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2017 (9) TMI 805 - ITAT MUMBAIAddition u/section 14A r.w.r. 8D - disallowance of expenditure incurred to earn exempt income - computation of claim - Held that:- In this case, the assessee has various investments including investments in subsidiaries and also it is a fact that the details filed by the assessee does not throw any light to prove that dividend income is earned form shares held by way of amalgamation only. We find that the Hon’ble Delhi High Court in the case of Joint Investments P Ltd vs CIT (2015 (3) TMI 155 - DELHI HIGH COURT) held that the window for disallowance is indicated in section 14A and is only to the extent of disallowing expenditure incurred by the assessee in relation to tax exempt income. This proportion or portion of the tax exempt income surely cannot swallow the entire amount as has happened in this case. Also in the case of CIT vs Holcim India Pvt Ltd (2014 (9) TMI 434 - DELHI HIGH COURT) has held that there can be no disallowance u/s 14A in the absence of exempt income. The rationale behind these judgments is that the amount of disallowance cannot exceed exempt income. In this case we find that the assessee has earned exempt income of ₹ 24,138, whereas the AO disallowed an amount of Rs ₹ 3,36,28,000. Therefore, considering the facts and circumstances of the case and also following the ratios of the case laws discussed above, we are of the view that disallowance u/s 14A cannot exceed the exempt income. Hence, we direct the AO to restrict disallowance u/s 14A to the extent of exempt income earned by the assessee. - Decided partly in favour of assessee.
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