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2019 (5) TMI 1054 - AT - Income TaxAddition u/s 14A read with rule 8D - HELD THAT:- AO has failed to establish any expenses out of total expenses claimed by the assessee to be relating to the exempt income and in absence of any direct nexus between expenditure and exempt income, the AO can not invoke provisions of section 14A of the Act to disallow the said expenses as has been held in the case of Leena Kasbekar vs. ACIT [2017 (8) TMI 845 - ITAT MUMBAI] . It would be reasonable if a reasonable disallowance is worked out by applying the percentage on the total expenses of ₹ 67,35,894/- as has been calculated hereinabove. A.R. during the course of hearing prayed before the Bench to apply a percentage of 2% to 5% of the said expenses, however, we are not convinced with the arguments of A.R. on this issue. 10% of the said expenses would be reasonable disallowance u/s 14A r.w.r. 8D(2)(iii) in this case. Accordingly, a sum of ₹ 6,73,589/- is sustained by reversing the order of Ld. CIT(A) and AO is directed to delete the remaining disallowance. Appeal of the assessee is partly allowed.
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