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2020 (4) TMI 465 - AT - Income TaxBogus purchases - Un–substantiated closing credit balance of trade creditors - AO has restricted his enquiry only with regard to the purchases made from Advait Distributors Pvt. Ltd. which has been shown as outstanding sundry creditor - HELD THAT:- From the materials placed in the paper book it is noticed that the additional evidences furnished before Commissioner (Appeals) included PAN details of Advait Distributors Pvt. Ltd., copy of confirmation obtained from the said party, copy of ledger account of concerned party in assessee’s books, copy of assessee’s account in the books of Advait Distributors Pvt. Ltd. Commissioner (Appeals) has declined to look into the aforesaid evidences filed by the assessee with a general statement that no fruitful purpose would be served by admitting the evidences. Before rejecting the additional evidences, CIT(A) should have verified their authenticity himself or could have directed the Assessing Officer to verify them. - Matter restored before the AO. Disallowance u/s 14A r/w rule 8D - assessee has earned exempt income by way of dividend - assessee has not disallowed any expenditure attributable to such income - HELD THAT:- The contention of the learned Authorised Representative that due to availability of surplus interest free funds, no disallowance of interest expenditure under rule 8D(2)(ii) is to be made is acceptable keeping in view the legal position on the issue. Accordingly, we delete the disallowance of interest expenditure made under rule 8D(2)(ii). As regards the disallowance of administrative expenditure under rule 8D(2)(iii) amounting to ₹ 9,032, since, no convincing arguments have been advanced on behalf of the assessee, we confirm the said disallowance. Accordingly, disallowance u/s 14A r/w rule 8D is restricted to ₹ 9,032. These grounds are partly allowed.
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