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2012 (5) TMI 108 - AT - Income TaxWrite off of old unrecoverable earnest money deposits deductible u/s. 37(1) - appeal against disallowance of claim – Held that: - Assessee could not place on record any evidence showing that the amounts in question were given in earlier years on account of earnest money deposits to its business associates and the said parties refused to refund such amount to it - matter is restored to the file of AO to give one more opportunity to the assessee to lead evidence in support of its claim. Direction given to the AO to recompute the disallowance u/s. 14A – Held that:- Direction given to the AO by CIT(A) in conformity with the judgment of the Hon’ble jurisdictional High Court in the case of Godrej & Boyce Mfg. Co. Ltd (2010 (8) TMI 77 - BOMBAY HIGH COURT) is correct as disallowance u/s 14A. Rule 8D is not retrospective. Rule 8D applicable from Assessment Year 2008-09 – in favour of assessee. Disallowance made by the AO u/s.14A as per Rule 8D – Held that:- Disallowance u/s.14A is called for when the AO is not satisfied with the assessee’s claim of having incurred no expenditure or some amount of expenditure in relation to exempt income - satisfaction of the AO as to the incorrect claim made by the assessee in this regard is sine qua non for invoking the applicability of Rule 8D - computing disallowance u/s.14A as per Rule 8D without rendering any opinion on the correctness or otherwise of the assessee’s claim is incorrect way - restore the matter to the file of AO to re-compute disallowance - in favour of assessee.
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