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2013 (10) TMI 921 - ITAT MUMBAIDisallowance of Rent – Held that:- The only ground that the assessee wanted to engage in a new business but it did not do so, is not justified to make the disallowance of the entire rent amount - Even the ld. CIT(A) while confirming the disallowance has not considered this aspect of the matter - There is no denial to the fact during the financial year in consideration, the assessee company had been engaged in the business, assessed to income tax, and the premises in question was used for the business purpose of the assessee - since the assessee has contended that it intended to also engage into business activity of trading and software development, hence the possibility cannot be ruled out that the business premises was taken on rent taking into consideration the future requirements relating to the said business activity also - a reasonable disallowance of Rs.10 lakhs out of the entire rent disallowance made by the AO will be justified. Accordingly, the disallowance is restricted to Rs.10 lakhs on account of rent paid for the business premises. Restricting the Disallowance u/s 14A of the Income Tax Act r.w Rule 8D of the Income Tax Rules - Held that:- Relying upon Godrej & Boyce Ltd. Mfg. Co. VS. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT ] - Rule 8D was not applicable for the year under consideration - Even otherwise for application of Rule 8D, the AO was required to record his dissatisfaction to the calculation/computation made by the assessee - The disallowance under this head was required to be made by the AO on some reasonable basis by way of a speaking order but no such procedure was followed by the AO - The ld. CIT(A) taking into consideration the overall facts and circumstances restricted the disallowance to the amount which seems to be quite reasonable – there was no reason to interfere in relation to the finding of CIT (A) regarding confirmation of disallowance – Decided against Assessee. Disallowance on account of 'mark to market loss' on F&O transaction – Held that:- Following CIT v. "Woodward Governor India (P.) Ltd. [2009 (4) TMI 4 - SUPREME COURT] Profits for income-tax purposes are to be computed in accordance with ordinary principles of commercial accounting, unless, such principles stand superseded or modified by legislative enactments - Unrealized profits in the shape of appreciated value of goods remaining unsold at the end of the accounting year and carried over to the following years account in a continuing business are not brought to the charge as a matter of practice, though, as stated above, loss due to fall in the price below cost is allowed even though such loss has not been realized actually - the disallowance made by the ld. CIT(A) in respect of mark to market losses on derivatives is hereby ordered to be deleted – Decided in favour of Assessee.
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