TMI Blog2017 (11) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirmed by the ld. CIT(A). In view of the above facts and circumstances of the case, the order of the ld. CIT(A) on the issue is confirmed and ground raised by the assessee is dismissed. Purchase of assets - assets purchased were capable of personal use - Held that:- We find that no plausible explanation has been given either before the authorities below or even before us. Therefore, the assets purchased by the assessee, like furniture and mobile set are capable of personal use. Accordingly, in the absence of any satisfactory explanation, we do not find any infirmity in the order of the ld. CIT(A) who has rightly confirmed the action of the Assessing Officer. Thus, Ground No. 2 of the assessee is dismissed. Disallowance on account of unconfirmed creditors - Held that:- CIT(A) has not commented upon such demand letter and has not made any enquiry in this regard. In the interest of justice, the matter is set aside to the file of the ld. CIT(A) who will conduct proper enquiry and find out whether the creditors are still outstanding and genuineness of the demand letter so placed on record. Accordingly, Ground No. 3 is allowed for statistical purposes Non deduction of TDS on f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 14A of the Income Tax Act, 1961 and Rule 8D of the Income Tax Rules. 2.That the Learned Commissioner of Income Tax (Appeal) has erred in fact in law while confirming the disallowance of ₹ 1,185/- out of the claim of depreciation. 3.That the Learned Commissioner of Income Tax (Appeal) has erred in fact in law while confirming disallowance of ₹ 62,403/- being payable to sundry creditor as non-payable. 4.That the Learned Commissioner of Income Tax (Appeal) has erred in fact in law while confirming disallowance of ₹ 22,000/- paid as fee for arbitration to Justice R. L. Khurana, for non-deduction of TDS; where the said fee is not covered in the definition of professional fee. 5.That the Learned Commissioner of Income Tax (Appeal) has erred in fact in law while confirming disallowance of ₹ 2,20,924/- towards personal use out of / Travelling Expense (Rs. 53,181/-), Telephone Expenses (Rs. 67743/-) Business. Promotion (Rs. 1,00,000/-) 6. That the Learned Commissioner of Income Tax (Appeal) has erred in fact in law while disallowing the claim of the assessee in respect of carry forward of loss of ₹ 4,11,895/-, and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income-tax Act, 1961, section 14A of the Act prohibits allowance of any expenditure incurred in relation thereto. Income from deployment of funds in shares earned by way of dividend is not included in total income by virtue of the provisions contained in section 10(34) of the Act, whether the shares are held as stock-in-trade or as investment. As dividend income does not form part of total income under the Act, the provisions of section 14A are applicable. The allowance of expenditure in relation to dividend income is thus not admissible in computing the income of an assessee whether the shares are held as investment or they are held on trading account as stock-in-trade. The provisions of section 14A, controls the computation of income under the provisions of the Act and has overriding effect over other provisions. Therefore, even if the expenditure is allowable under any other provision of the Act, disallowance is made because of the overriding effect of section 14A of the Act. 5. We further observe that the Legislature, by using the expression expenditure in relation to income which does not form part of the total income in section 14A of the Act, in no way indicates t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... virtue of the provisions of Section 14A(1); ii) The payment by a domestic company under Section 115(1) of additional income tax on profits declared, distributed or paid is a charge on a component of the profits of the company. The company is chargeable to tax on its profits as a distinct taxable entity and it pays tax in discharge of its own liability and not on behalf of or as an agent for its shareholders. In the hands of the shareholder as the recipient of dividend, income by way of dividend does not form part of the total income by virtue of the provisions of Section 10(33). Income from mutual funds stands on the same basis; iii) The provisions of sub section (2) and (3) of Section 14A of the Income Tax Act 1961 are constitutionally valid; iv) The provisions of Rule 8D of the Income Tax Rules as inserted by the Income Tax (Fifth Amendment) Rules 2008 are not ultra vires the provisions of Section 14A, more particularly sub section (2) and do not offend Article 14 of the Constitution; v) The provisions of Rule 8D of the Income Tax Rules which have been notified with effect from 24 March 2008 shall apply with effect from Assessment Year 2008- 09; 7. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or even before us. Therefore, the assets purchased by the assessee, like furniture and mobile set are capable of personal use. Accordingly, in the absence of any satisfactory explanation, we do not find any infirmity in the order of the ld. CIT(A) who has rightly confirmed the action of the Assessing Officer. Thus, Ground No. 2 of the assessee is dismissed. 11. As regards Ground No. 3, the Assessing Officer made disallowance of ₹ 62,403/- on account of unconfirmed creditors, which action of the Assessing Officer was confirmed by the ld. CIT(A). 12. We have heard the rival contentions and perused the facts of the case. As a matter of fact, it was pleaded before the ld. CIT(A) as well as before us that the party is demanding money and copy of demand letter has been placed on record. But the ld. CIT(A) has not commented upon such demand letter and has not made any enquiry in this regard. In the interest of justice, the matter is set aside to the file of the ld. CIT(A) who will conduct proper enquiry and find out whether the creditors are still outstanding and genuineness of the demand letter so placed on record. Accordingly, Ground No. 3 is allowed for statistical purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for business promotion has been maintained and, therefore, personal use at this juncture, can also not be ruled out. Expenses appear to be quite reasonable. Therefore, we find no infirmity in the order of the ld. CIT(A) who has rightly confirmed the action of the Assessing Officer in this regard. Accordingly, Ground No. 5 is dismissed. 18. As regards Ground No. 6, the brief facts are that the Assessing Officer made disallowance of loss for long term capital gain as per revised computation, which action was confirmed by the ld. CIT(A). 19. We have heard the rival contentions and perused the facts of the case. As a matter of facts, the assessee filed revised computation during the course of assessment proceedings which was not accepted by the authorities below for the reason that the assessee should have made the claim through revised return. It is settled law that the claim which is legally permissible should otherwise be allowed by the Assessing Officer which, in fact, has not been allowed in the present case and, therefore, the matter is set aside to the file of the Assessing Officer who will allow the claim after verifying the genuineness of the computation of loss as per r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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