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2018 (5) TMI 2166 - ITAT INDOREDisallowance u/s 14A read with Rule 8D - disallowance of expenditure incurred for earning exempted income - Assessee added no expenditure was incurred in relation to earning exempt income - HELD THAT:- It has been consistently held by various Hon'ble Courts that if the assessee possesses sufficient capital and reserves as well as interest free funds and if there is no finding by the revenue authorities that interest bearing funds have been applied for investing in shares and securities, it has to be presumed that the assessee has invested its own capital and reserves i.e. interest free funds for making the investments. We find support from the judgment of Reliance Utilities [2009 (1) TMI 4 - BOMBAY HIGH COURT] and HDFC Bank [2014 (8) TMI 119 - BOMBAY HIGH COURT] We, therefore, respectfully following the above judgments of the Hon'ble Courts, are of the considered view that the learned Commissioner of Income Tax (Appeals) has rightly deleted the interest disallowance. As regards the disallowance of administrative expenditure we find no reason to interfere with the finding of the learned Commissioner of Income Tax (Appeals) who has sustained the addition by keeping in view the investments made in quoted shares as well as unquoted shares as well as looking to the aspect that the assessee is engaged in the business of purchase and sale of shares. Disallowance of penalty levied by Stock Exchange for procedural defaults such a delay in submission of return, etc. - Allowable business expenditure or not? - HELD THAT:- From a perusal of the finding of CIT (Appeals) as well as going through the submissions given by the assessee in the light of the judgment of the Hon'ble High Court of Bombay in the case of CIT vs The Stock & Bond Trading Company [2011 (10) TMI 172 - BOMBAY HIGH COURT] we are of the considered view that the assessee made no offence prohibited by law which can be contemplated to be covered under Explanation to section 37 of the Act and, therefore, the payment of penalty made by the assessee to the Stock Exchange is a regular business expenditure and the impugned disallowance has rightly been deleted by the learned Commissioner of Income Tax (Appeals). We uphold the same. Disallowance of prior period expenses - HELD THAT:- As we find that the payment related to service tax and the necessary proof of payment was placed on record. Therefore, as the liability has crystalised during the year, the learned Commissioner of Income Tax (Appeals) has rightly allowed the assessee’s claim of expenditure - No interference is, therefore, called for in the findings of CIT(Appeals).
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