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2019 (2) TMI 697 - AT - Income TaxDisallowance of preoperative expenses - expenses treated as capital in books of account, but claimed as revenue in statement of total income u/s 37(1) - Held that:- AO was erred in disallowing deduction claimed towards pre-operative expenses in statement of total income u/s 37(1) of the Income-tax Act, 1961 even though the said expenditure has been treated as capital expenditure in books of account. CIT(A), after considering relevant facts has rightly deleted addition made by the AO. Therefore, we are of the considered view that there is no error in the findings of the Ld.CIT(A) and hence, we are inclined to uphold the findings of the Ld.CIT(A) and dismiss appeal filed by the revenue. Exemption u/s 14A r.w.r. 8D - Held that:- We find that although the AO has accepted the fact that the assessee has made suo moto disallowance of ₹ 2,75,214, without verifying whether disallowance made by the assessee are direct expenses or other expenses which falls under the provisions of Rule 8D(2)(iii), made further disallowance of ₹ 2,69,162 by applying 0.5% of average value of investments. The assessee has filed details of expenses disallowed as per which, the expenses disallowed by the assessee are coming under the purview of rule 8D(2)(iii). Therefore, we are of the considered view that further disallowance of expenses by applying rule 8D(2)(iii) @0.5% amounts to double disallowance which is not permissible under the law. Therefore, we direct the AO to delete addition made u/s 14A r.w.r. 8D(2)(iii) of I.T. Rules, 1962. Disallowance of ROC charges paid for increase in authorised capital - AO has disallowed on the ground that fees paid for increase in authorised capital is capital in nature which cannot be allowed as deduction u/s 37(1) - Held that:- The assessee has filed necessary details to prove that it has paid ROC fees for increase in authorised capital for issuance of bonus shares. But, we are not aware whether the said particulars are part of assessment proceedings before the AO or not. Therefore, we are of the considered view that the issue needs to be re-examined by the AO in the light of the decision in the case of CIT vs General Insurance Corporation Ltd [2006 (9) TMI 116 - SUPREME COURT]. Hence, we set aside the issue to the file of the AO and direct him to consider the issue on the basis of working furnished by the assessee.
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