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2016 (12) TMI 1891 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - HELD THAT:- The same rule is not retrospective as it was notified on 24/03/2008 and would be applicable only from AY 2008-09. In Godrej & Boyce Mfg. Co. Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT] it has been held that Rule 8 D is not retrospective. In CIT vs. M/s. Godrej Agrovet Ltd [2014 (8) TMI 457 - BOMBAY HIGH COURT] has held that percentage of the exempt income can constitute a reasonable estimate for making disallowance in the years earlier to the assessment year 2008-09. In the above case it upheld the disallowance to the extent to 2% of the total exempt income. Respectfully following the above decision, we direct the AO to restrict the disallowance to 2% of the total exempt income. Thus the first and second ground are partly allowed. Treating advance / unearned revenues as the income of the year under consideration - Whether no right to receive the said revenues had accrued to the assessee during the year under consideration and also without appreciating that the method of accounting adopted by the assessee in recognizing revenues was in consonance with AS – 1 read with AS-9 issued by ICAI and notified by the Central Government? - HELD THAT:-There is no merit in the contention of the ld. counsel that the aforesaid advance/unearned revenue has been duly disclosed and offered to tax in the subsequent year. The assessee is free to take remedial measures permissible in law in the A.Y. 2008-09 where it has claimed to have offered the said income. Hon'ble Supreme Court in Tuticorin Alkali Chemicals & Fertilizers Ltd [1997 (7) TMI 4 - SUPREME COURT] has held 'It is true that this court has very often referred to accounting practice for ascertainment of profit made by a company or value of the assets of a company. But when the question is whether a receipt of money is taxable or not or whether certain deductions from that receipt are permissible in law or not, the question has to be decided according to the principles of law and not in accordance with accountancy practice. Accounting practice cannot override section 56 or any other provision of the Act. The order of the ld. CIT(A) upholding the addition made by the AO is confirmed. Therefore, the third ground of appeal filed by the assessee is dismissed. TDS credit - HELD THAT:- We direct the AO to give TDS credit after proper verification and as per the provisions of the Act. The assessee is directed to furnish the details before the AO and the assessee shall be given a reasonable opportunity of being heard on this point. Thus ground number 5.1 is allowed for statistical purpose.
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