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2013 (12) TMI 997 - ITAT MUMBAIScientific research expenses – Held that:- The documents were submitted before the learned CIT(A) to show the objective, purpose and the results of the research and development activity carried on by the assessee - No such evidences were produced before the AO by the assessee - The ld. CIT(A) without referring the matter back to the AO to verify the claims of the assessee in this respect and without giving any opportunity to the AO to rebut the claim of the assessee deleted the additions made by the AO - He solely relied upon the submissions and evidences produced by the assessee before him. A proper course of action to refer the matter back to the AO so that the claim of the assessee could have been genuinely verified was not adopted by the learned CIT(A) – The issue was restored for fresh decision. Disallowance u/s. 14A – Held that:- The assessee company is a zero debt company - The interest expenditure is not at all related to any borrowing or investment in shares and mutual funds – Following Godrej & Boyce Mfg. Co. Ltd 328 ITR 81 - Rule 8D r.w.s. 14A(2) is not arbitrary or unreasonable but can be applied only if assessee’s method is not satisfactory - The disallowance u/s. 14A has to be made on a reasonable basis - There can be no disallowance of interest under section 14A - The AO has made a disallowance of Rs.1,66,334/- as per rule 8D in respect of administrative expenses which is on a higher side - Rule 8d is not applicable to the current year – Only Rs. 1 lakh should be disallowed under section 14A which is around 5% of the dividend income earned – Partly allowed in favour of Revenue.
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