9911796707
TMI Blog2016 (1) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... ly stated, the facts of the case as recorded in the assessment order are that the assessee made investment of Rs. 18.95 crore in unquoted equity shares. However, no dividend was received during the year. Applying the provisions of section 14A read with Rule 8D, the AO computed disallowance at Rs. 1,40,28,358/-. The ld. CIT(A) reduced the disallowance to Rs. 74,15,767/-, thereby allowing part relief. Both the sides are in appeal in support of their respective stands. 4. We have heard the rival submissions and perused the relevant material on record. The AO has categorically recorded on page 2 of the assessment order that: 'however, no dividend is received during the year.' Thus it is evident from the assessment order itself that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival submissions and perused the relevant material on record, we find that the way in which this addition has been made by the AO is not proper. He has gone by the percentage of scrap sale to turnover, which is not a relevant factor. Scrap is ordinarily considered with reference to production. It is further pertinent to note that percentage of scrap to production may not remain consistent over the years. The generation of scrap depends on various factors, such as, quality of raw material, age of machine, quality of work force, etc. If good raw material is used, naturally, it will lead to lower scrap and vice versa. The relevant factors discussed above ultimately find their reflection on the gross profit rate. If the gross profit rate of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns was not allowable. Applying interest rate of 12.5%, he made an addition of Rs. 3,55,562/-. The assessee argued before the ld. CIT(A) that no fresh amount was advanced to M/s Tobu India Ltd. during the year and the amount shown as receivable was simply opening balance. The ld. CIT(A) got convinced with the assessee's submissions and deleted the addition. 8. After considering the rival submissions and perusing the relevant material on record, we find that the assessee argued before the ld. CIT(A), which has been recorded on page 16 of the impugned order, that there was no fresh lending to Tobu India Ltd., during the current year and the balance was an opening balance. The ld. CIT(A) recorded a categorical finding that the AO had: 'not est ..... X X X X Extracts X X X X X X X X Extracts X X X X
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