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2018 (12) TMI 1492 - AT - Income TaxDisallowance u/s 14A - Held that:- The provisions of sub-section 2 of section 14A are very clear and as per the said provision, if a certain claim is made by the assessee in respect of expenditure incurred in relation to exempt income, the AO cannot vary the amount of such expenditure for the purpose of making a disallowance u/s 14A unless and until he, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee. A perusal of the assessment order passed in the case of the assessee shows that the AO has not recorded any such dissatisfaction in respect of the correctness of the claim of the assessee and in the absence of the same, find myself in agreement with the learned counsel for the assessee that disallowance made by the AO u/s 14A by invoking Rule 8D is not sustainable and the same is liable to be deleted. - Decided in favour of assessee. Addition of miscellaneous expenses and Puja Chanda expenses - Held that:- As regards the puja chanda expenses as find merit in the contention of the learned counsel for the assessee that the puja chanda expenses were required to be incurred by the assessee on account of payment to various sanghas and clubs on the occasion of puja at the locations where the projects of the assessee were being developed. Moreover, the details of such expenses show that the same were incurred by the assessee by cheques therefore hold that the disallowance of puja chanda expenses made by the AO and confirmed by the CIT(A) is not sustainable. As regards the disallowance made on account of security deposit paid to CESC and Post Delivery Expenses since the assessee was engaged in the business of development, construction and sale of apartments on ownership basis, the security deposit paid to CESC was in the nature of revenue expenditure incurred by the assessee for its project and the same therefore was allowable as deduction as claimed by the assessee. Similarly, the Post Delivery Expenses were duly explained by the assessee as the expenses for doing some finishing work which had remained incomplete mainly for the common area facilities after delivery of flats and this explanation offered by the assessee was rejected by the AO without giving any reasons whatsoever. Keeping in view the nature of the expenditure as well as the nature of assessee’s business, the expenses incurred by the assessee on account of security deposit paid to CESC as well as Post Delivery work represented part of the project expenses incurred by the assessee and the same were allowable as deduction as rightly claimed by the assessee. - decided in favour of assessee.
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