DEPUTY COMMISSIONER OF INCOME TAX , CHENNAI vs. M/S. SANMAR SPECIALITY CHEMICALS LIMITED, CHENNAI

0 Identical issues are involved in both these appeals and hence they are taken up together and disposed of in this common order for the sake of convenience.

0 The only identical issue to be decided in these appeals are as to whether the Ld.CIT(A) was justified in restricting the disallowance u/s. 14A to the extent of exempt income in the form of share of profit from partnership firm in the facts and circumstances of the instant case.

0 We have heard the submissions in the light of material available on records. The assessee is engaged in manufacturing and sale of Speciality Chemicals. The Ld.AO show caused the assessee as to why the expenditure incurred for the purpose of exempt income in the form of share of profit from partnership firm be computed in accordance with Rule 8D(2) of the Income Tax Rules and considered for disallowance. The assessee submitted that it had not incurred any expenditure for earning exempt income and that the entire investments were made out of own funds of the assessee. The Ld.AO however ignored the contentions of the assessee and proceeded to disallow the expenditure u/s 14A of the Act by following the computation mechanism provided in Rule 8D(2) of the Income Tax Rules. The Ld.CIT(A) had in principle upheld the adoption of computation mechanism provided in Rule 8D(2) of the ITA. No:2286 & 2287/Chny/2025

0 The issue in dispute is already decided by the decision of Hon’ble Supreme Court in the Maxopp Investment reported in 402 ITR 640 wherein it was held that disallowance u/s 14A of the Act r.w.s. 8D of the Income Tax Rules account exceed the actual exempt income. Respectfully following the same, we do not find any infirmity in the order of the Ld.CIT(A). Accordingly , the grounds raised by the revenue in both the years are dismissed. 6.0 In the result, both the appeals of the revenue are dismissed.