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2016 (12) TMI 748 - ITAT AHMEDABADDisallowance u/s. 14A - Held that:- From going through the audited balance sheet of the assessee and more specifically schedule-5 of the paper book we observe that there are various investments regularly made during the year in the Mutual Funds and tax free bonds, some of them are brought forward, some have been sold out and in some cases there have been addition to the previous balance. In all regular activity in the investment account has been carried out during the year and certain amount of expenditure towards administrative cost, salary expenditure, bank charges etc. cannot be ignored in the given circumstances. Further looking to the provisions of rule 8D(iii) r.w.s. 14A of the Act we believe that it is not easy for the Assessing Officer to go into the intricacies of the books of accounts in order to extract particular details in order to calculate the cost incurred towards managing investment. In order to cure this situation amended Rule 8D comes into fore play. We find that as per rule 8D (iii) amount of ₹ 3,53,002/- has been calculated and looking to the size and variety of investments, we find that the disallowance has been reasonably sustained by ld. CIT(A). We uphold the same. Accordingly, this ground of assessee is dismissed. Addition made u/s. 41(1) - Held that:- One last opportunity may be given to assessee and we restore this limited issue to the file of Assessing Officer for verifying unpaid liability of Pal Peogeot Limited ₹ 5,49,929/- and Oriental Transport Co. ₹ 4,93,486/-. Further we direct the assessee also to show all necessary evidences and documents to prove that there exists a dispute to the extent of impugned amount of ₹ 10,33,414. In case assessee is unable to prove the dispute both these parties in the past then the impugned amount of ₹ 10,33,414/- will be sustained as an addition u/s. 41(1) of the Act. Accordingly, this ground is allowed for statistical purposes. Assessing Officer erred in rejecting the books of account and estimate the profit.
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