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TMI Blog2012 (7) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... of power and fuel, manufacturing and out of selling expenses after comparing the expenses with earlier years - Held that:- Neither AO nor CIT(A) found that the expenditure incurred and claimed by the assessee was not for the purpose of business. The adhoc disallowance was made merely on the basis that some of the vouchers were self-made as merely that the assessee has accounted for the expenditure by self-made vouchers automatically does not prove that the expenditure incurred was for other than business purposes - decided in favour of assessee. - ITA No. 142/Agr/2011 - - - Dated:- 22-6-2012 - Bhavnesh Saini, And A. L. Gehlot, JJ. Appellant by : Rajendra Sharma R. M. Singhal, Advocates Respondent by : Waseem Arshad, Sr. D.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missed the ground of the assessee as under :- (CIT(A) paragraph no.2.2) I have analysed the matter and find that in view of the judgement of Godrej Boyce Mfg. Co. Ltd. vs. DCIT 328 ITR (Bom) Rule 8D shall apply from Assessment Year 2008-09. Therefore, I hold that the Assessing Officer was not right in applying the provisions of Rule 8D for disallowance u/s 14A for the year under consideration. But, that does not mean that no disallowance is called u/s 14A in the appellant s case. It is to be noted that the assessee has invested a sum of ₹ 13 crores for purchasing shares of M/s Bholey Baba Dairy Inds. Ltd., Aligarh. The assessee has debited sum of ₹ 3,30,48,331/- under the head Bank interest, in the immediately preceding y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Representative drew out attention on a chart which has been placed at page no.1 of assessee s Paper Book. Ld. Authorised Representative in support of his contention relied upon various decisions including the order of I.T.A.T., Agra Bench in the case of M/s Lala Ram Finance Investment Co. Pvt. Ltd. vs. DCIT in ITA No.260 261/Agr/2011 order dated 08.06.2012. 5. The Ld. Departmental Representative, on the other hand, relied upon the order of CIT(A) and submitted that the own capital which was available with the assessee has already been invested in the business. Therefore, the disallowance sustained by the CIT(A) may be confirmed. 6. We have heard the ld. Representatives of the parties and records perused. We find that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missible where no nexus between the expenditure incurred and income generated has been established. Hon ble High Court of Bombay in the case of Income Tax Appeal No.1260 of 2009 in case of CIT vs. K. Raheja Corporation P. Ltd. judgement dated 08.08.2011 while confirming the order of I.T.A.T. held that if the investment is made out of the assessee s own interest free funds, no disallowance can be made under section 14A of the Act. Section 14A is not a charging section but only disallowance of expenditure for a fair ascertaining of allowing common expenses between taxable and nontaxable income. Rule 8D can be applicable only where disallowance of interest on borrowed capital warrant for expenses out of such borrowed capital with the amount re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of selling expenses after comparing the expenses with earlier years and on the ground that some of the vouchers were self-made. The CIT(A) though observed that the disallowance made under various heads were purely on adhoc basis without pointing out specifically as to which of the expenses are not properly vouched and subject to verification. However, the CIT(A) held that some of the expenses are supported only by self-made vouchers. Therefore, he restricted the disallowance to the extent of ₹ 1,00,000/- out of each expenses. 9. We have heard the ld. Representatives of the parties and records perused. Under the taxing system, in our Country, it is for the assessee to conduct his business, and in his wisdom or otherwise to incur th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the vouchers were self-made. Merely that the assessee has accounted for the expenditure by self-made vouchers automatically does not prove that the expenditure incurred was for other than business purposes. Once it is found that the expenditure has been incurred for the purpose of business, the whole expenses are allowable. In the light of the fact of the case under consideration, we find that the Revenue Authorities has failed to point out that the expenditure incurred was for other than business purposes. We, therefore, are of the considered opinion that the expenditure claim made by the assessee is allowable. Therefore, we delete the addition sustained by the CIT(A) of ₹ 1,00,000/- each out of power and fuel expenses, manufacturin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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