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2020 (2) TMI 1310 - AT - Income TaxDeduction u/s 80HHC - CIT(A) directing the ld AO to exclude sales and excise duty as part of the total turnover for computing the deduction - HELD THAT:- In assessee's own case for Assessment Year 1995-96, 1997-98, 2000-01 and 2001-02 onwards wherein, the coordinate bench has directed the ld AO to not to consider the sales tax and excise duty in total turnover for computing the deduction u/s 80HHC of the Act. Further, the above issue is also squarely covered in favour of the assessee by the decision of the Hon'ble Supreme Court in CIT Vs. Laxmi Machine Works [2007 (4) TMI 202 - SUPREME COURT]. Disallowance of royalty - allowable revenue expenditure - HELD THAT:- The above issue is squarely covered in favour of the assessee by the decision of the Hon'ble Delhi High Court [2017 (5) TMI 469 - DELHI HIGH COURT] wherein, the appeal filed by the revenue against the order of the coordinate bench for Assessment Year 2007-08 to 2009-10 has not been admitted. The coordinate bench in that order has held that the expenditure of royalty and technical guidance fees is revenue in nature. Taxing the interest income as “profit of the business” for computation of deduction u/s 80HHC - HELD THAT:- It is undisputed that the assessee has eared interest income on fixed deposit has not been challenged as being taxed under the head “income from other sources”. Only in the case where the interest income is “business income” then only netting off can be allowed. In the present case the ld AO has held it to be the “income from other sources” and no argument were advanced before us that it is a “business income”, the decision of the Hon'ble Delhi High Court [2007 (1) TMI 86 - HIGH COURT, DELHI] does not apply to the facts of the case. In the result, ground No. 1 of the appeal is dismissed and orders of the lower authorities are confirmed. Disallowance u/s 14A being 25% of the tax free dividend income earned by the appellant - HELD THAT:- When the assessee contends before the AO, that it did not incur any expenditure for the earning of exempt income, the ld AO is duty bound to prove the explanation of the assessee incorrect with regard to examination of the books of assessee. In the present case the ld AO has not mentioned that what are those expenditure incurred by the assessee for earning of exempt income. Merely, stating that certain expenditure are required to be incurred for earning the exempt income does not satisfy the requirement of provision of section 14A(2). Hon'ble Supreme Court [2018 (3) TMI 805 - SUPREME COURT] has held that before making any disallowance, AO needs to record the satisfaction which is missing in this case. In the preset case, it is apparent that assessee has not incurred or not disallowed any expenditure u/s 14A. We direct the ld AO to delete the disallowance u/s 14A.
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