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2016 (1) TMI 644 - AT - Income TaxDisallowance u/s 14A - Held that:- Rule 8D of Income Tax Rules, 1962 is applicable only prospectively i.e. from assessment year 2008-09, hence, disallowance u/s 14A of the Act for the years prior to assessment year 2008-09 has to be made on reasonable basis once the AO having regards to the accounts of the assessee is not satisfied with the correctness of the claim of the assesssee company. We, therefore, restore this issue to the file of the A.O. with a direction to re-compute the disallowance to be made u/s 14A of the Act of reasonable amount as per directions of Hon’ble Bombay High Court in Godrej and Boyce Manufacturing Company Limited(supra). As pointed out by the assessee company, the assessee company has already made disallowance of its own of an amount of ₹ 4,65,332/- being disallowance @2% of dividend income of ₹ 2,32,66,616/- received by the assessee company which basis of disallowance has been accepted by the Revenue in the preceding assessment years. The A.O. is accordingly directed to consider this aspect also - Decided partly in favour of assessee Disallowance of expenditure on purchase of monitors and batteries - revenue v/s capital expenditure - Held that:- The assessee company has not been able to bring on record any further evidence/documents or explanation before us to substantiate its contentions that these expenditure w.r.t. purchase of monitors and batteriesare revenue in nature to controvert the findings of the CIT(A). In our opinion, these expenditure are capital expenditure incurred by the assessee company and has rightly been disallowed by the A.O and sustained by the CIT(A) - Decided against assessee Adhoc disallowance of 5% out of provision for expenses - Held that:- The AO shall consider the claim of the assessee company for both the years i.e. assessment year 2005-06 and 2006-07 with respect to the assessment records and books of accounts maintained by the assessee company to ensure that no prejudice is caused to the assessee company due to double addition of the same amount leading to double taxation and at the same time the AO shall also protect the interest of revenue after verifying the claim of ₹ 4,64,58,410/- towards provision for expenses debited to the Profit and Loss Account during the assessment year 2005-06 and claimed as revenue expenditure vis-à-vis the actual expenditure incurred by the assessee company against this provision for expenses of ₹ 4,64,58,410/-. The assessee company shall be given opportunity of hearing in accordance with the principles of natural justice and the assessee company shall be allowed to produce relevant evidence in its defense to justify and substantiate its claim of provision for expenses of ₹ 4,64,58,410/- debited to the Profit and Loss Account and claimed as revenue expenditure in the return of income filed with Revenue. - Decided in favour of assessee for statistical purposes. Long term capital gain on transfer of land and short term capital gain on transfer of building and accessories - Held that:- The working adopted by the AO to bifurcate the values of land and building cannot be accepted in view the peculiar facts and circumstances of the case and the working adopted by the assessee company based on the valuation report submitted by the government approved registered valuer using land residual technique and which is also supported by the comparable sales in the vicinity and also ready reckoner rates announced by the Government is to be preferred keeping in view peculiar facts and circumstances of the case more so when the said report of the registered valuer has not been demolished by the AO with cogent evidences . The CIT(A) has allowed the appeal of the assessee company based on well reasoned order which we uphold as we have not find any infirmities in the said order whereby the CIT(A) directed the AO to adopt the values assigned to land and building by the assessee company based on the valuation report of government approved registered valuer by following land residual technique method. Hence, we direct that the values as assigned by the assessee company in valuing land and building separately both on the date of sale as also on 01/04/1981 based on the valuation report(s) dated 11.11.2004 of government approved registered valuer using land residual technique method be accepted in this particular case keeping in view facts and circumstances of the case. - Decided in favour of assessee
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