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2012 (12) TMI 124 - AT - Income TaxAddition made under sec. 14A of the Act - chain of Chinese food restaurants - assessee received dividend - it was submitted by the assessee that dividend income has been earned by it from mutual funds the investment – Held that:- Disallowance under sec. 14A can be made if the expenditure incurred has nexus with the exempt income. Since the Assessing Officer had not examined the issue relating to nexus between the expenditure incurred and exempt income earned, we set aside the matter to the file of the Assessing Officer with the directions to examine whether any administrative expenditure was incurred for earning the exempt income - Assessing Officer will provide opportunity of being heard to the assessee. Disallowance on ad hoc basis - AO during the course of assessment proceedings asked the details of packing material – Held that:- Complete details of expenditure were furnished before the AO and no defect has been pointed out by the Assessing Officer. No specific query regarding packing material expenses or other expenses has been raised by the AO. It is a settled law that ad hoc disallowance without pointing out any mistake is not justified – addition deleted - appeals filed by the assessee is partly allowed and by the Revenue is allowed for statistical purposes.
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