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2017 (9) TMI 1964 - AT - Income TaxMaintainability of the claim qua advances written off - advances as found by AO are to related parties - HELD THAT:- Explanations/details, among others, would be readily available with the assessee if the transactions have actually arisen in the normal course of its business, to which surprisingly no reference has at all been made, even in passing, by the assessee while pleading its’ case. The facts/incidents referred to are only to enable definite findings of fact in the conspectus of the case. We, accordingly, only consider it proper to restore the matter back to the file of the AO to allow the assessee, in the interest of justice, another opportunity to prove its claims, which could be so on various counts and per a number of supporting documents and corroborative circumstances. Needless to add, he shall decide per a speaking order. The burden to prove its claims being on the assessee, an inability on its part to do so shall entitle the AO to draw inference(s) as may be proper under the circumstances. Reference here may be made to the decision in Kapurchand Shrimal [1981 (8) TMI 2 - SUPREME COURT]. Disallowance of personnel and administration expenses - extent of expenditure incurred for or attributable to the property income, which constitutes the principal receipt and, correspondingly, the principal activity during the year - HELD THAT:- It was upon the assessee to show that the expenditure incurred in relation thereto is lower in proportion to that obtaining on the basis of the proportionate receipt in the total turnover - both before the AO as well as the ld. CIT(A) no explanation, muchless materials, stand furnished by the assessee toward the same. The position continues to be the same before us. How, therefore, we wonder, can the AO’s estimate, who is entitled to make the same on the basis of the material and the information on record, be faulted with (refer Consolidate Coffee Ltd. v. State of Karnataka [2000 (11) TMI 136 - SUPREME COURT] - AO is entitled to make a reasonable estimate is well settled. The reasonability of the estimate apart, personnel and administrative expenditure is inadmissible u/ss. 23 & 24, so that the AO has in fact, in allowing proportionate expenditure thereon, been liberal. Under the circumstances, we find no infirmity in the impugned order and, accordingly, confirm the disallowance. Disallowance u/s. 14A in respect of dividend income - HELD THAT:- Almost, the entire disallowance u/s. 14A is qua direct interest expenditure, implying an examination of accounts, as well as of the extent to which the investment has been financed by interest bearing funds. There is, in fact, another, equally relevant aspect of the matter. The investment in shares and units does not form part of the assessee’s business. The bulk (.56.66 lacs) of the expenditure disallowed u/s. 14A is interest expenditure, of which .56.16 lacs is by way of direct interest cost. Now, inasmuch as holding investments or otherwise dealing in shares/units is not the assessee’s business, the interest expenditure, to the extent the same stands apportioned to investments, cannot be regarded as for the purposes of its’ business, or even in respect of property income. The same would therefore stand to be disallowed, either u/s. 36(1)(iii) or u/s. 24(b), as well. A similar argument would apply to the administrative expenditure admissible u/s. 37(1); the expenditure disallowed u/r. 8D(2)(iii) being only that relatable to the tax-exempt income, i.e., that can be said to be expended toward earning the same - Therefore, a disallowance in the impugned sum arises in the computation of the assessee’s total income. We decide accordingly.
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