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2017 (7) TMI 1255 - AT - Income TaxDisallowance u/s 14A r.w.r 8D - Held that:- To workout the disallowance under Rule 8D, the Assessing Officer has to first examine the accounts of the assessee and the correctness of the claim and then, if having regard to such accounts and the claim, he is not satisfied with either the correctness of the claim made by the assessee or made a claim that no expenditure at all has been incurred for the purpose of earning the exempt income, then only he can resort to Rule 8D. In the present case, AO has straightaway proceeded to apply Rule 8D for the purpose of disallowance under section 14A without satisfying or complying with the mandatory requirement of section 14A(2) or Rule 8D(1). Once the Assessing Officer has failed to comply the statutory requirement, then he cannot proceed to make the disallowance under section 14A(1) of the Act and accordingly, the disallowance made by the Assessing Officer is reduced to the extent of ₹.2,64,14,439/- as was voluntarily offered by the assessee. Hence, the ground raised by the assessee is partly allowed. Addition u/s 14A - investments with regard to administrative and managerial activities - Held that:- In the present assessment year, it was stated to have made fresh investment of ₹.20 crores, which are also capable of earning dividend income, as per the details under ‘Note on issues’ and not admitted any expenses towards administrative and managerial. The Assessing Officer has not called for any specific explanation on the above facts. Under the above facts and circumstances, we direct the assessee to work out the expenditure component towards administrative and managerial aspect and so that the same shall be disallowed in the computation of income of the assessee. Accordingly, the ground raised by the assessee is partly allowed. Disallowance u/s 43B - employers contribution to other funds for which a provision is made but not completely paid and thus, attracts disallowance - Held that:- As assessee has submitted that the assessee itself has disallowed the expenditure in the computation of income, and therefore, he has pleaded that the Assessing Officer cannot make double disallowance, which was already disallowed by the assessee we direct the Assessing Officer to verify as to whether the assessee has disallowed the employer’s contribution to other fund/leave salary paid, etc. in its account and if is found that the assessee has disallowed in its account, the same cannot be again disallowed by the Assessing Officer. Disallowance of provision for enhanced compensation - Held that:- As per trading account of the assessee, filed before us, vide cheque No. 139189 dated 29.03.2012, the assessee has made payment of ₹.12,500/- for the land acquired for PCP in Kattupalli Village. Similarly, vide cheque No. 139189 dated 30.03.2012 and the assessee is stated to have made payment of ₹.1,4074,027/- for the land acquired for PCP in Kattupalli Village. Since there is no possibility to issue one cheque on two different dates with different amounts, the same need to be verified. Further, no payment details are available with regard to the amount stated to have paid to Petrochem Park Project of ₹.2,11,74,945/-, which required to be furnished by the assessee before the Assessing Officer for verification. If the above payments have been made by the assessee against the provisions for enhanced compensation, the Assessing Officer is directed to allow the expenditure after verification of records, which is subjected to the decision of the Tribunal on the issue of allowance of provision for enhanced compensation of ₹.25.66 crores as was not allowed in the assessment year 2009-10 by the Assessing Officer and the same is under adjudication by the Coordinate Benches of the Tribunal. Hence, the ground raised by the assessee is allowed for statistical purposes.
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