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2017 (12) TMI 1415 - AT - Income TaxAddition u/s 14A r.w.r. Rule 8D - Held that:- It is the duty of assessee to justify the source of investment mad by the assessee in the investment / PPF irrespective of fact that the own fund of assessee exceeds the impugned investment. We find that the issue of disallowance of interest will accordingly be decided after verifying the details whether the impugned investment was made by the assessee out of her own fund or borrowed fund. Thus, in the interest of justice and fair play we are inclined to restore the issue back to the file of AO with a direction to verify the source of investment made by the assessee in the impugned equity shares / PPF. In terms of above, this ground of Revenue’s appeal is allowed for statistical purpose. For disallowance made by the AO under Rule 8D(2)(iii) of I.T Rules, 1962. At the outside, it was observed that assessee has sum motu made the disallowance of ₹15 lacs against the exempted income earned by it during the year. However, the AO has invoked the provision of Rule 8D(2)(iii) without recording the satisfaction as envisaged under the provision of Section 14A of the Act. We also find that in similar facts and circumstance, the Hon'ble Co-ordinate Bench of this Tribunal in assessee’s own case in immediate preceding AY 2010-11 has deleted the addition Disallowance on account of no business activity - Held that:- At the outset, it was observed that assessee has claimed total income business expenses in its profit and loss account for ₹41,49,216/- only and , total expenses disallowed by AO comes to ₹41,48,587/-. Thus, in our considered view further disallowance of ₹15,00,632/- will lead to the double addition in the hands of assessee. Moreover, the amount of disallowance cannot exceed the actual expense claimed by assessee in its income tax return. In this view of the above matter, we do not find any infirmity in the order of Ld. CIT(A). We uphold the same Addition under the head house property - Held that:- It is undisputed fact that impugned properties are commercial properties and the assessee conceded the addition made by the Ld. CIT(A) for ₹4.20 lacs as the addition of the same has not been challenged. Therefore, we dismiss the plea of Ld. AR that no addition can be made in respect of commercial property under the head “house property”. FMV determination - Held that:- AR has not brought any documentary evidence suggesting that fair market value as recommended by the Inspector of Department is not as per prevailing market rate. Thus in this view of the above, we find no infirmity in the order passed by Ld. CIT(A). Accordingly, we uphold the same. Hence, this ground of Revenue’s appeal is allowed.
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