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2016 (11) TMI 1558 - AT - Income TaxDisallowance of expenditure incurred on repairs, renovation etc. of bungalow on lease - Held that:- ZSP group has already offered the same to tax in their petition before the Settlement Commission -thus taxing it in the hands of the assessee company will amount to double taxation - also the property does not belong to the assessee company. Merely because the assessee has made a statement u/s 132(4) by admitting the same as additional undisclosed income, the same is not binding on the assessee - thus we are of the considered opinion that the expenditure incurred on repairs and renovation on bungalow has to be allowed as a business expenditure in the hands of the assessee company. Disallowance u/s 14A r.w. Rule 8D - Held that:- AO has not proved any nexus between the expenditure incurred and earning of tax free dividend income - only expenditure, which has been proved to have been incurred in relation to earning of tax free income can be disallowed and section 14A cannot be extended to disallow such expenditure which is assumed to have been incurred for the purpose of earning tax free income - reliance is placed on the judgement Hon’ble Bombay High Court in the case of CIT Vs. Reliance Utilities and Power Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] where in it is held that if there were funds available both interest free and overdraft and or loans taken, then presumption would arise that investment would be out of the interest free funds generated or available with the company if the interest free funds were sufficient to meet the investments - hence no disallowance u/s 14A shall be made.
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