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2010 (11) TMI 851 - AT - Income TaxDisallowed u/s 014A - HELD THAT:- In case of Godrej Boyce Manufacturing Company Ltd. vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] held that Rule 8D will not apply to assessment years prior to A.Y 2008-09. In respect of assessment years prior to 2008-09 the AO has to make the disallowance u/s 014A of the Act on a reasonable basis. We are of the view that the basis adopted by the AO was reasonable and we, therefore, direct that a sum of Rs. 1.00 lac directed to be disallowed by the AO u/s 14A should be restored. We order accordingly. Loss in valuation of the closing stock - HELD THAT:- the assessee has valued each scrip of the derivatives as at the end of the year. We do not see how this can make any difference to the legal principle. If the derivatives have been treated as stock-in-trade then there is nothing unusual in the assessee valuing each derivative by applying the rule cost or market whichever is lower. We, therefore, direct the AO to allow the provision as reflecting in substance the loss arising on account of valuation of the closing stock. The ground is allowed.
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