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TMI Blog2012 (3) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 - Valuation of Closing Stock 2. Three substantial questions of law are framed:- "1. Whether on the facts and circumstances of the case the Income Tax Appellate Tribunal was correct in law and on facts in deleting the addition made by Assessing Officer on account of rejection of method of valuation of closing stock as followed by the assessee ? 2. In case the answer to question No.1 above is in the negative whether the change in the method of valuation was bonafide?" 3. Whether the Income Tax Appellate Tribunal was right in accepting the net realizable value as declared by the respondent-assessee and was right in not adopting the cost price for computation of the closing stock?" 3. Similar questions of law have been decided in IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or remuneration paid to a banker or any other person for realizing dividend or tax free bond interest. 7. The Assessing Officer, however, did not accept the said contention, inter alia, observing as under:- "The assessee has shown total receipt of Rs.165,62.72 lakhs which inter alia comprises of income of Rs.188.34 lakhs from tax free bonds/mutual funds. The assessee has incurred expenditure of Rs.189.93 lakhs being the bank interest paid and Rs.599.44 lakhs being the administrative expenses. Looking into the nature and extent of income, it is seen that expenses have been incurred for the purposes of earning the aforementioned income for the following reasons:- (i) A large sum of money has been invested in shares on which divid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,55,67,77,758/- [General surplus + Loans] [1460745195 + 96032563] Interest related to exempted income = 18993385 x 782933269 = 95,52,136/- (A) 1556777758 (2) Administrative expenses (Rs.5,99,44,162/-) Total Receipts 1,65,62,72,129/- Exempted Receipts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest has been paid by the appellant company for making investment in the earning of the exempt income the AO has wrongly disallowed a sum of Rs.95,52,136/-on account of interest and the same is deleted. Regarding the proportionate disallowance of administrative expenses to the amount of Rs.6,81,673/- as it cannot be said that no expenses had been incurred under this head for earning the exempt income the same has been rightly disallowed by the assessing officer. Therefore, the addition of Rs.95,52,136 is deleted and addition of Rs.6,81,673/- is confirmed." 9. The Revenue preferred an appeal against the deletion of addition of Rs.95,52,136/-. The Tribunal went into the question of deletion of Rs.95,52,136/- and has recorded the following fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was rightly admitted by him. He decided the matter after hearing the AO also in the matter. His finding could not in any way be displaced by the learned DR before us. Therefore, it is held that no part of interest expenditure could be disallowed u/s 14A." 10. In view of the aforesaid factual position, we do not find that an order of remit on the question of disallowance of interest paid u/s 14A of the Act is required to be passed. The instruments resulting in tax free income were purchased the earlier years, whereas the bank loan was availed of in the present year. Further the bank loan was for a specific purpose, i.e. export of sugar and could not be used for any other purpose. Thus on the said aspect no order of remit is required and ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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