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2021 (9) TMI 217 - AT - Income TaxDisallowance u/s 14A r.w.r. 8D2(ii) and Rule 8D2(iii) - CIT(A) deleted disallowances after appreciating the fact that reserve and surplus available with the assessee are in far excess than the investment made by assessee - HELD THAT:- The Hon’ble Bombay High Court in Reliance Utilities & powers Ltd [2009 (1) TMI 4 - BOMBAY HIGH COURT] held if there are funds available both, interest free and interest bearing, then a presumption would arise that investment would be out of interest free funds generated or available with the company. We find that the interest free funds available with the assessee are in far excess than the investment made by the assessee for earning the exempt income. Considering the aforesaid factual matrix, we do not find any legality or infirmity in the order passed by the Ld.CIT(A), which we affirm. In the result this ground of appeal is dismissed. Addition solely on the basis of statement of official of assessee as recorded during the survey action - HELD THAT:- We find that the stand of assessee right from the beginning is that the additional income was not accrued as the agreement with MDHPL was not materialised. AO has not issued any notice under section 133(6) or summon under section 131 to MDHPL to verify the veracity of the facts to prove it contrary. The AO has not investigated the issue and only insisted on the disclosure made by assessee. As seen that the ld.CIT(A) after considering the submission of assessee, accounts of MDHPL and the fact that no amount on account of marketing fees from the contract of assessee with MDHPL was realised. In our view, there is no infirmity in the order of the ld.CIT(A), which we affirm. In the result, Ground No.2 of the raised by Revenue is dismissed. Addition on protective basis on the stock difference found during the survey - Addition on the basis of additional evidences - HELD THAT:- The assessee explained that the difference was recorded in the books of accounts of Vivid Margi Investment [sister concern of assessee]. The AO made the addition by taking view that the sister concern of assessee is not assessed in his range and it is not ascertainable. We find that the AO has not investigated the fact from sister concern, no notice of summon was issued. We find that the Ld.CIT(A) after considering the accounts and invoices of Vivid M. Investment that these stocks were duly accounted in the said concern deleted the protective addition. CIT(A) took a reasonable view after verifying the facts. We further find that the assessee made a mere protective addition and not clarified on whom the substantive addition is made. Hence, we affirm the order of ld CIT(A). In the result this ground of appeal is also dismissed. Unexplained cash difference at the time of survey - CIT(A) deleted the addition without calling the remand report and in violation of Rule 46A - HELD THAT:- AO has not pointed out whether the difference in cash was short or in excess. We find that before making addition, the AO has not issued any show cause notice. The ld.CIT(A) on furnishing copy of petty cash book found that the cash available on 05.08.2008 was of ₹ 1,15,026/-. - AO made addition without specifying the difference whether it was short or in excess made addition of ₹ 34,962/-. The ld. CIT(A) on verifying the petty cash book deleted the addition. In our view, the ld.CIT(A) has taken a reasonable and plausible view as the ld.AO has not clarified whether cash was excess or short. Thus, we do not find any reason to interfere with the findings of the ld.CIT(A). - Decided against revenue.
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