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2017 (12) TMI 1398 - AT - Income TaxAddition on account of expenses not related to the business - Held that:- Commissioner of Income Tax (Appeals) has given valid and cogent reasons for deleting the addition made by Assessing Officer. We concur with the same. The Assessing Officer cannot step into the shoes of assessee and dictate how much expenditure is reasonable for earning particular quantum of income. As has been rightly pointed by the First Appellate Authority the Assessing Officer has not raised any doubt over the genuineness of the expenditure. Thus, in the absence of any material on record indicating that the expenditure has been made for non-business purpose, no disallowance is warranted. Accordingly, grounds raised by the Revenue in appeal are rejected and appeal of the Revenue is dismissed. Disallowance u/s. 14A r.w.r 8D - AO while making disallowance u/s. 14A r.w.r. 8D has included the amount of share application money against which shares are yet to be allotted - Held that:- Co-ordinate Bench of Tribunal in assessee‟s own case for assessment year 2009-10 has held that share application money pending allotment does not constitute part of investment for the purpose of computing disallowance u/s. 14A. Interest received on deposits belonging to the society - Held that:- In assessment year 2009-10 [2017 (2) TMI 1293 - ITAT PUNE] the assessee demonstrated before the Tribunal that own funds of the assessee were much more than the amount advanced. The Tribunal decided the issue in favour of the assessee holding no disallowance of interest is warranted. Share application money pending allotment does not constitute part of investment for the purpose of making disallowance u/s. 14A Disallowance u/s. 14A in respect of share of profits earned from partnership firms - Held that:- t is a trite law that no disallowance is to be made where investments are made for strategic purpose and no tax free income has been earned from such investments. In the instant case, the assessee has received income exempt from tax u/s. 10(2A) of the Act. Therefore, on such tax free income disallowance u/s. 14A r.w. Rule 8D(2)(iii) can be made. However, it is made clear that for computing disallowance only those investments on which exempt income has been earned shall be taken into consideration and the amount of disallowance in any case should not exceed the amount of exempt income. Suo-moto disallowance u/s. 14A made by the assessee - Held that:- It is no one‟s case that investment has been made by utilizing borrowed funds. Therefore, provisions of Rule 8D(2)(ii) are not attracted. However, the provisions of Rule 8D(2)(iii) would apply in respect of tax free income earned from partnership firms. The facts in the present case are distinguishable from the facts in the immediately preceding assessment years. While deciding ground No. 2 we have upheld disallowance u/s. 14A in respect of investments made in partnership firms on which tax free income has been earned. The Assessing Officer is directed that after giving effect to ground No. 2, the balance disallowance, if any from suo-moto disallowance made by the assessee u/s. 14A be deleted. Accordingly, additional ground No. 1 raised in the appeal is partly allowed for statistical purpose. Addition of interest received on deposits belonging to the society - Held that:- Assessee could not bring any material before us to show that assessee has infact handed over the money to the society. Since there is no evidence on record that any society has been formed and the assessee has transferred the money to the society or has shown any liability in its books and considering the fact that the assessee has claimed tax credit on such interest income, therefore, we find no infirmity in the order of the CIT(A) on this issue. Accordingly, the grounds raised by the assessee on this issue are dismissed Disallowance of interest expenditure u/s. 36(1)(iii) to be allowed. See The Commissioner of Income Tax Versus Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT]
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