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2019 (2) TMI 1932 - AT - Income TaxAddition u/s 40A(2)(b) - HELD THAT:- We find it is a case of addition both on account of ad-hocism and on account of lack of comparable cases. Neither the Assessing Officer nor the CIT(A) gathered any comparable cases from the open market with similar line of business activity before holding the payments are excessive or unreasonable. In our considered opinion, such ad-hocism is unacceptable and unsustainable. Therefore, in our opinion, grounds raised by the assessee should be allowed in full for want of Assessing Officer failures to discharge the onus. It is a settled legal proposition in matters of principles of provisions to section 40A(2)(b) Assessing Officer is under obligation to prove that the claims made by the assessee are unacceptable. This is a case where the assessee demonstrated the primary onus by furnishing the basic facts. Disallowance u/s 14A read with Rule 8D(2)(ii) - AO noted that the assessee earned exempt income by way of dividend and PPF interest - CIT(A) directed the Assessing Officer to delete the disallowances and rework the same - HELD THAT:- We find the CIT(A) merely directed to the Assessing Officer to delete the addition and rework the disallowance. In our view, the said direction is fair and reasonable and it does not call for any interference. It is not brought to our notice on the outcome of such direction before the Assessing Officer. Therefore, the Assessing Officer is directed to take a view in this matter at the earliest after considering the existing law on this issue. We do not find any reason why the Assessing Officer should make any disallowance under clause (ii) of Rule 8D(2) of the Rules when the assessee is having adequate interest-free own funds like profits of the year and capital account balances etc. Accordingly, the ground no.4 raised by the assessee is allowed for statistical purposes.
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