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TMI Blog2014 (2) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... ng & investment. It filed its return of income for A.Y. 07-08 on 26.10.2007 declaring total income of Rs. 33,11,900/-. The case was selected for scrutiny and thereafter the assessment was framed under section 143(3) vide order dated 22.12.2009 and the total income was determined at Rs. 1,19,85,435/-. Aggrieved by the order of A.O, Assessee carried the matter before CIT(A). CIT(A) vide order dated 23.09.2010 granted partial relief to the Assessee. Aggrieved by the aforesaid order of CIT(A), the Revenue is now in appeal before us. and Assessee has also filed a CO. We first take up Revenue's appeal. The grounds raised by the Revenue reads as under:- 1. The ld. CIT(A)-XIV, Ahmedabad has erred in law and on facts in restricting the addition m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 14A and disallowed the same. Aggrieved by the order of A.O., Assessee carried the matter before CIT(A). CIT(A) after considering the submissions of the Assessee granted partial relief to the Assessee by holding as under:- 3.2 I have considered the assessment order and the above contentions. It is noticed that so far as first contention is concerned, the appellant has rightly pointed out that the disallowance out of administrative expenses made by the A.O. is twice, firstly he has disallowed Rs. 10 lakh on adhoc basis and again he has disallowed 0.5% of the investment i.e. Rs. 11,89,390/-. In my view, therefore, the A.O. was not justified in making addition for both these amounts. It is noticed that Rule 8D has been introduced only fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the case of Reliance Unities & Power Ltd. Thus, respectfully following the decision of Hon'ble ITAT, Ahmedabad, the disallowance of Rs. 17,48,655/- is deleted. 6. Aggrieved by the order of CIT(A), the Revenue is now in appeal before us. 7. Before us, the ld. D.R. submitted that during the year Assessee had made investment, had taken loans for which interest was also paid and there was intermingling of funds and therefore A.O. was justified in working out the disallowance of interest. He further submitted that the investment decisions are taken by the Board of Directors who are paid salaries and other expenses are also incurred by the Assessee and therefore expenses can be attributed for earning tax free income. He further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). It is also seen that A.O. while making the disallowance on account of administrative expenses has noted that Assessee has claimed various administrative expenses like payment of salaries to employees, Directors remuneration, Professional fees and other office expenses which can be attributed to earning tax free income. He has also noted that the decision of investments are taken by the Directors who also paid salaries. The aforesaid finding of A.O. could not be controverted by ld. A.R. 10. It is also a fact that Assessee has earned tax free income to the extent of Rs. 24.92 lacs against which the disallowance. of Rs. 10 lacs under 14A has been sustained by CIT(A). Considering the totality of facts, we find that the disallowance t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the disallowance of Rs. 4,17,959/- as also the addition of Rs. 42,42,560/- ultimately results Into disallowance of claim of Rs. 46,60,519/- being the sundry debit balances written off. The A.O. has applied the ratio of the decision of the Gujarat High Court in the case of Dhall Enterprises & Engineers Pvt. Ltd. vs. CIT reported at 207 ITR 729 and held that claim of the appellant for bad debt is not allowable. Though he has stated that the claim of Rs. 4,17,959/- is disallowed, as stated earlier, in fact the addition results into disallowance of claim of bad debt of Rs. 46,60,519/- The A.O. is of the view that as per the provisions of section 36(1 )(vii) and section 36(2) the assessee has to prove that debtors has become bad. He has st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad for the purpose of allowing claim of bad debts. 14. Before us, the Revenue could not controvert the findings of CIT(A), we therefore find no reason to interfere with the order of CIT(A). Thus this ground of Revenue is dismissed. 15. In the result, the appeal of Revenue is dismissed. C.O. No. 08/AHD/2011 of Assessee 16. The grounds raised by CO. reads as under:- 1. That the learned CIT(A) has grievously erred in law and on facts in confirming the disallowance of Rs. 10,00,000/- u/s. 14A of the Act on estimate basis only and without any basis. 2. That on facts and in law, the learned CIT(A) has grievously erred in confirming the addition of Rs. 23,602/- u/s.40(a)(ia) of the Act. 1st ground of C.O. is with respect to disallowance und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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