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2016 (10) TMI 249 - BOMBAY HIGH COURTDisallowance of expenditure at 5% of exempted income under Section 14A - Held that:- We find that the impugned order of the Tribunal has not disturbed the order of the Commissioner of Income Tax (Appeals), who while applying the test of reasonable disallowance, disallowed the expenditure at 5% of the exempted income. This was by following the decision of the Tribunal in M/s. VIP Industries Ltd. vs. DCIT. [2010 (9) TMI 1097 - ITAT MUMBAI ]. Thus, the disallowance under Section 14A of the Act is reasonable in the absence of the Revenue showing the same to be perverse. Disallowance u/s. 40(a)(ia) - whether amount of 'reimbursement' does not fall under any of the categories specified u/s. 40(a)(ia)? - Held that:- In the present case, the impugned order of the Tribunal prima facie proceeds on the basis that it is an undisputed position that the amount paid by the Respondent Assessee to M/s. Mafatlal Industries was in the nature of reimbursement of expenses. This without considering the grievance of the Revenue that the amount paid to M/s. Mafatlal Industries Ltd. is not reimbursement of expenses. We were inclined to restore this issue to the Tribunal for fresh consideration. However, the Counsel for the Revenue resisted a remand at this stage and expressed a view that at the final hearing he would be able to succeed before this Court without a remand. Appeal admitted on question :- Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified by holding that amount of 'reimbursement' does not fall under any of the categories specified u/s. 40(a)(ia) of the I.T. Act, without considering the findings of the CIT(A) that the payment made on the service rendered to the assessee was not reimbursement in nature?
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