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2015 (1) TMI 913 - AT - Income TaxDisallowance u/s 14A - Audit Fees and Bank charges - Held that:- These two item of expenditure i.e. audit fee and bank charges do not fall under the category of the expenditure incurred for a composite activity resulting taxable and non taxable income, therefore, there is no direct or proximate nexus of these two expenditures with the earning of dividend income. Under the provisions of section 14A, the apportionment of an expenditure is required to be made only when the expenditure is incurred for a composite activity or indivisible activity which results taxable and non taxable income. In the absence of any nexus of the expenditure in question with earning of the dividend income, no disallowance is called for u/s 14A of the Act. Accordingly we delete the disallowance made u/s 14A on account of administrative expenditure. - Decided in favour of assessee. Reduction of claim u/s 54F - C.I.T. restricted the claim to ₹ 5,20,65,966/- and thereby disallowing deduction to the extent of ₹ 23,62,8401- (Rs.9,90,0001- plus ₹ 13, 72,8401-) - Held that:- It is pertinent to note that apart from ₹ 9.90 lakh as sum of ₹ 25,600/- was also paid by the assessee to the society as entry fee which was allowed by the Assessing Officer as part of the cost of the acquisition of flat. Thus it is clear that for entrance in the society, the charges were only ₹ 25,600/- which has been allowed. There is no mandate of payment of ₹ 9.90 lakh to the society as a pre condition for transfer of flat in question when the entrance fee is separately paid by the assessee. Further it was paid for maintenance and development fund of the society and has no connection with acquisition of or transfer of flat in question. The stand of the society in the assessment proceedings of the society is that the amount is collected from the members for carrying out repair of the building of the society and not of any particular flat. Such repair is carried out once in every 10 to 12 years, therefore, when the payment is not for acquisition or transfer of flat then it cannot be part of the cost of the new flat for the purpose of exemption u/s 54F of the Income Tax Act. Accordingly, we do not find any error or illegality in the order of CIT(A) qua this issue. - Decided against assessee . Reduction of deduction u/s 54F on account of expenditure on renovation - Held that:- In the case in hand, no such evidence was produced by the assessee to show that the house was not in a habitable condition and the expenditure was incurred for making it habitable. Accordingly, we do not find any error or illegality in the order of CIT(A) qua this issue. - Decided against assessee . Unexplained cash credit - CIT(A) deleted the addition u/s 68 - Held that:- it is clear that the assessee produced the record to show the payment towards construction of the property in question from the year 2000 till 31.03.2007 total amounting to ₹ 60,95,000/-. As per MOU the assessee has received back only the invested amount of ₹ 60,95,000/- without any surplus or gain on the same. Thus find any error or illegality in the order of CIT(A) qua this issue. - Decided against revenue.
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