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TMI Blog2015 (11) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... d that apart from the suo-moto disallowance of ₹ 5,40,188/-, the further disallowance which can be added is in relation to bank charges of ₹ 5,426/- and accounting expenses of ₹ 71,500/-. So considering the overall facts and circumstances of the case, the disallowance under section 14A is restricted to the suo-moto disallowance made by the assessee of ₹ 5,40,188/- + ₹ 5,426/- towards bank charges + ₹ 71,500/- incurred towards accounting expenses. - Decided partly in favour of assessee. Disallowance being 10% of the telephone expenses - Held that:- The nature of the telephone expenses is that some element of personal use cannot be ruled out. The Ld. CIT(A) has very fairly restricted the disallowance of the telephone expense to 10%. We do not find any infirmity in the order of the Ld. CIT(A) in this respect. - Decided against the assessee. Disallowance of 1/6 of interest on motor car loan and motor car insurance - Held that:- The assessee himself has disallowed 1/6 car expenses but left out to disallow the expenses related to interest on car loan and insurance on car which are very much part of the car expenses. We do not find any infirmity i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in appeal on the ground that AO has observed in the assessment order that the appellant has no objection to the disallowance u/s 14A . The Appellant having objected to the above observation of the AO in ground of appeal raised before the CIT(A) and appellant not having made any such statement before AO , the said disallowance ought to be deleted. 5. The appellant craves leave to add, alter, amend and/or rescind any grounds of appeal during the course of the hearing. Ground No.1 2 3. Ground No.1 2 relates to deduction under section 54(1) of the Act. The brief facts of the case are that the assessee had sold one flat on 17.12.07 for a sale consideration of ₹ 1.65 crores on which the capital gains had been computed at ₹ 61,38,810/-. The assessee claimed deduction of ₹ 16,81,790/- under section 54(1) and deduction of ₹ 35 lakhs under section 54E of the Act. As regards the deduction under section 54(1), the assessee submitted before the Assessing Officer (hereinafter referred to as the AO) that the assessee had entered into an agreement with M/s. Ideal Hights Pvt. Ltd. for purchase of a flat at Kolakata. The assessee also furnished a copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Ld. CIT(A), the assessee has come in appeal before us. 6. We have considered the rival contentions. We find that in a very recent decision, the Hon ble Karnataka High Court in the case of CIT vs. B.S. Shantakumari in ITA No.165 of 2014 vide order dated 13.07.2015 has held that section 54F of the Act is a beneficial provision which permits for construction of residential house. Such provision has to be construed liberally for achieving the purpose for which it is incorporated in the statute. The intention of the legislature, as could be discerned from the reading of the provision, would clearly indicate that it was to encourage investments in the acquisition of a residential plot and completion of construction of a residential house in the plot so acquired. A bare perusal of said provision does not even remotely suggest that it intends to convey that such construction should be completed in all respects in three years and/or make it habitable. The essence of said provision is to ensure that assessee who received capital gains would invest same by constructing a residential house and once it is established that consideration so received on transfer of his Long Term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the subordinate authority, has all the powers which the original authority may have in deciding the questions before it, subject to the restrictions or limitations, if any, prescribed by statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. An assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. The appellate authorities have jurisdiction to deal not merely with additional grounds which become available on account of change of circumstances or law, but with additional grounds which were available when the return was filed but could not have been raised at that stage. The words could not have been raised must be construed liberally and not strictly. It is open to the assessee to claim a deduction before the appellate authority which could not have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry expenses of ₹ 71,931/-, insurance and office expenses etc. in the P L account. He, therefore, relying upon the decision of the Hon ble Bombay High Court in the case of Godrej Boyce Manufacturing Co. Ltd. Vs. DCIT [(2010) 328 ITR 81 (Bom)] held that rule 8D was applicable for the year under consideration and accordingly upheld the disallowance made by the AO as per the provisions of rule 8D of the I.T. Rules. Being aggrieved, the assessee has come in appeal before us. 12. We have considered the rival submissions of the Ld. representatives of the parties. It may be observed that in the case of Godrej Boyce Manufacturing Co. Ltd. (supra), the Hon'ble Bombay High Court has held that Rule 8D r.w.s. 14A(2) is not arbitrary or unreasonable and also not retrospective and applies from A.Y. 2008-09. It has been further held that under section 14A of the Income Tax Act, resort can be made to Rule 8D of the Income Tax Rules for determining the amount of expenditure in relation to exempt income, if, the AO is not satisfied with the correctness of the claim made by the assessee in respect of such expenditure. The satisfaction of the Assessing Officer has to be arrived at, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounting charges. Considering the overall facts and circumstances of the case, we find that apart from the suo-moto disallowance of ₹ 5,40,188/-, the further disallowance which can be added is in relation to bank charges of ₹ 5,426/- and accounting expenses of ₹ 71,500/-. So considering the overall facts and circumstances of the case, the disallowance under section 14A is restricted to the suo-moto disallowance made by the assessee of ₹ 5,40,188/- + ₹ 5,426/- towards bank charges + ₹ 71,500/- incurred towards accounting expenses. This ground is accordingly partly allowed. Now coming to the appeal of the assessee for A.Y. 2009-10. ITA No.6293/M/2012 for A.Y. 2009-10 Ground No.1 16. Ground No.1 is relating to the disallowance of ₹ 5,81,245/- under section 14A read with rule 8D of the I.T. Rules. During the year under consideration, the assessee had earned dividend/tax free interest income aggregating ₹ 56,54,905/-. The assessee suo-moto allowed an amount of ₹ 1,32,619/- incurred towards Demat expenditure, advisory services and security transaction tax. The assessee in the P L Account has debited bank charges of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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