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2019 (5) TMI 1050

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..... (6) TMI 1124 - ITAT DELHI] wherein it has been held that while computing the book profit under clause (f) of Explanation 1 to section 115JB no addition can be made in respect of disallowance under section 14A read with rule 8D. Accordingly, we direct the AO to delete the disallowance while computing the book profit. The appeal of the assessee is allowed. Disallowance under rule 8D2(ii) - assessee’s own interest free funds were more than the investment made - HELD THAT:- CIT(A) has deleted the disallowance by following the decision in the case of CIT vs. HDFC Bank Ltd. [2014 (8) TMI 119 - BOMBAY HIGH COURT] on the ground that assessee’s surplus funds were more than the investments in the shares. Therefore, we do not find any infi .....

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..... O that no expenditure was incurred in relation to earning of the exempt income and submitted that if provisions of section 14A applied, only the disallowance would work out to ₹ 80,196/-. The AO brushing aside the contentions of the assessee applied the provisions of section 14A read with rule 8D working out the disallowance at ₹ 5,58,67,588/- comprising interest of ₹ 1,99,28,763/- under rule 8D(2)(ii) and ₹ 3,59,38,825/- under rule 8D(2)(iii) by applying 0.5% of the average investments. 4. In the appellate proceedings, the Ld. CIT(A) deleted the disallowance under rule 8D(2)(ii) of ₹ 1,99,28,763/- by following the decision of jurisdictional Hon ble Bombay High Court in the case of HDFC Bank Ltd. 366 ITR 505 (B .....

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..... section 14A read with rule 8D. Accordingly, we direct the AO to delete the disallowance while computing the book profit. The appeal of the assessee is allowed. ITA No.162/M/2018 (Revenue s appeal) 7. The issue in the Revenue s appeal is against the order of Ld. CIT(A) deleting the disallowance of ₹ 1,99,23,763/- made under rule 8D2(ii) of the IT Rules on the ground that assessee s own interest free funds were more than the investment made. 8. We find that the Ld. CIT(A) has deleted the disallowance by following the decision in the case of CIT vs. HDFC Bank Ltd. (supra) on the ground that assessee s surplus funds were more than the investments in the shares. Therefore, we do not find any infirmity in the order of Ld. CIT(A) and accord .....

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