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2015 (2) TMI 153 - AT - Income TaxDisallowance of expenses - no business activity carried on by assessee - Held that:- Claim of the assessee has never been rejected on the ground that the assessee had not carried out any business activity. Even, if we presume that no business activity was carried out during the year, even in that stage, because of the temporary lull due to certain circumstances, the claim of expenditure which was necessary for the continuity of the business, cannot be disallowed. However, we find that the AO has not applied his mind as to the genuineness of the expenses. Hence, we restore this issue to the AO for the limited purposes of the verification of the incurring of expenses and thereafter to allow the expenses found actually incurred by the assessee for business purpose. - Decided in favour of assessee for statistical purposes. Hire charges - income received from ‘other sources’ OR ‘business income’ - Held that:- As furniture and fixtures were rented by the assessee temporarily and the same have already been disposed off during the next financial year. Hence, keeping in view the principle of consistency, we direct that the hire income from furniture and fixtures etc. be treated as ‘business income’. - Decided in favour of assessee. Interest income from FDRs - income received from ‘other sources’ OR ‘business income’ - Held that:- the interest income from FDRs can not be treated as ‘business income’. Merely because, the assessee company is engaged in business, that itself, does not mean that every income earned by the assessee should be treated as ‘business income’. We do not find any infirmity in the orders of the lower authorities in treating the interest income as income from ‘other sources’- Decided against assessee. Disallowance under section 14A - Held that:- Perusal of the assessment order reveals that the AO has not followed the guidelines of objective satisfaction as laid down by the hon’ble Bombay high Court in the case of Godrej & Boyce ( 2010 (8) TMI 77 - BOMBAY HIGH COURT) while making the disallowance . He without recording any reasoning for his dissatisfaction with regard to the working/claim of the assessee, straightway applied Rule 8D against the mandate of the provisions of section 14A of the Income Tax Act. The Ld. CIT(A) also ignored the mandate of the provisions of section 14 A, while confirming the disallowance. Thus estore this issue back to the file of the AO with a direction that the AO will give opportunity to the assessee to place on record all the relevant facts including its accounts and then examine the computation/ calculation made in this regard by the assessee having regard to the accounts of the assessee. - Decided in favour of assessee for statistical purposes.
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