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2014 (11) TMI 1223 - ITAT MUMBAIDisallowance of telephone expenses - assessee non furnishing telephone wise amount of claim and the places where telephones were installed - personal expenditure - HELD THAT:- We find that the assessee before the AO could not furnish any details of expenses, neither with regard to purpose for which the telephone was used and where such telephones were installed. In such a case, personal user by the partners cannot be ruled out. There cannot be any precedence on factual matter, when in A.Y. 2004-05, the Ld.CIT(A) has deleted the disallowance on the ground that there was no basis of ad hoc disallowance by the AO. It was in this background the Tribunal had deleted the said addition. The learned counsel was unable to furnish the details or point out that on similar reasons disallowance was made in the earlier years. Thus looking to the facts of the case, we are of the opinion that this matter should go back to the file of the AO to examine this issue afresh - Decided in favour of assessee for statistical purpose. Disallowance of business promotion expenses being 20% - AO disallowed said expenses on ad hoc basis on the ground that these expenses pertain to expenditure incurred on hotels and clubs and similar disallowance in the pased were made - Assessee submitted a very important fact and distinguishing feature in this year is that, assessee has paid Fringe Benefit Tax on payments relating to business promotion, therefore to the proportion of FBT paid, no disallowance should be made - HELD THAT:- We agree with the contention of the learned counsel that, if the assessee has paid FBT on the said amount then no disallowance is called for. However, in order to verify, this contention the matter is restored to the file to the AO, to see whether, any FBT has been paid on the amount debited for business promotion expenses. In case FBT has been paid then no disallowance should be made on such payment. Accordingly, ground no. 2 is partly allowed. Disallowance u/s 14A read with rule 8D - HELD THAT:- So far as assessee’s contention that no interest should be disallowed as the investments have been made from surplus and were made prior to the loan taken from the bank, have not been examined either by the AO or by the Ld.CIT(A). This contention of the assessee should be examined by the AO. Further we agree with the contention of the learned counsel that, so far as investment in debentures and mutual funds which are debt oriented, the same should be excluded while taking the average investment for the purpose of disallowance under clause (iii) of rule 8D (2). Only average investment made in the shares should be taken into account. We direct the AO to compute the disallowance under clause (iii) of rule 8D (2) only on average investment made in shares. Thus the entire issue of disallowance u/s 14A is restored back to the file of the AO to examine the issue of interest and indirect expenses as per directions given above. - Decided partly in favour of assessee for statistical purposes.
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