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2021 (11) TMI 743 - ITAT DELHIDisallowance of provision for warranty - CIT(A) accepted the assessee’s submissions and working as being correct and allowed the claim of the assessee - HELD THAT:- A perusal of the order of the CIT(A) shows that he has accepted the submissions of the assessee without actually examining the weight of the submissions of the assessee. CIT(A) has simply accepted the submissions provided by the assessee and after duly reproducing the submissions in the impugned order has noted that in view of the submissions made by the assessee and the case laws cited and in view of the facts and circumstances of the case, the impugned disallowance is deleted. While making the deletion, the Ld. CIT(A) has not given any reasoning as to why the submissions of the assessee were found to be satisfactory for the purpose of making provision of warranties. CIT(A) has not adjudicated the issue before him by examining the various details and documents submitted by the assessee and has simply accepted the contentions of the assessee without returning a finding on fact. In such a situation, we deem it appropriate to restore this issue to the file of the CIT(A) for considering the issue afresh and, thereafter, adjudicate on the issue by passing a speaking order after giving proper opportunity to the assessee. Accordingly, the Department succeeds on ground No.1 and the same stands allowed for statistical purpose. Disallowance U/s 14A r.w.r. 8D - HELD THAT:- AO has simply applied the procedure prescribed in Rule 8D of the Income Tax Rules to compute the amount disallowable u/s 14A of the Act without appreciating that in the present case, no part of interest could have been said to have been incurred in relation to exempt income. In the assessment order, the Assessing Officer has not pointed out even a single expenditure having been incurred by the assessee during the year which was having proximate nexus with the exempt dividend income earned during the year. Assessing Officer, while computing the disallowance u/s 14A, considered the entire investments whereas the disallowance u/s 14A read with Rule 8D is in relation to the income which does not form part of the total income and this can only be done by taking into consideration the investment which has given rise to the income which does not form part of the total income. CIT(A) has returned a categorical finding of fact on the issue and has computed the disallowance after excluding those investments which were not related to the earning of dividend income. Such is also the mandate in the case of ACB India Ltd. vs. ACIT [2015 (4) TMI 224 - DELHI HIGH COURT] and plethora of other judgments. We also note that the assessee is not in appeal before this Tribunal against the amount of disallowance U/s 14A as confirmed by the Ld. CIT(A). Accordingly, we find no reason to interfere with the finding of the Ld. CIT(A)
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