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2019 (7) TMI 536 - AT - Income TaxDisallowance u/s 14A - expenditure attributable the exempt income under Rule 8D(2)(ii), towards proportionate interest expenditure and towards administrative expenditure Rule 8D(2)(iii) of the IT Rules - HELD THAT:- In the light of the fact that own funds are in substantially excess of the corresponding investment, there is no warrant to invoke Rule 8D(2)(ii) in view of the judicial precedents noted above. Therefore, disallowance under Rule 8D(2)(ii) requires to be deleted by the AO. As regards the administrative and general expenses the assessee could not explain with evidence about the actual expenditure attributable to earning of such income. The statute has provided a formula for ascertaining disallowance which cannot be ordinarily departed from. No compelling circumstances have been shown. Therefore, we decline to interfere with the disallowance made under Rule 8D(2)(iii) of the IT Rules.Ground No.1 of the assessee is partly allowed. Disallowance u/s 36(1)(va) - default in payment of employees’ contribution to PF - HELD THAT:- In view of the decision of the Hon’ble Gujarat High Court in case of CIT vs. Gujarat State Road Transport Corporation [2014 (1) TMI 502 - GUJARAT HIGH COURT] we do not find any merit in the grievance of the assessee on this score. Ground No.2 of the assessee’s appeal is dismissed. Method of computation of business income as a consequence of sale of flat - conversion of land into stock-in-trade - AR thus submitted that the cost price of FMV on the date of conversion of land into stock-in-trade is liable to be taxed as long term capital gain and excess consideration accrued / received over and above FMV is liable to be taxed as business income - HELD THAT:- We find merit in the plea of the assessee for setting right the error committed by the assessee. We, therefore, are disposed to entertain deviation in the claim originally made which may result in lower tax liability. The issue however has not been examined by the Revenue authorities on facts. Therefore, we consider it appropriate to set aside the issue to the file of the AO for fresh adjudication in the light of submissions to be made by the assessee with factual evidences before AO. It will thus be open to the assessee to show before the AO that it was over assessed incorrectly or subjected to higher tax in any manner owing to its own mistake. The AO shall determine the issue in accordance with law after giving fair opportunity to the assessee. Ground No.3 of the assessee’s appeal is accordingly allowed for statistical purposes.
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