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TMI Blog2019 (8) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case, the Appellant submits that the disallowance is unwarranted and requires to be deleted. 3) Without prejudice to the above ground and in any event, the Appellant submits that the above disallowance is grossly excessive and arbitrary, and the same requires to be reduced substantially. 4) The learned Commissioner of Income Tax (Appeal;,) erred in holding that interest expenditure on borrowings utilized for the purposes of the business activities of the Appellant was not allowable under Section 36(l)(iii) of the Act, and in Confirming disallowance of interest expenditure under Section 14A of the Act aggregating to Rs. 41,107/- as attributable to borrowings purportedly utilized for acquiring investments, yielding exempt dividend income. Having regard to the facts and circumstances of the case, the Appellant submits that the unwarranted and arbitrary disallowance be deleted. 5) Without prejudice to the Appellant's contention that no interest is allocable to the earning of exempt dividend income and in any view of the matter, the Appellant submits that the disallowance computed at Rs. 41,107/- is arbitrary and grossly excessive and the same requires to be red ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of business promotion expenses and allowed partial relief in respect of disallowance of expenditure incurred in relation exempt income, where he has sustained 15% of total expenditure incurred on the salary of Shri. Sunil Nair amounting to Rs. 64,505/-, by following his predecessor CIT(A) order for AY 2009-10. Aggrieved by the Ld. CIT(A), order, the assessee is in an appeal before us. 4. The first issue that came up for our consideration from ground No.1 of assessee appeal is determination of ALV of house property @10% of original cost of property. The assessee firm had rented out its flat situated at Bakhtavar Building, Opp. Colaba Post Office Mumbai to Ms. Simone Tata at Rs. 600/- per month from AY 2005-6 to 2008-09 and ALV of the property was taken at Rs. 12,32,505/- by the AO. Similarly, for the year under consideration by following his finding in earlier year determined ALV of the property at Rs. 12,30,505/- and after allowing standard deduction at 30% made additions of Rs. 8,62,243/- under the head income from house property.. 5. The Ld. AR for the assessee, at the time of hearing submitted that this issue is squarely covered in favour of the assessee by the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the file of the Assessing Officer who shall determine the standard rent as per the Rent Control Act and fair rent by conducting enquiries to assess the ALV of the property denovo keeping in view the guidelines set out by the Hon'ble Jurisdictional High Court in the case of CIT v. Tip Top Typography (supra). Thus, we restore this matter to the file of the Assessing officer for denovo adjudication. All contentions are left open. The Assessing officer shall provide opportunity of being heard to the assessee and to furnish fresh evidences and submissions in support of its contentions. This ground is allowed for Statistical purpose. 7. In this view of the matter and consistent with view taken by the Coordinate Bench in assessee's own case for earlier year, we restore this issue to the file of the AO for denovo adjudication in light of findings of the Tribunal on the basis of decision of Hon'ble High Court in the case of CIT vs TIP TOP Typography (Supra). 8. The next issue that came up for our consideration from ground No. 2 and 3 of assessee's appeal is Adhoc disallowance of business promotion expenses. The AO has disallowed business promotion expenses amounting to Rs. 2,78,160/- on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment business has to incur certain expenditure for the customers/clients to keep good relations. We find considerable merit in the submissions of the assessee. In the circumstances, accepting the submissions of the assessee we delete the disallowance made towards business promotion. Ground No.4 is allowed. 11. In this view of the matter and consistent with view taken by the Coordinate bench, we direct the AO to delete the additions towards business promotions expenses. 12. The next issue that came up for our consideration from ground No.4 to 7 of the assessee's appeal is disallowance of expenditure incurred in relation to exempt income. The AO has disallowed expenditure incurred in relation to exempt income towards interest expenditure and other expenses under Rule 8D(2)(ii)and (iii) for Rs. 3,40,027/- on the ground that although assessee claims have not incurred any expenditure, but in view of the decision of Hon'ble Bombay High Court in the case of Godrej & Boyce manufacturing company Pvt.Ltd. vs. DCIT (supra), it is mandatory to determine expenses incurred in relation to exempt income under the prescribed method provided u/s Rule 8D(2)(ii) of I.T.Rules, 1962. Accordingly, he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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