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2017 (12) TMI 114 - AT - Income TaxDisallowance u/s 14A - Held that:- The Hon’ble Delhi High Court in the case of H.T. Media Limited (2017 (8) TMI 962 - DELHI HIGH COURT) observed that there was to be a minimum compliance with the mandatory requirement u/s 14A(2) read with Rule 8D which requires A.O. to examination of the accounts of the assessee and upon arriving at a dissatisfaction as to correctness of the claim of the assessee in respect of expenditure incurred in relation to exempt income. A.O. can determine the amount of expenditure which should be disallowed in accordance with the method prescribed under rule 8D of the rules. The court explained that unless such dis-satisfaction was recorded in the manner indicated u/s 14A of the Act, the question of invoking rule 8D of rules and the formula there under does not arise. In the present case, the assessing officer has not given any finding in respect of interest expenditure incurred by the assessee. Thus, we find no reason to interfere with the order passed by the Ld. CIT(A). - Decided in favour of assessee. Addition u/s 40A - assessee is outsourcing job work relating to reeling and doubling from sister concern namely Sri Venkataraya Threads Pvt. Ltd - Held that:- We find that the A.O. has not made any enquiry whether the payment made by the assessee is excess according to the norms prevailing in the similar industry. It is submitted that the assessee has to increase the price for the purpose of business expediency. We find neither A.O. nor CIT(A) gave any reasons for the disallowance. Accordingly, we find that the A.O. is not justified in invoking section 40A(2)(b) of the Act and accordingly we set aside the order passed by CIT(A) and we direct the A.O. to allow the claim of the assessee.- Decided in favour of assessee.
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