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2021 (10) TMI 823 - AT - Income TaxDisallowance u/s 14A r.w Rule 8D - profit earned by an assessee from a partnership concern - HELD THAT:- Expenditure incurred for earning of share of profit in a partnership firm, being exempt u/s 10(2A) of the Act, would be liable for disallowance u/s 14A - In fact, we find that a similar view had been taken in the case of Shri Vishnu Anant Mahajan [2012 (6) TMI 297 - ITAT, AHMEDABAD] - as observed by the Tribunal that the provisions of Sec. 14A applies to the share of profit earned by an assessee from the partnership firm. Also, the ITAT, Mumbai in the case of Minal Industries Ltd. [2019 (9) TMI 759 - ITAT MUMBAI] following the view taken by the “Special bench” of the ITAT, Ahmedabad in the case of Shri. Vishnu Anant Mahajan [2012 (6) TMI 297 - ITAT, AHMEDABAD] had concluded, that the claim of the assessee that the provisions of Sec. 14A would not be applicable to the share of profit earned by the assessee from a partnership firm does not merit acceptance. Accordingly, in the backdrop of our aforesaid observations, we herein conclude that the claim of the ld. A.R that no disallowance u/s 14A could be made qua the profit earned by an assessee from a partnership concern cannot be accepted and is accordingly rejected. AO without recoding his objective satisfaction had wrongly assumed jurisdiction and dislodged the disallowance that was on a suo motto basis offered by the assessee u/s 14A - A.O had given cogent reason as to why the disallowance offered by the assessee u/s 14A was not to be accepted, therefore, we do not find any merit in the claim of the ld. A.R that there was a failure on the part of the A.O to record an objective satisfaction that as to why the disallowance offered by the assessee was not to be accepted. Accordingly, not finding favour with the aforesaid contention of the assessee, we reject the same. Disallowance u/s 14A r.w.Rule 8D(2)(iii) was liable to be restricted only qua the investments that had yielded exempt income to the assessee during the year under consideration - HELD THAT:- We find no infirmity in the view taken by the CIT(A) that the disallowance u/s 14A cannot exceed the amount of the exempt income received by the assessee during the year under consideration.
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