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2017 (9) TMI 1407 - ITAT MUMBAIDisallowance u/s 14A - Rule 8D applicability - no suo-motu disallowance - Held that:- We find that the assessee had not claimed any expenditure against the exempt income, that the AO/FAA have not mentioned the basic fact as to how much expenditure was incurred by it for earning tax free income. The idea behind introducing the provisions of section 14A was to discourage the practice of claiming double benefit i.e.claiming exemption for a particular item of income and claiming expenditure against such income. But, if the assessee does not claim any expenses against the exempt income, then no disallowance can be made. In short, the pre-condition for making any disallowance u/s.14A r.w. Rule 8D is incurring of expenditure for earning exempt income. As the assessee has not claimed any expenditure against the dividend income or other exempt income, so, in our opinion, the FAA was not justified in upholding the order of the AO. Respectfully, following the order of the Tribunal in the case of Daga Global Chemicals Private Ltd. (2015 (1) TMI 1204 - ITAT MUMBAI) we decide first ground of appeal in favour of the assessee. Disallowance under the head electricity expenses - as per AO the electricity expenses claimed by the assessee were not of the office premises - Held that:- Meter no. is 776819, that it is issued in the name of Nitin R. Killawala, the bill issued in the name of K.R Killawala and the meter no. is 7716819, that the said bill is for the month of Nov.2009, that in the month of March 2014 the bill issued in the name Nitin R Killawala (Pg-23-24) of PB displayed meter No.7716820, that vide its application dated nil the assessee had submitted an undertaking for change of name (pg-27 to 31 ) of the PB, that on pg-29 present address of the assessee is given. It appears that AO and the FAA had decided the issue without considering these vital pieces of information. Therefore, in the interest of justice, matter is restored back to file of AO for fresh adjudication. Ad hoc disallowances under various heads - held that:- AO had not rejected the books of account nor has he pointed out specific defects about expenditure incurred by the assessee. In the audit report there is no mention of the personal expenses incurred by the assessee for the partners. Therefore, in our opinion ad hoc disallowances should not have been made where the results of books have been accepted. In the case of SSV Pvt. Ltd.(2011 (7) TMI 574 - PUNJAB AND HARYANA HIGH COURT) as held that ad hoc disallowance cannot be made once books of accounts are audited and if same are accepted to be as per law by the AO - Decided in favour of the assessee.
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