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2017 (9) TMI 1521 - AT - Income TaxSelling of goods at lower rates - addition on difference in sale price for the goods sold to M/s. Hamilton Housewares Pvt. Ltd.(HHPL) - Held that:- AO/FAA had not brought on record any evidence to prove that higher price was received by the assessee than what was stated in the books of accounts. We would also like to mention that both the authorities have emphasised that by charging lesser price the assessee had helped the buyer to claim higher 80IB deduction. But,they have ignored the basic fact that deduction under that section is available only for manufactured goods. Thus,the one of the reasons for rejecting the claim of the assessee has no basis at all. Apart from the presumption,based on the relationship between HHPL and the assessee-company,there was no other material before both the revenue authorities to come to the conclusion that the sale price charged by the assessee from HHPL was not reasonable. It is a fact that the assesse had incurred negligible expenses under the heads transportation and advertisement, i.e.1.04% and 0.74% of the sales respectively. Whereas,HHPL had incurred substantial expenditure on account of those two heads. The assessee was suffering losses and it decided to charge lesser price in lieu of certain expenses incurred by the purchaser then the decision cannot be challenged by anybody. Revenue authorities are not entitled to step in to the shoes of the assessee and decide the issue as to how to run its business and which expenses to incur or not to incur. - Decided in favour of assessee. Disallowance made u/s. 14A - assessee had not earned exempt income - Held that:- As per the settled principles no disallowance u/s. 14A of the Act can be made if the assessee had not earned exempt income. In the case under consideration the AO had mentioned that the assessee had made investments. In other words, he also accepted the assessee had not claimed any exempt income against which expenditure was booked. Therefore, we are of the opinion that there was no justification for making any disallowance as per the provisions of section 14 A read with rule 8D. Reversing the order of the FAA,we decide the effective ground of appeal in favour of the assessee.
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