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TMI Blog2016 (9) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and in law in confirming the disallowance of an amount of Rs. 1,41,991/- made by AO by invoking the provisions of Rule 8D read with Section 14A of the Act. (ii) That the above-said disallowance has been confirmed rejecting the explanation and evidences brought on record by the assessee. 3(i) On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the action of AO in disallowing an amount of Rs. 1,50,763/- being 1/6th of the following expenses. Particulars Amount (Rs.) Car repairs and maintenance 3,13,549/- Interest on car loan 49,014/- Insurance on car 18,952/- Telephone expenses 1,52,613/- Travelling expenses 3,22,571/- Entertainment/ staff welfare expenses 47,875 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 14A may not be made. Assessee replied vide his letter on 19.12.2013, which was not acceptable to the AO in accordance with the provisions of Section 14A. AO held that assessee has diverted its fund for non-business purposes claiming that the idle funds were utilized for earning incomes and on the other side, assessee was incurring interest expenses and claim was made that these were business expenses. Therefore, the AO calculated the disallowance as per the provisions of Rule 8D of the I.T. Rules and made the disallowance of Rs. 1,41,991/- and also made adhoc disallowance of Rs. 1,77,892/- being 1/6th of total expenses of Rs. 10,67,353/- on account of vehicle running and maintenance expenses, telephone expenses, travelling expenses and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest on car loan 49,014/- Insurance on car 18,952/- Telephone expenses 1,52,613/- Travelling expenses 3,22,571/- Entertainment/ staff welfare expenses 47,875/- Total 9,04,574/- The ld. Counsel of the Assessee stated that the above disallowances has been made without any basis. These disallowance have been made despite the fact that these expenses have been incurred for the purpose of business and profession. To support his contention, he relied upon the following case laws and stated that the issue in dispute is squarely covered by the said decisions. - ACIT vs. Amtek Auto Ltd. 112 TTJ 455 - DCIT vs. Yash B. Johar, ITA No. 2612/Mum/2008 AY 2004- 05 dated 5.2.2010. - Devji Nenshi Palani vs. ITO ITA No. 6519/Mum/2009 AY 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kisha Engineering India Ltd. (Delhi High Court) ITA 115/2014 & 119/2014 dated 25-11-2014 Disallowance of expenses on exempt income uls 14A r.w Rule 80 - investments in shares and mutual funds - Held that:- In Maxopp Investment Ltd. vs. Commissioner of Income Tax [2011 (11) TMI 267 - Delhi High Court] it has been held that it is only when the AO is not satisfied with the claim of the assessee, that the Legislature directs him to follow the method that may be prescribed - the findings recorded by the CIT(A) and the Tribunal are appropriate and relevant - the assessee had sufficient funds for making investments in shares and mutual funds - The self or voluntary deductions made by the assessee were not rejected and held to be unsatisfactory, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second addition in respect of adhoc disallowance made by the AO in respect of 1/6th of the aforesaid expenses as mentioned in a tabulation form in para 5.1 of this order is concerned, I find that Ld. CIT(A) while recording his finding has pointed out that AO had made the disallowance without pointing out any specific defects in the books of accounts. Despite that he only allowed the claim of depreciation on vehicle and rest of the disallowance affirmed, which is not sustainable in the eyes of law and against the well settled law. In this regard, I draw support from the ITAT decision in the case of ACIT vs. Amtek Auto Ltd. 112 TTJ 455 wherein it has been held as under:- "19. We have considered the rival submissions, and find that the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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