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2020 (10) TMI 929 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D - Non recording of satisfaction before making disallowance - HELD THAT:- As decided in own case AO [2019 (4) TMI 1436 - ITAT DELHI] at the first instance should have examined the correctness of the statement made by the assessee that no expenses were incurred for earning the exempt income during the year and if and only if the Ld. AO is not satisfied on this account after making reference to the accounts, he is entitled to adopt the method under Rule 8D of the Rules. We, therefore, while allowing the plea of the assessee direct AO to delete the addition made on this score. Interest on Car Loans - AO held that income and expenditure account of the assessee for the year under consideration, it was seen that the assessee has debited interest paid on account of vehicle loan - HELD THAT:- As decided in own case [2019 (4) TMI 1436 - ITAT DELHI] it is not the case of the Ld. Assessing Officer that the car loan was diverted for any other purpose, because there is no denial of the statement of the assessee that the loan amount was directly disbursed to the seller of the car. Inasmuch as the loan was for the purpose of business and no question of diversion of such funds had taken place, merely because the assessee placed his own funds and also the interest free loans for some other purposes, is not open for the Ld. Assessing Officer to disallow the interest on the amount taken for business purpose. We, therefore, direct the Assessing Officer to delete this addition. Software Expenses - AO has disallowed the claim of the assessee of treating software expenses as revenue expenses and treated it as capital expenditure and depreciation @ 60 % was allowed and 40% of the expenses were disallowed on account of software expenses being capital in nature - HELD THAT:- The issue of depreciation of the software and the computer accessories has been adjudicated a number of cases by this Tribunal wherein depreciation @60 % has been allowed - since the AO and the ld. CIT ( A) have categorically mentioned that the assessee did not produce the relevant evidences for the purchase of software, we, accordingly, set aside the orders of the authorities below and restore this issue to the file of AO with direction to re-decide the issue after giving an opportunity of being heard to the assessee, after verifying the bills and vouchers produced on this issue. This ground is allowed for statistical purposes. Disallowance of Personal Expenditure - AO noted that assessee has claimed telephone and telex, vehicle running and maintenance expenses and depreciation on vehicle in profit and loss account - HELD THAT:- We are of the view that the entire addition is wholly unjustified. The AO has not pointed out on which items personal element was involved in claiming the aforesaid expenses. AO has not pointed out any specific item which is used by the assessee for personal purposes. It is ad hoc addition made by the AO by disallowing 1/10th out of these expenditures. It is well settled law that ad hoc addition cannot be sustained unless AO has pointed out any specific item in which personal element is involved. There was thus, no justification to make any disallowance out of these expenditures. We, accordingly, set aside the orders of the authorities below and delete the entire addition. Appeal of the assessee is allowed
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