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2015 (11) TMI 58 - ITAT MUMBAIDisallowance u/s'14A - Held that:- There is no doubt that the assessee definitely has to incur higher expenses for rendering professional services and thereby earning professional receipts. The contention of the assessee that the value of jewellary of ₹ 41,63,417/- included by the assessing officer in the determination of average investment need to be excluded is to be accepted as any gain on sale of jewellary is taxable under the Act. Keeping in view the peculiar facts and circumstances of the case , the end of justice will be met if the disallowance of the expenses is restricted to 10% of common expenses of ₹ 12,83,814/- whereby the disallowance will come to ₹ 1,28,381/- u/s 14A of the Act. The amount of disallowance is restricted to ₹ 1,28,381/- keeping in view the peculiar facts and circumstances of the case and shall neither be construed as our making any aspersion on the applicability of Section 14A of the Act read with rule 8D of Income Tax Rules,1962 for the impugned assessment nor setting any precedent whatsoever.- Decided partly in favour of assessee. Disallowance of Foreign Exchange Fluctuation Loss on balance maintained in foreign currency in EEFC A/c. - Held that:- The assessee is consistently following the accounting policy of offering to tax both income/loss on mark to market basis as on the date of balance-sheet in the return of income filed with the revenue with respect to the EEFC account. The LD AR has made statement before us that the EEFC account is being maintained by the assessee and the credits in the earlier years were on account of professional fee received by the assessee in foreign exchange in the earlier years. We, therefore, hold that on the basis of principles of consistency in the accounting policy followed by the assessee from several years which accounting policy is also in consonance with the prescribed Indian accounting standards, the loss incurred by the assessee on account of foreign exchange fluctuation loss in the EEFC account as at the year end is to be allowed and the addition made by the assessing officer and as confirmed by the CIT(A) needs to be deleted. - Decided in favour of assessee. Disallowance of Dentistry expenses u/s 40(a)(ia) - non deduction of TDS - Held that:- We have observed that the assessee is a cine artist /actress and her beauty and personality is one of the most important trait for generating business and revenue. The assessee spent dentistry charges which are part and parcel of her beautification to generate the revenue. The assessee has paid 89,500/- towards the material cost while the rest ₹ 85350/- is towards the professional fees paid to doctor for treatment of her teeth. The assessee is required to deduct TDS u/s 194J of the Act on the professional fees paid to doctor which the assessee has failed to deduct and hence ₹ 85,350/- being professional fees out of total expenditure of ₹ 1,74,850/- is held to be disallowable expenditure u/s 40(a)(ia) of the Act as no TDS was deducted by the assessee u/s 194J of the Act while we allow expenditure of ₹ 89,500/- being incurred by the assessee towards the material cost paid for her treatment. - Decided partly in favour of assessee.
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