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2015 (5) TMI 426 - AT - Income TaxDisallowance u/s 14A read with Rule 8D(2)(iii) - CIT(A) allowed part relief - Held that:- Assessee had share capital of ₹ 19.29 crores and reserves and surplus of ₹ 201.15 crores, sum of which far exceeded the investments of ₹ 41.68 crores of the assessee company in shares and mutual funds at the end of the year and therefore, as held by various Hon'ble Courts, no interest expenditure can be held to be attributable to earning to exempt income from share and mutual funds at the end of the year and therefore, as held by various Hon’ble Courts, no interest expenditure can be held to be attributable to earning of exempt income from shares and mutual funds. Accordingly, no disallowance is warranted in the appellant’s case under Rule 8D(2)(i) and Rule 8D(2)(ii). Disallowance u/s 14A r.w. Rule 8D cannot in any rate exceed the expenditure that has been actually incurred by the assessee as per its books of account for earning exempt income and in the absence of exercise not carried out by the AO as prescribed by section 14A before invoking Rule 8D as afore-stated, we find force in the contention of the counsel of the assessee and direct that only ₹ 1,72,879/- suo- motto disallowed by the assessee can be upheld and the rest of the addition made need to be deleted. - Decided in favour of assessee. Addition on account of product development expenses as deferred revenue expenses - CIT(A) deleted addition - Held that:- Such expenses were claimed by the assessee in earlier years too and were being allowed by department. So by applying the rule of consistency as laid by the Hon’ble Supreme Court in Radhasoami Satsang Vs. CIT (1991 (11) TMI 2 - SUPREME Court ), we are of the opinion that there was no need to take a different view, because, the facts permeating in earlier years have not changed. We concur with the opinion of the ld CIT(A) that expenses incurred for developing samples as per the requirement of customers are allowable expenses u/s 37(1) of the Act and are not covered by Section 35D of the Act. - Decided in favour of assessee.
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