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2014 (11) TMI 279 - AT - Income TaxDisallowance u/s 14A Computation under rule 8D(2)(ii) - Held that:- It is only the interest on borrowed funds that would be apportioned and the amount of expenditure by way of interest that will be taken will exclude any expenditure by way of interest which is directly attributable to any particular income or receipt - interest expenses directly attributable to tax exempt income as also directly attributable to taxable income, are required to be excluded from computation of common interest expenses to be allocated under rule 8D(2)(ii) - Since there is mistake in computing the disallowance, net current assets is to be considered while applying the formula under Rule 8D of the I.T. Rules instead of gross current assets thus, the AO is directed to re-compute the disallowance and decide the issue afresh Decided partly in favour of assessee. Speculation loss disallowed Held that:- It is proper to examine the issue afresh on the plea of the assessee that it has actually taken delivery of pepper - If the assessee has actually taken delivery of pepper and thereafter sold it, then the provisions of sec. 43(5) cannot be applied thus, the matter is remitted back to the AO for fresh consideration. Bad debts disallowance Held that:- The Assistant Commissioner of Income tax is not correct in disallowing the bad debts on the ground that it was not offered as income in earlier years and hence conditions u/s. 36(2) was not satisfied - The amounts written off were considered as income in the earlier years and hence bad debts written off should have been allowed as expenditure - allowing dues from client written off as bad debts on the ground that the conditions u/s. 36(2) were not satisfied is also not justified - The assessee is a stock broker and the amounts receivable from clients which includes brokerage payable by the client was a part of the debt and the debt had been taken into account in the computation of income, the conditions stipulated in section 36(1)(vii) and 36(2) stood satisfied - both the grounds have not been properly adjudicated thus, the matter is remitted back to the AO for fresh consideration Decided in favour of assessee.
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