TMI Blog2014 (5) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive terms - on merits also CIT(A) has merely made some further ad hoc estimate out of director’s remuneration, administrative expense and other heads - Thus, a partial addition has been sustained not on any cogent reasons but on ad hoc estimate - the addition deserves to be deleted on both counts i.e. non recording of satisfaction and on merits also - the partial addition u/s 14A retained by the CIT(A) is deleted. Leave encashment expenses – Held that:- There was merit in the contention of the assessee that the leave encashment though pertaining to earlier year is allowable on actual payment basis in the year of payment i.e. assessment year in question - It has not been disputed that assessee has not claimed the expenditure in earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income Tax (Appeals) has erred both on facts and in law in enhancing the disallowance made by the learned assessing officer u/s 14A from Rs. 12,31,562/- under Rule 8D to Rs. 15,88,450/- on estimate basis without providing the appellant company a reasonable opportunity of showing cause against such enhancement in terms of Sub Section (2) of Section 251 of Income Tax Act, 1961. 2. The learned Commissioner of Income Tax (Appeals) has erred both on facts and in law in upholding the learned Assessing officer s action in disallowing Rs. 4,08,000 being prior period expenses allegedly on the ground that the same are not allowable. 2. Ld. Counsel for the assessee at the out set contends that ITAT Delhi Bench A in para 4 of its order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n allowed by ITAT in a series of earlier years judgment and is also covered by Hon ble Supreme Court s judgment in the case of CIT vs. Smifs Securities Ltd. reported in 348 ITR 302, respectfully following the same, revenue s appeal dismissed. Assessee s appeal: 5. Apropos first issue of assessee s appeal, the ld counsel for the assessee contends that Rule 8D was not applicable in this year as it is applicable from A.Y. 2008-09. The assessee furnished a detailed working in respect of indirect expenses at Rs. 3,95,321/- which was suo motu added back as disallowable expenditure u/s 14Ato the computation of income. Ld. AO has no where recorded any satisfaction that the working of 14A disallowance provided by the assessee was not proper. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce without giving any cogent basis. Thus, assessee s working has been substituted by CIT(A) with a further ad hoc estimate without giving any cogent basis. Since orders of both the lower authorities i.e. A.O. and CIT(A) suffer from these defects i.e. not recording satisfaction by A.O. and ad hoc estimate by CIT(A), the assessee s working deserves to be upheld. 5.2. Apropos second issue i.e. alleged prior period expenses, ld. Counsel contends that issue has been misconceived by authorities below. Some of the employees of the assessee company were transferred to associated concerns, their leave encashment pertaining to earlier year were paid. Neither provision in this behalf was made in earlier year nor expenses were claimed in earlier ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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