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2018 (1) TMI 839 - AT - Income TaxDisallowance of expenses when the business was not fully functional - Held that:- Assessing Officer has not disallowed 100% expenditure and he had considered the maximum expenditure as genuine and having been incurred for the purpose of business u/s 37(1) of the Act, which means that the expenditure claimed by the assessee has been considered as excessive. Nowhere in the order of the Assessing Officer there is a whisper as to how the expenditure is excessive and how the expenditure to the extent of ₹ 25,13,385/- is not having been incurred for the purpose of business u/s 37(1) of the Act or there is a personal expenditure. Making of estimation for disallowance under such circumstances and facts of the case is not permissible. Treatment to rental income - business income or income from house property - Held that:- The assessee had exploited the asset for commercial exploitation in the form of employees’ quarters, office premises, etc. Therefore, under such facts and circumstances of the case, we find no infirmity in the order of the CIT(A) who has rightly treated the income as income assessable under the head ‘business income’ instead of assessable under the head ‘income from house property’. Disallowance u/s 14A - Held that:- AO has wrongly applied the formula given in Rule 8 of the I.T. Rules. The arguments made by the ld. AR that the investments were old investments except the shares of MTCPL which were revived as part of rehabilitation scheme duly approved by BIFR and on which no dividend income was earned during the year. The assessee having incurred demat charges amounting to ₹ 2,18,304/- which, in fact, relates to earning of dividend income and to that extent, the CIT(A) has rightly disallowed and allowed the balance relief of ₹ 36,95,625/-. - Revenue appeal dismissed.
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