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2020 (8) TMI 813 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D(2)(iii) - AO was not satisfied with this claim of the assessee and accordingly, he invoked rule 8D of the rules and made addition for 0.5% of the average value of the investment towards administrative expenses for earning exempt income in terms of rule 8D(2)(iii) of the rules - HELD THAT:- In the assessment year 2009-10, the AO recorded that the assessee made heavy investment for earning of the exempt income and expenses for running the exempt income like manpower, vehicle, telephone, use of Internet, computer and its depreciation, electricity etc. must have been incurred by the assessee. Tribunal found that the AO was not specific as to what exactly the probable expenditure in the matter. Tribunal also noted that the expenses in respect of the mutual funds were already deducted by the respective operators. Tribunal observed that the AO would have taken legal exercise to verify the correctness or otherwise of the certificate, that was issued by the asset management companies or Citibank. In the year under consideration also the AO has recorded similar dissatisfaction and not made any attempt to carry out the exercise which was proposed by the Tribunal in assessment year 2009-10. In view of the identical dissatisfaction recorded by the AO, which has been held as not proper by the Tribunal we respectfully following the finding of the Tribunal in assessment year 2009-10, delete disallowance in dispute in instant year. Disallowance on account of the personal expenses out of the vehicles, depreciation, telephone and telex and travelling expenses - AO has made disallowance at the rate of 1/10 of the expenses on estimate basis in view of the non-production of the logbook of the vehicles - HELD THAT:- AO has not pointed out any other defects in the vouchers under other heads of expenditure. We find that the assessee has already admitted 1/20th of the expenses against the disallowance made under the head vehicle maintenance, depreciation telephone and telex and travelling expenses, therefore we feel it appropriate to restrict the disallowance to 1/20th of the expenses under the heads corresponding to the disallowance which was made by the AO. - Appeal of the assessee is partly allowed.
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