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2014 (1) TMI 1353 - ITAT MUMBAIRecalculation of disallowance u/s 14A of the Act r.w. Rule 8D(ii) of the Rules ordered – Held that:- while making the disallowance u/s.14A of the Act, AO had not recorded the reasons for invoking the provisions of Rule 8D(ii) of the Rules – also, he did not consider the net interest amount – if interest has been paid and received for the same transaction then only net amount of interest has to be considered for apportionment - AO cannot ignore the interest paid/received while making disallowance under section 14A r.w Rule 8D – Relying upon The Morgan Stanley India Securities Ltd. [2014 (1) TMI 1260 - ITAT MUMBAI ] - there could be no dispute that since the amount of interest debited to the Profit & Loss Account as on net basis the disallowance of interest should also be made only with reference to the net interest. Disallowance of expenses u/s 37(1) of the Act - Transaction charges and turnover fees – Held that:- FAA should have not admitted the bifurcation given by the assessee, without obtaining a report from the AO - FAA, a senior officer of the hierarchy of the department is supposed to follow the rules prescribed by the Act - He can direct the AO to submit a remand report or make further inquiries and AO is bound to follow his instructions - AO has specifically taken a ground about not given him an opportunity to verify the claim made for the first time before the FAA - Whatever was the basis of calculation of disallowance it should have been forwarded to the AO, because the AO is the appropriate authority to look in the pieces of evidences - FAA is entitled to admit new evidences and decide the matter without referring to the AO but those are extra ordinary situations –the matter remitted back to the AO for fresh adjudication – Decided partly in favour of Assessee.
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