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2018 (10) TMI 985 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - suo moto disallowance by assessee - Held that:- As observed that the assessee has made suo-moto expense disallowance of ₹ 3,30,594/- u/s 14A read with Rule 8D(2)(iii), being 0.5% of average value of investment in shares [0.5% of average of ₹ 646.96 Lacs & 675.41 Lacs]. This being the case, the legal grounds as to applicability of Rule 8D as raised by Ld. AR fails since the assessee, himself, has computed disallowance u/r 8D and there was no question of satisfaction by AO before proceeding to compute the disallowance in terms of Rule 8D. The additional disallowance is arising only out of the fact that Ld. AO has added the value of inventories also while working out the said disallowance. MAXOPP INVESTMENT LTD. VERSUS COMMISSIONER OF INCOME TAX, NEW DELHI AND PRINCIPAL COMMISSIONER OF INCOME TAX-I VS. D.B. CORP LTD. [2018 (3) TMI 805 - SUPREME COURT OF INDIA] followed. No reason to deviate from the stand of lower authorities so far as disallowance u/r 8D(2)(iii) is concerned. The interest disallowance u/r 8D(2)(ii) has already been set aside by FAA to the file of Ld. AO to ascertain the factual matrix of assessee’s submissions that interest expenditure pertained only to wind mill business carried out by the assessee. Since the same is factual in nature and set aside to Ld. AO, we see no reason to interfere with the same at this stage. Ground Number-1 stands dismissed. Disallowance of education expenses incurred by assessee towards director’s son education - Allowable busniss expenses u/s 37(1) - as per assessee same is allowable to the assessee in terms of Section 37(1) on the premise that the candidate was under obligation to join the assessee after completion of studies - Held that:- No such general scheme was floated by the assessee for the other employees and no commercial expediency as to allowability of the same has been demonstrated before us. The perusal of various clauses of the agreement dated 24/06/2008 entered into by the assessee with Neeraj Anil Mutha reveal that the candidate was under no obligation to join the assessee & serve for any stipulated period of time. Further, the agreement did not provide for any security / safeguards for the assessee in case the various terms of the agreement were not abided by the candidate at later stage or in case the candidate decided not to join the assessee at a later stage. Therefore, finding no substance in the submissions, the ground stand dismissed. Addition of personal expenditure - Held that:- The details of the same have already been extracted in the quantum assessment order. Nothing on record controvert the findings of Ld. AO and the submissions of Ld. AR do not persuade us to delete the impugned additions. This ground stand dismissed.
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