO to re-compute the disallowance by reducing the amount of expenditure already disallowed from the dividend income from the amount worked out by the AO at ₹ 6,04,000/-. - Decided partly in favour of assessee.
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