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2016 (4) TMI 1135 - AT - Income TaxDisallowance of expenditure u/s.14A - Held that:- Sec.14A(1) declares the law that the expenditure incurred by the assessee in relation to the income which does not form part of the total income under the Act shall not be allowed as a deduction in computing the taxable income of the assessee. Sec.14A(2) provides for determining the quantum of such expenditure which shall not be allowed as a deduction. That is the machinery provision as far as sec.14A is concerned. In that provision, it has been provided that if the Assessing Officer is not satisfied with the correctness of the computations made by an assessee, he shall compute the quantum in accordance with the method that may be prescribed. For this matter, Rule 8D has already been prescribed. Sub-sec.(3) further provides that even in a case where an assessee claims that no expenditure was incurred, the assessing authority has to presume the incurring of such expenditure as provided under sub-sec.(2) read with Rule prescribed. Therefore, it becomes clear that even in a case where the assessee claims that no expenditure was so incurred, the statute has provided for a presumptive expenditure which has to be disallowed by force of the statute. In a distant manner, literally speaking, it may even be considered for the purpose of convenience as a deeming provision. When such deeming provision is made on the basis of statutory presumption, the requirement of factual evidence is replaced by statutory presumption and the Assessing Officer has to follow the consequences stated in the statute. It means that even in a case where no expenditure is stated to have been incurred, the assessing authority has to apply Rule 8D. As the statutory presumption substitutes the requirement of factual evidence, the question of enquiry does not arise. - Decided in favour of assessee. Allowance of claim of forex loss as revenue expenditure - Held that:- In view of the provisions of sec.43A of the Act, at the time of making payments in foreign exchange towards any business asset – after the acquisition of the asset - if there is any fluctuation in the rate of exchange leading to an increase or decrease in the liability of the assessee, then the amount of expenditure would have to be considered to be of capital nature, and shall be taken into account in computing the actual cost of the asset as per the provisions of section 43A. The expenses claimed by the assessee were incurred in connection with the purchase of spares for the Dredging Machine and as rightly observed by the Assessing Officer these expenses have incurred on the capital account and therefore the same cannot be allowed as revenue expenditure. The assessee would be entitled to the depreciation on the enhanced value as per the provisions of the Sec.43A of the Income Tax Act and the assessee got relief to that extent - Decided against assessee.
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