TMI Blog2019 (3) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... t be said that no expenditure is attributable to such activities”. In view of the above extracted portion of the assessment order, it is clearly discernible that the AO recorded proper satisfaction before making disallowance u/s.14A. Computing of disallowance - whether investments which did not yield any tax free income during the year should have been excluded while computing the disallowance? - HELD THAT:- The Hon'ble Delhi High Court in ACB India Ltd. vs. CIT (2015 (4) TMI 224 - DELHI HIGH COURT] has held that the average value of investments, for the purposes of Rule 8D(2)(iii), should be confined to those securities in respect of which exempt income is earned and not the total investments. Similar view has been taken in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explain the reasons as to why the disallowance was not properly offered. The assessee gave certain reasons. Rejecting such contentions, the AO recorded satisfaction and proceeded to make disallowance under Rule 8D(2)(iii) at ₹ 32,12,212/-. The amount of ₹ 4,58,400/- voluntary disallowed by the AO was reduced to make the final disallowance of ₹ 27,53,812/-. The ld. CIT(A) sustained the same. 4. We have heard both the sides and gone through the relevant material on record. The first contention of the ld. AR was that the AO failed to record satisfaction before making disallowance u/s.14A. We do not find any force in this contention because the AO has categorically recorded that : the assessee has incurred various kind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of which exempt income is earned and not the total investments. Similar view has been taken by the Special Bench of the Tribunal in the case of ACIT vs. Vireet Investments (P) Ltd. (2017) 165 ITD 27 (Del) (SB) holding that only those investments should be considered for computing average value of investments which yield exempt income during the year. In view of the afore referred precedents, we set aside the impugned order to this extent and remit the matter to the file of Assessing Officer for re-computing the disallowance under Rule 8D(2)(iii) by considering only such investments in calculating the average value of investments, which have yielded exempt income during the year. The assessee will be allowed hearing opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X
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