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2016 (2) TMI 662 - ITAT MUMBAI

2016 (2) TMI 662 - ITAT MUMBAI - TMI - Disallowance of loss - Held that:- Admittedly, the assessee does not have any material to prove that the advance of ₹ 3,50,000/- was given in connection with a view to start new venture in the pharmaceutical lines. Hence, the claim of the assessee that the advance was given in the normal course of business was not substantiated. The tax authorities were right in holding that the loss of advance cannot be claimed as bad debt, since the same was not off .....

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leted. Accordingly, we direct the assessee to move an appropriate petition before the AO, who shall act upon it in accordance with the discussions made (supra).

Disallowance of repair and maintenance expenditure - Held that:- We notice that the assessee had taken business premises on rent and it has been occupying the same for the last 40 years. The ld. AR, inviting our attention to the details of repairs and maintenance furnished in the paper book, submitted that the assessee has onl .....

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see is in the nature of revenue expenditure, since the same has been incurred on maintenance of the existing business premises of the assessee. Accordingly, we set aside the order of ld. CIT(A) on this issue and direct the AO to delete the impugned addition.

Disallowance u/s 14A - Held that:- Closing value of shares held as investment was ₹ 84.07 lakhs and the closing value of stock-in-trade was ₹ 20.42 lakhs. The partnersí capital account stand at ₹ 120.27 lakhs, wh .....

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er of ₹ 14.65 crores in its other business. Thus, we notice that the administrative expenses have been mainly incurred for other business purposes. Considering all these factors, we are of the view that the disallowance made u/s 14A may be determined at ₹ 46,425/-, as worked out by the assessee, since the same works out to about 5% of the dividend income received by the assessee. Accordingly, we set aside the order of ld.CIT(A) and sustain the disallowance u/s 14A at ₹ 46,425/- .....

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allowance of repair and maintenance expenditure of ₹ 2,90,000/-; and c) Disallowance u/s 14A of ₹ 6,73,650/- 2. We heard the parties and perused the record. The assessee is a partnership firm carrying on the business in pharmaceutical products on wholesale basis. The first issue relates to disallowance of claim of ₹ 3,50,000/- made by the assessee as bad debts. The AO noticed that the assessee had given an advance of ₹ 3,50,000/- to a person named as Shri Nilesh Shah and .....

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owed the claim of bad debts of ₹ 3,50,000/-. The ld.CIT(A) also confirmed the same. 3. At the time of hearing, the ld. AR submitted that the assessee had given this advance for starting a new venture in the pharmaceutical lines. However, the advance was given during the course of carrying on the business and the loss of the same should be allowed as a trading loss under section 28 of the Act. The ld. AR further submitted that the assessee has ultimately recovered the amount of ₹ 3,50 .....

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tively prayed that the AO should be directed to delete the amount of ₹ 3,50,000/- offered by the assessee in assessment year 2014-15, if the impugned disallowance is confirmed during the year under consideration. 5. Admittedly, the assessee does not have any material to prove that the advance of ₹ 3,50,000/- was given in connection with a view to start new venture in the pharmaceutical lines. Hence, the claim of the assessee that the advance was given in the normal course of business .....

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has been confirmed by us during the year under consideration, the said amount offered by the assessee in the assessment year 2014-15 is liable to be deleted. Accordingly, we direct the assessee to move an appropriate petition before the AO, who shall act upon it in accordance with the discussions made (supra). 7. The next issue relates to disallowance made out of repairs and maintenance expenditures. The assessee claimed the sum of ₹ 4,59,666/- as repair and maintenance expenditure. The AO .....

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es on this issue and perused the record. We notice that the assessee had taken business premises on rent and it has been occupying the same for the last 40 years. The ld. AR, inviting our attention to the details of repairs and maintenance furnished in the paper book, submitted that the assessee has only strengthened and repaired the existing structures of the business premises and hence the same is allowable as revenue expenditure. A perusal of the details submitted by M/s Saya Construction Co. .....

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this issue and direct the AO to delete the impugned addition. 9. The next issue relates to the disallowance made u/s 14A of the Act. The ld. AR submitted that the AO has applied the provisions of Rule 8D of the Income Tax Rules, 1962 for the year under consideration even though he said Rule is not applicable to the assessment year 2007-08. He further submitted that the ld.CIT(A) accepted this position of law but held that the disallowance computed by the AO is reasonable one. The ld. AR further .....

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amp; Boyce Manufacturing Co. Ltd. (328 ITR 81)(Bom). 10. On the contrary, the ld. DR submitted that the assessee has earned dividend income of ₹ 8.94 lakhs and hence disallowance has to be made u/s 14A of the Act. 11. In the rejoinder, the ld.AR submitted that the assessee has worked out the disallowance at ₹ 46,425/- and the same is placed at page 66 of paper book. 12. There is no dispute with regard to the fact that the provisions of Rule 8D are not applicable to the year under con .....

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