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2012 (8) TMI 480 - AT - Income TaxDisallowance of an expenditure incurred on interiors and furnishings - Held that:- The AO is carried away by the size of the expenditure claimed, and not examined the capital or revenue nature of the each of the item of expenditure. This approach of the Revenue authorities is not correct and cannot be approved - it cannot be adjudicate the ground meaningfully without having facts as to description, use, function of each of the items, which is under dispute - restore the matter to the file of the AO with a direction to examine the nature of the item-wise expenditure claimed by the assessee. Non deduction of tax u/s 194C - Disallowance of expenditure in terms of S.40 (a) (ia) - Held that:- The word ‘payable’ used in section 40 (a) (ia) has to be given its natural meaning & is applicable only to expenditure which is payable as on 31st March of every year and cannot be invoked to disallow the amounts which have already been paid during the previous year, without deducting tax at Source - no dispute the payments in question were made by the assessee during the year under consideration - in favour of assessee. Direction to apply Rule 8D - Held that:- As the provisions of Rule 8D should be made applicable even to the assessment years prior to the amendment to the said rule no mistake in the direction of the CIT(A) to AO to apply the Rule 8D for determination of disallowable expenditure attributable for earning of exempt income on a reasonable basis mentioning the express reasons - against assessee.
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