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TMI Blog2017 (7) TMI 863X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2008-09 prospectively which cannot be applied retrospectively. It is also noticed that the AO while making the disallowance out of the expenses has not given any basis for making the disallowance @ 20%. Therefore, considering the ratio laid down in the aforesaid referred to decision deem it appropriate to set aside the impugned order and remand the case back to the file of the AO to be adjudicated afresh de novo in accordance with law after providing due and reasonable opportunity of being heard to the assessee. The AO should also decide the another issues which have been agitated by the assessee in its appeal alongwith the main issues relating to the disallowances of interest u/s 14A of the Act and the expenses while framing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tments had been made by the petitioner in earning tax free income, out of its own interest free funds already available with the petitioner firm. 3. That on the facts and in the circumstances of the petitioner firm's case, the learned Commissioner of income tax (Appeals) 18, New Delhi erred in law and on facts in holding that the assesses has not shown any expenditure attributable to its exempted incomes aggregated to ₹ 60,08,969, however in contrary to that, the learned CIT(A) has herself mentioned in the same paragraph, that the assesses has itself added back ₹ 9,39,077/- therefore only amount of ₹ 24,70,653/- is disallowed from business expenses claim by the assesses as per the provision of section 14A read w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) ₹ 100679 being 20% of depreciation on vehicles of ₹ 503395 and (c) ₹ 12615 being 20% of interest on loan of ₹ 63074, all under section 37(1) of the Act without appreciating inter alia that the amount of depreciation on vehicles and interest on vehicles cannot be considered for disallowance under section 37(1) of the Act. 7. That on the facts and in the circumstances of the petitioner firm's case, the learned Commissioner of income tax (Appeals) 18, New Delhi erred in law and on facts in not considering that there was no long term capital gains of ₹ 394998 arising to the petitioner on the redemption of certain mutual funds during the year, instead there was long term capital loss of ₹ 75466 (af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O asked the assessee to submit the details of interest paid on loan. In response, the submissions of the assessee was that the proportionate interest amounting to ₹ 9,39,077/- has already been added back. The AO observed that the interest amounting to ₹ 34,09,730/- has been specifically paid for the purchase of mutual fund. He, therefore, added the remaining amount of ₹ 24,70,653/- by invoking the provisions of Section 14A of the Act read with Rule 8D(2)(i) of the Income Tax Rules, 1962. The AO also disallowed ₹ 2,25,831/- being one-half percent of the average of value of the investment. The AO disallowed 20% of the expenses incurred on vehicle running maintenance, depreciation and loan for vehicle purchased and ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the orders of the authorities below and reiterated the observation made by them in their respective orders. 8. I have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the AO while making the disallowance u/s 14A of the Act invoked the provisions contained in Rule 8D of the Income Tax Rules, 1962, which is not applicable for the assessment year under consideration as the same is applicable for the assessment year 2008-09 onward. In this regard, it is relevant to point out that the Hon ble Bombay High Court in the case of Godrej and Boyce Mfg. Co. Ltd. Vs DCIT reported in (2010) 328 ITR 81 held that Rules 8D of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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