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2018 (6) TMI 1522 - AT - Income TaxAddition as Prior Period Expenses - Held that:- Undisputedly, the assessee company has been following mercantile system of accounting, which is allowable only when the liability to pay the same stands crystallized. Moreover, when the assessee has not claimed the expenses in question while computing the total income, the same cannot be disallowed by the AO. So, when the assessee has not claimed deduction on account of prior period expenses, the same cannot be disallowed by the AO, hence, Ld. CIT(A) has rightly deleted the same. - Decided against the Revenue. Addition on account of School Running Expenses - Held that:- When we examine school running expenses, in the light of the global concept of business it includes care and concern for the society at large, particularly for the people of the locality where business is located. Moreover, AO has not disputed the genuineness of the expenses nor it is the case of the AO that the expenses used by the assessee are for its personal purposes - expenditure made by the assessee for running the school for the employees of a company as well as residence of vicinity, the same are integrally related to the business activities of the assessee - Decided against the Revenue. Addition on account of Club Membership Fee - Held that:- The approach of the assessee in spreading out the membership fee receipts over the period of membership cannot be faulted and as such the Ld. CIT (Appeals) was justified in deleting the addition made by Assessing Officer. - Decided against the Revenue. Addition invoking the provisions u/s 14A read with Rule 8D - Held that:- when the assessee has come up with categoric plea that the entire investment have been made out of its own interest free funds available and the incurred expenses have been suo moto disallowed and the AO has not pointed out any defect in the computation made by the assessee company, provision s contained u/s 14A read with Rule 8D are not attracted which can only be invoked if the AO is not satisfied with the claim of the assessee. Sustaining the addition under Rule 8D(2)(iii) by Ld. CIT(A) on account of administrative expenses to earn the exempt income is concerned, again, we are of the considered view that when the AO as well as Ld. CI T(A) have not recorded their dissatisfaction that the computation of expenses disallowed by the assessee are not correct nor has pointed out any specific computation defects, the same cannot be sustained as Rule 8D(2) has only prescribed a formula to determine expenditure incurred to earn the exempt income which does not form part of the total income under the Act, which cannot be invoked unless AO has not come up with specific dissatisfaction with the cl aim of the assessee. So, in these circumstances addition sustained by Ld. CIT(A) under Rule 8D(2)(iii) is not sustainable
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