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2017 (6) TMI 827 - AT - Income TaxDisallowance u/s 14A - Held that:- Since the investment was made out of surplus funds, no further disallowance is required to be made u/s 14A of the Act as section 14A provides for disallowance of expenditure incurred in relation to income which does not form the part of the total income, meaning thereby, there should be direct nexus between the actual expenditure incurred for the purpose of earning tax free income. The proximity cause of disallowance u/s 14A is its relationship with the tax exempt income. Wherever the expenses incurred has no relationship with the income not includible in the total income, there cannot be any occasion to invoke the provision for making the disallowance u/s 14A of the Act. In the light of the foregoing discussion, it can be concluded that the expenditure, which can be disallowed u/s 14A should be actually incurred. It is also noted that during assessment proceedings, the report of the accountant, specifying the basis for calculating the amount disallowable u/s 14A of the Act was submitted by the assessee and the Ld. Assessing Officer without rejecting the report mechanically applied Rule-8D and computed the amount of disallowance, which cannot be said to be justified. At best, the disallowance may be restricted as suo-moto made by the assessee. Thus, no further disallowance was required to be made.- Decided in favour of assessee. TDS credit - Held that:- Two parties deducted TDS but did not hand over the TDS certificate to the assessee. It was also explained that the assessee wrote to the Assessing Officer of those parties with respect to this claim but there was no response from the Assessing Officer also. The Ld. Counsel relied upon section 205 of the Act. In such a situation, we remand this ground to the file of the Ld. Assessing Officer to examine the claim of the assessee and if felt necessary, The Ld. Assessing Officer may call report from the Assessing Officer of those parties, as prayed by the assessee. The ld. Assessing Officer may also send notices to the concerned parties and examine them with respect to deduction of tax at source, if so required. The assessee be given opportunity of being heard with further liberty to furnish evidence, if any, in support of its claim. Thus, this ground of the assessee allowed for statistical purposes.
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