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2021 (1) TMI 47 - AT - Income TaxDisallowance u/s.14A read with Rule 8D - HELD THAT:- It is a well settled principles of law that disallowance computed u/s.14A read with Rule 8D shall not swallow entire income earned for the year. This principle is supported by the decision of Hon’ble Delhi High Court in the case of Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] where it was clearly held that disallowance of expenditure u/s 14A shall not exceed exempt income earned for the year. Thus we direct the Assessing Officer to restrict the disallowance computed u/s.14A read with Rule 8D of I.T.Rules, 1962 to the extent of exempt income earned for the year. Computation of book profit u/s.115JB of the Act towards disallowance of expenditure in relation to exempt income u/s.14A read with Rule 8D - This issue is also covered in the case of Vireet Investments Private Limited [2017 (6) TMI 1124 - ITAT DELHI] wherein held computation under clause (f) of Explanation 1 to section 115JB(ii) of the Act is to be made without resorting to computation as contemplated u/s.14A read with Rule 8D of I.T. Rules, 1962. Therefore, we are of the considered view that Assessing Officer cannot make additions towards computation of disallowance u/s.14A read with Rule 8D of I.T. Rules, 1962, to the book profit computed u/s.115JB. Appeal filed by the assessee is allowed.
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