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2020 (9) TMI 455 - ITAT DELHIAddition u/s 14A - suo moto disallowance u/s 14A in respect of earning dividend income - HELD THAT:- CIT(A) has given a finding that the AO has correctly applied Clause 3 of Sub-Rule 2 of Rule 8D to compute the disallowance of expenses but from the perusal of record it can be seen that the assessee has made suo moto disallowance u/s 14A in respect of earning dividend income. The assessee has given a working before the AO on account of interest expenses and on account of administrative expenses on estimate basis. The same has not been properly adjudicated by the AO as well by the CIT(A). The assessee has given in its reply dated 23/12/2009, the details as to why the disallowance u/s 14A shall not be computed under Rule 8D. AO has computed the disallowance as per Rule 8D of the Income Tax Rules which is not applicable for the year under consideration as the present AY is 2007-08. It is pertinent to note that the AO has also not given the satisfaction as to how the working given by the assessee is not plausible. The assessee has made disallowance at 10% which was in support for the earlier AY 2006-07 which was confirmed by the Tribunal in assessee’s own case [2019 (4) TMI 1900 - ITAT DELHI]. Therefore, the suo motu disallowance at 10% is reasonable and cannot be faulted with. We, therefore, set aside the findings of the CIT(A) and direct the Assessing Officer to accept the suo motu disallowance. Hence, the appeal filed by the assessee is allowed. Penalty u/s 271(1)(c) - HELD THAT:- Since the same is based on the quantum appeal and there is no finding given by the AO that the assessee furnished inaccurate particulars of income or concealed the particulars of income, the penalty does not survive as per the provisions of Section 271(1)(c) of the Income Tax Act, 1961. Hence, appeal filed by the assessee is allowed. Addition u/s 43A - foreign currency loans in respect of which foreign exchange gains or losses - for the purpose of investing in shares which were capital assets in the hand of the company in the relevant years, when the loan were raised - HELD THAT:- It is pertinent to note that the Revenue has not brought on record that any capital assets were acquired from a country outside India during the relevant assessment year. The applicability of Section 43A will not be attracted when there is no acquisition of any capital assets in the relevant assessment year. CIT(A) rightly held that the assessee correctly offered net exchange gain earned by it on account of currency fluctuation computed by considering the rate of USD as on the date of loan taken in the earlier years and final settlement thereof in the year under reference. Since, the assessee already disallowed in its statement of taxable income for the A.Ys 2005-06 and 2006-07 notional losses accounted for by it to comply with AS- 11, no further disallowance of such losses was called for and the same amount to double disallowance. Thus, the CIT(A) rightly deleted the said addition. - Decided in favour of assessee.
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