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2017 (1) TMI 1397 - AT - Income TaxAddition made on account of capitalisation in respect of contract awarded to Gremach Infrastructure Equipments and Projects Ltd.(GIEPL) - Held that:- Without establishing the basic fact that the assessee had claimed the expenditure, the AO had made the disallowance. The expenditure was incurred by an erstwhile entity namely JSWERL and certain discrepancies were noticed about the transaction. So, if any disallowance was to be made, it should have been in the hands of that assessee or it should have been in the case of successor of JSWERL. The FAA has given a categorical finding of fact that before the amalgamation with JSWERL, the assessee had no connection with that entity, that expenditure was claimed by that company and was disallowed by the AO of that company while completing the assessment for the AY.s 2008-09 and 2009-10,that the AO had wrongly disallowed the expenditure in the hands of the assessee. Thus, there was no justification for making any addition in the case of the assessee - Decided in favour of assessee Disallowance, made u/s.14A - Held that:- We find that the assessee had not earned any exempt income for the year under consideration, that it had made the disallowance of ₹ 13.59 lakhs on its own, while filing the return of income, that the AO had made for the disallowance under the heads interest expenditure and administrative expenditure, that the AO had not given any reason for rejecting the claim made by the assessee. It is a settled principle that disallowance u/s.14A could be made, only if the assessee claims expenditure against the exempt income. Therefore, we do not see any infirmity in the order of the FAA. Confirming the same, we decide second ground against the AO.
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