TMI Blog2011 (5) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... are pertaining to disallowance of telephone expenses, miscellaneous expenses, conveyance expenses, motor car expenses, depreciation on motor car, and disallowance of travelling expenses. 3. To dispose of these appeals, we refer to the facts in AY 2004-05. The assessee firm is an authorized dealer of Telco Vehicles/Spare Parts/Lubricants/Repairs Services, etc. in district of Nasik, Mumbai, Solapur Ahmednagar. The assessee filed its return of income declaring total income at ₹ 1,37,14,241/- on 01/11/2004 along with Audit Report in Form No. 3CB 3CD. During the year under consideration, the assessee firm had shown total receipts on sales and other income at ₹ 77,89,55,040/-. The net profit before deducting provision for ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 9th day of April, 2010 and copy of which is filed on record. The learned counsel for the asesssee has submitted that in the subsequent years for AY 2006-07 and 2008- 09, the AO has not disallowed any expenditure under the aforementioned heads and copies of the assessment orders of the said years have been filed on record. 6. On the other hand, the learned DR has not controverted to the submissions made by the learned counsel for the assessee. 7. After hearing the learned representatives of both the parties and perusing the record, we find that in AY 2003-04, the ITAT directed the AO to delete the impugned disallowances by observing as under:- 4. Having heard the rival contentions and having perused the material on record, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest on bank overdrafts. u/s 14A of the Act. 10. The AO had observed that the assessee had taken secured loans and shown as investments made in the form of Konkan Railway Tax Free Bonds and units of mutual funds and the income from these assets had been shown by the way of interest and dividend as exempted income and income from the date of mutual funds as capital gains. The AO was of the view that the assessee had treated these investments as capital assets and not as business assets. The contention of the asesssee was that as regards investment in tax fee bonds there is no change in the investment made during the year had not been accepted by the AO. The AO did not accept the submissions of the assessee and disallowed the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The AO must adopt a reasonable basis or method consistent with all the relevant facts and circumstances af ter furnishing a reasonable opportunity to the assessee to place all germane material on the record. The proceedings for assessment year 2002-03 would stand remanded to the AO. The AO should determine as to whether the assessee had incurred any expenditure (direct or indirect) in relation to dividend income/income from mutual funds which does not form part of the total income as contemplated under section 14A. The AO can adopt a reasonable basis for effecting the apportionment. While making that determination, the AO s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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