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2021 (8) TMI 26 - AT - Income TaxDisallowance u/s 14A - Assessee has made suo motu disallowance - CIT (A) deleted the addition on the ground that the AO has failed to record his satisfaction before invoking the provisions contained u/s 14A - HELD THAT:- AO except for making general observation that, “it cannot be ruled out that some expenditure would definitely be incurred towards such investments and keeping in view the huge investments of ₹ 45.67 crores out of total assets of assessee at ₹ 448.94 crores, it can be safely concluded that buying and selling of securities as well as maintaining a portfolio of large number of scrips leading to or capable of generating the dividend income is one of the main activities of the assessee”, has not recorded his satisfaction as to how and under what circumstances disallowance has been made by the assessee company is incorrect u/s 14A of the Act. AO has also not disputed books of account on the basis of which assessee has come up with the plea that he has incurred the expenditure only to the tune of ₹ 29,04,491/- of which it has made suo motu disallowance. So, in the absence of satisfaction recorded by the AO, mechanical invoking of provisions contained u/s 14A read with Rule 8D is not permissible as has been held by Hon’ble Delhi High Court in case of Maxopp Investment Ltd. [2011 (11) TMI 267 - DELHI HIGH COURT] CIT (A) has rightly deleted the addition made by the AO u/s 14A of the Act. So, ground no.1 is determined against the Revenue. Disallowance of consumption incentive - Addition on the ground that these expenses are in the nature or provision, liability for which may or may not accrue in the time to come - CIT (A) deleted this addition - HELD THAT:- Keeping in view the facts and circumstances of the case and following the order passed by the coordinate Bench of the Tribunal in the assessee’s own case for AYs 2008-09 & 2009-10, we are of the considered view that when the assessee has been consistently following mercantile system of accounting, the liability brought on record is an ascertained liability and the party-wise detail has been brought on record by the assessee and perused by the AO as well as ld. CIT (A) qua the discount given. So, we find no illegality or perversity in the findings returned by the ld. CIT (A), hence ground no.2 is determined against the Revenue. Disallowance under Explanation 2 of section 36(1)(va) - employees contribution beyond due date - CIT (A) deleted the addition in the light of the conjoint reading of section 36(1)(va) and section 43B - HELD THAT:- When the assessee has deposited the employees contribution of PF on 25.04.2012 as against the due date of 20.04.2012 but well before filing the return of income, we find no illegality or perversity in the deletion made by the ld. CIT (A), hence ground no.3 is determined against the Revenue.
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