TMI Blog2016 (3) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... payments made by the assessee. The Ld. DR could not bring anything contrary to the finding of the ld. CIT(A). Hence, we uphold the action of the ld. CIT(A) in restricting the addition to ₹ 50,000/-. - Decided against revenue Addition under the head “Repairs and Maintenance" - Held that:- We found that the reason given by the Assessing Officer for this disallowance was the missing vouchers and bills. The AO has not brought out any instances of any missing supporting vouchers. The Ld. DR could bring anything contrary to the finding of the ld. CIT(A). We uphold the action of the ld. CIT(A) in restricting the addition of ₹ 10,000/-.- Decided against revenue - I.T.A.Nos.745 & 746/Ind/2014, C.O.Nos. 2 & 3/Ind/2015 (Arising out of I.T.A.Nos.745 & 746/Ind/2014) - - - Dated:- 1-3-2016 - Shri D.T. Garasia And Shri B.C.Meena, JJ. Deprtment by : Shri R. A. Verma, DR Assessee by : Shri Vijay Bansal, CA ORDER D.T.Garasia,. Appeals by the Department and cross objections by the assessee are directed against the separate orders of CIT(A)-II, Indore, both dated 28.08.2014 and relate to assessment years 2010-11 and 2011-12. I.T.A.No. 745/Ind/2014 (D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he identical issue of disallowance is] s 14A r.w. rule 8D has been decided by my predecessor in the assessee's own case for the A.Y. 2009-10 wherein the CIT (A), after detailed discussion has held that disallowances u/ s 14A in this case was required to be made in the ratio of exempt income to taxable income. It has been brought to my notice by the appellant vide para-1.5 of the submissions as reproduced above that Hon'ble ITAT, Indore Bench has duly approved the decision of the then CIT(A). Further, it has also been brought out that the appeal preferred by the department against the order of Hon'ble ITAT, Indore Bench in the M.P. High Court has been dismissed. The appellant has filed copies of order of ITAT and Hon'ble M.P. High Court. After considering the orders of my predecessor, ITAT and M.P. High Court, I hereby concur with the decision of my predecessor and direct AO to follow the ratio laid down by the him in the appeal order dated 16.07.2012, the relevant part of which is as under:- 4.1.5 Thus on consideration of overall facts and circumstances of the case and the relevant provisions of law and following the decision of Hon'ble Special Bench (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). Assessee has filed cross objection against the appeal filed by the department against the aforesaid order of Learned CIT(A)-2, Indore. The assessee would like to submit that the calculation made by the learned AO by applying Rule 8D is wrong and not as per the wording provided in Rule 8D. Your honour we would like to reproduce the relevant provisions of section 14A and Rule 8D as below : Subsection (2) of section 14A read as under:- (2) The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. The method as above, is prescribe under Rule 8D, which read as under:- 2. The expenditure in relation to income which does not form part of the total income shall be the aggregate of following amounts, namely:- (i) the amount of expenditure directly relating to income wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above amounts have been excluded from the formula provided in Rule 8D. During the year by following the decision of the Indore bench of ITAT , in case of appellant itself, which is confirmed by the Jurisdictional High Court , if the proportionate amount has been calculated, a maximum disallowance come to ₹ 1,19,532/- (Rs. 2,20,245/1,58,39,200 * 85,96,306) . However your honour we would like to humbly submit that even this disallowance has been based on the calculation under Rule 8D and according to our submission (Encl. 19) the disallowance as per rule 8D come to ₹ 831/- only and therefore the disallowance by following the above decision should be only ₹ 12/- only (Rs. 2,20,245/1,58,39,200 * 831) Now coming to the objection of assessee on adhoc addition by learned AO of ₹ 2,00,000 and ₹ 50,000/-, which is restricted to ₹ 50,000/- and ₹ 10,000/- by Learned CIT(A)-2, we would like to humbly submit that there were not a single voucher being pointed out by the Learned AO which is missing, the books of accounts were duly audited, and therefore it is most humbly requested to kindly delete the ad hoc addition of ₹ 50,000 and &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A). Grounds no. 1 2 of the Revenue fails. Ground No. 3 : 9. The brief facts of the case are that the ld.AO has observed that the assessee has incurred expenses of ₹ 16,42,333/- under the head office general expenses. On verification of these expenses on test basis, it was found by him that bills and voucher for supporting of some of the expenses were missing. The AO further observed that there were also instances of cash payments to the parties. The AO disallowed ₹ 2,00,000/- on lump sum basis out of office and general expenses. Hence, ₹ 2,00,000/-. 10. The matter carried to the ld. CIT(A) and the ld. CIT(A)partly allowed this ground by observing as under :- 3.1 I have gone through the assessment order and relevant para-2 of the assessment order wherein the issue has been discussed by the AO. It is observed that the AO has not at all given any reasons for making the ad hoc disallowance of ₹ 2 lacs. The only reason brought out by the AO are that the bills and vouchers of expenses were missing and there were instances of cash payments. But the AO has failed to bring out any instances of missing vouchers and cash payments made by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of both the parties. We have gone through the orders of the authorities below and also written submission. We found that the AO has failed to bring out any instances of missing vouchers and the cash payments made by the assessee. The Ld. DR could not bring anything contrary to the finding of the ld. CIT(A). Hence, we uphold the action of the ld. CIT(A) in restricting the addition to ₹ 50,000/-. Ground no. 3 of the Revenue fails. Ground no. 4: 14. The facts of the case are that the AO observed during the course of verification that the assessee company has incurred expenses of ₹ 9,14,817/- under the head Repairs and Maintenance. On verification of these expenses on test basis, the AO found that the bills and voucher for supporting of some of the expenses were missing. The AO disallowed ₹ 50,000/- on lump sum basis out of Repair and Maintenance. 15. The matter carried to the ld. CIT(A) and the ld. CIT(A) deleted this appeal by observing as under :- 4.1 I have gone through the relevant para-3 of the assessment order wherein the AO has discussed the addition. The only reason given by the AO for this disallowance is the missing vouchers and bills. But the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. We have heard the rival contentions of both the parties. We found that the reason given by the Assessing Officer for this disallowance was the missing vouchers and bills. The AO has not brought out any instances of any missing supporting vouchers. The Ld. DR could bring anything contrary to the finding of the ld. CIT(A). We uphold the action of the ld. CIT(A) in restricting the addition of ₹ 10,000/-. Ground no. 4 of the Revenue is dismissed. I.T.A.No. 746/Ind/2014 (Department s Appeal): A.Y. 2010-11 : 19. In this appeal, the following grounds have been taken by the Revenue :- On the facts and in the circumstances of the case and in law, the CIT(A) has erred in :- 1. restricting the disallowance rightly made u/s 14A of the Act from ₹ 31,98,441/- to ₹ 1,00,663/- while assessee has made investment of interest bearing funds in the partnership firm, profit of which was exempt. 2. restricting the disallowance u/s 14A of the Act from ₹ 31,98,441/- to ₹ 1,00,663/- by applying the ratio of 1:30:85 for exempt income and taxable income. Whereas provision of Section 14A r.w.r. 8D does not speak about ratio between exempt income and taxa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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