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2019 (3) TMI 274 - ITAT BANGALOREDisallowance u/s 14A r.w.r. 8D - disallowance towards interest on borrowed funds - onus to prove - primary responsibility of the assessee to submit evidence to support its claim - HELD THAT:- AO has computed the aforesaid disallowance towards interest on borrowed funds without even verifying the details and without determining whether there is any nexus between the borrowed funds and the earning of exempt income. The assessee has also not produced any details to support its claim that the borrowed funds were not utilised to make the investments that earned the exempt income. The assessee has only provided the year end balances of the borrowed funds and not the details of investments made in order to establish that borrowed funds were not used for investments in instruments which earned the assessee exempt income The orders of the authorities below on this issue be set aside and this issue be remanded to the file of the AO for fresh determination considering the propositions that the disallowance u/s 14A of the Act cannot exceed the exempt income and the judicial pronouncement cited in this regard. The assessee is directed to furnish the details of investment made and also establish with evidence that the investments in instruments generating exempt income to the assessee were not made out of borrowed funds; which shall be considered by the AO while deciding the issue. Nature of expenditure - Disallowance of Professional Fees as capital expenditure - revenue expenditure allowability - genuineness of the payment - HELD THAT:- AO should have first examined the genuineness of the payment claimed to have been made; the purpose of the payments and then decide as to whether the payment of professional fees to ‘Keynote’ is allowable as deduction u/s 37 of the Act. As the facts related to the payments and surrounding circumstances have not been examined, we deem it appropriate to set aside the orders of the authorities below and restore the matter back to the file of the AO for fresh examination and determination of the allowability of the professional fees paid to ‘Keynote’ as deduction u/s 37 of the Act. Addition on account of Carbon Credit - accrual of income - Difference in carbon credit outstanding as on 31.03.2011, and as on 31.03.2012 shown at NIL - HELD THAT:- Addition made by the AO on account of nonexistent income from carbon credits in the year under consideration is not at all acceptable. AO has not even rendered a finding that the income from carbon credits has actually been received by or accrued to the assessee. Adopting the figure of carbon credits of the earlier year and assuming / presuming the same as the assessee’s income in the year under consideration as income from carbon credit is absolutely baseless, untenable, unacceptable and is contrary to all cannons of taxation. This issue, as discussed above, we have no hesitation in holding that the addition made as income from carbon credits is factually unsustainable and untenable - Decided in favour of assessee.
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