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2020 (4) TMI 564 - AT - Income TaxDisallowance u/s 14A r.w.r 8D - assessee offered suo-moto disallowance u/s 14A - HELD THAT:- As assessee’s own funds far exceeded the investments held by the assessee which is evident from the fact that the assessee has year-end share capital and free reserves aggregating to ₹ 17.25 Crores as against investments of ₹ 9.16 Crores held by the assessee - incremental reserves during the year far exceeds the incremental investments made by the assessee during the year - unless nexus of borrowed funds vis-à-vis investments made by the assessee was established by Ld. AO, a presumption was to be drawn in assessee’s favor that the investments were out of own funds - interest disallowance u/r 8D(2)(ii) would not be warranted. Therefore, we delete the same. Direct expenditure u/r 8D(2)(i) - Disallowance u/s 14A made while computing Book Profits u/s 115JB - Assessee has identified direct expenditure in the shape of demat charges and securities transactions charges and offered suo-moto disallowance of the same in its computation of income. These expenses are directly relatable to earning of exempt income and the same has already been disallowed by the assessee while computing its income under normal provisions. However, the same has not been added back while computing Book Profits u/s115JB. Keeping in view the clause (f) to explanation-1 to Section 115JB (2), the same would be added back while computing Book Profits u/s 115JB. The Ld.AO is directed to add back the same while making computations u/s 115JB. Disallowance of indirect expenditure u/r 8D(2)(iii) - AO is directed to consider only those investments which have yielded exempt income during the year and add back the same while computing income under normal provisions. However, the same would not be added back while making computations u/s 115JB as held by Delhi Tribunal (Special Bench) in ACIT Vs. Vireet Investment (P.) Ltd. [2017 (6) TMI 1124 - ITAT DELHI]
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