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2020 (4) TMI 753 - AT - Income TaxDisallowance u/s. 14A - Whether AO recorded the requisite satisfaction before proceeding to compute disallowance u/s 14A - HELD THAT:- No suo-moto disallowance was offered by the assessee despite earning exempt income in the form of dividend income and LTCG. AO specifically took note of the fact that most of the income earned by the assessee was in the form of dividend income and capital gains. The said analysis, in our opinion, was quite sufficient to establish that Ld. AO had recorded the requisite satisfaction before proceeding to compute disallowance u/s 14A. Therefore, this plea raised by Ld. Sr. Counsel could not be accepted. While computing the disallowance, only those investments were to be considered which yielded exempt income during the year - AO is directed to verify the computations and restrict the disallowance considering only those investments which have yielded exempt income during the year. The separate disallowance of Bank Charges for ₹ 1.38 Lacs would not be warranted since it could not be said that the bank was used only for the purpose of earning exempt income. Ground No. 1 stand partly allowed. MAT computation u/s 115JB - HELD THAT:- Unless the factum of debit of actual expenditure was brought on record, adjustment of disallowance u/s 14A while computing book profits u/s 115JB would not stand test of law. Similarly, disallowance u/s 40(a)(ia) was a statutory disallowance for want of TDS. Unless the same was specifically covered by manner of computations as provided u/s 115JB, the adjustment of the same would also not be justified. Disallowance u/s 41(1) - outstanding debt - HELD THAT:- Assessee has placed on record debt-confirmation dated 24/02/2016 issued by M/s Status Marketing Pvt. Ltd. The said confirmation letter acknowledges the fact that amount of ₹ 90.43 Lacs was receivable from the assessee as on 31/03/2014. It also acknowledges the fact that amount of ₹ 59.56 Lacs was due by the director of that entity to the assessee company against booking of flats in the Hill view park project. Upon perusal of the same, it could not be said that the amount payable by the assessee had ceased to exist or there was remission or cessation of trading liability. The factum of outstanding debt was duly acknowledged in the confirmation of M/s Status Marketing Pvt. Ltd. Therefore, the provisions of Sec. 41(1), in our considered opinion, could not be applied to the fact of the case.
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