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2019 (4) TMI 1654 - ITAT MUMBAIDisallowance of expenses u/s.14A in respect of earning such exempt income - AO asked the assessee to furnish details of expenses incurred for earning exempt income and also show-caused as to why the expenses incurred and claimed in respect of exempt income should not be disallowed u/s.14A of the Act r.w.r 8D - HELD THAT:- It is now well settled that without recording any subjective satisfaction with cogent reasons, the ld. AO cannot proceed to make disallowance u/s.14A of the Act or by adopting computation mechanism provided in rule 8D(2) of the rules. This position has been made very clear by the recent decision of Hon’ble Supreme Court in case of Maxopp Investment Ltd., vs. CIT [2018 (3) TMI 805 - SUPREME COURT OF INDIA] AO had not recorded any satisfaction with cogent reasons for rejecting the claim of the assessee that no expenditure was incurred for earning exempt income, the disallowance u/s.14A of the Act made by the AO deserves to be deleted. Suo-moto offered a sum of ₹ 5 lakhs for disallowance u/s.14A on an adhoc basis during the course of assessment proceedings. Even this was not considered by the ld. AO while framing the assessment. Only dividend bearing investments are to be considered for the purpose of computing the disallowance u/s.14A of the Act r.w.rule 8D of the rules. Reliance in this regard is placed on the special bench decision of Delhi High Court in the case of ACIT vs. Vireet Investments Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI] Consideration of revised claim made by the assessee towards deduction of provision for bad and doubtful debts written back - HELD THAT:- CIT(A) had accepted the claim for reducing the provision for doubtful debts written back in the sum of ₹ 23,96,673/- from the total income after considering the fact that the said sum was duly disallowed by the assessee in the computation of income in earlier years in the year in which said provisions were made. Hence, adding the very same sum in the year under consideration would lead to double addition. Accordingly, we hold that the ld. CIT(A) had rightly granted relief to the assessee by placing reliance on the decision of Hon’ble Jurisdictional High Court in the case of Pruthvi Brokers and Shareholders Pvt. Ltd., [2012 (7) TMI 158 - BOMBAY HIGH COURT] wherein clarified that the judgment of Hon’ble Supreme Court in the case of Goetze India Ltd., [2006 (3) TMI 75 - SUPREME COURT] does not impinge upon the hearing of the Income Tax Appellate Tribunal as well as CIT(A) to consider the claim of the assessee and direct the Assessing Officer to allow the claim of the assessee. Addition made towards compensation in the form of mark-up of reimbursement - HELD THAT:- Since the method adopted by the transfer pricing officer for computing the arm's-length price is not as per the provision of law, the action of the authorities below is not sustainable. Hence, we direct that addition in this regard should be deleted. Disallowance of liquidated damages - HELD THAT:- As decided in assessee's own case [2013 (4) TMI 925 - ITAT MUMBAI] decided in favour of the assessee on the said orders by the ITAT, we do not see any reason for taking a different view on this issue in the absence of any material change in the facts of the case and thus the order of the Ld.CIT(A) on this count is upheld.
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