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2018 (1) TMI 787 - ITAT KOLKATADisallowance u/s. 14A read with Rule 8D - Held that:- Disallowance u/s 14A be restricted to the exempt income earned by the assessee Disallowing being 10% of repairing expenses on estimate basis - Held that:- AO disallowed 10% of the repairs and maintenance claimed by the assessee as deduction in computing the total income on the ground that the assessee could not produce the related bills and vouchers. The CIT(A) confirmed the order of the AO. Before me the prayer of the ld. Counsel for the assessee was that the disallowance is excessive and should commensurate with the quantum of total expenditure and the scale of business of the assessee. There has been no basis for the disallowance by the AO or CIT(A). Disallowance of 5% of the repair expenses would be just and fair. Accordingly ground no.4 is partly allowed. Receipt of surrender value of Keyman Insurance Policy as Central Income when the premium when paid was allowed as deduction from the composite income of the assessee at the time of payment - Held that:- The only business of the assessee is growing and manufacturing of tea. The surrender value of keyman insurance policy is admittedly connected with the business of growing and manufacture by the assessee and therefore it has to be considered as part of the composite income on which Rule 8 should be applied. In this regard it is also noticed by me that the insurance premium was paid when the policy was in force was allowed as deduction while computing the composite income. Therefore the nexus with the business of the assessee has been accepted by the revenue in the past. Therefore the surrendered value of keyman insurance policy received during the previous year had also to be considered as part of the composite income on which Rule 8 has to be applied
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