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TMI Blog2017 (7) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... nted under Rule 8D having regard to the guidelines laid down by the Hon’ble Supreme Court in the case of Godrej And Boyce Mfg. Co. Ltd [2017 (5) TMI 403 - SUPREME COURT OF INDIA] Disallowance u/s.115JB r.w.s. 14A and r.w.r 8D. - Held that:- We direct the AO to recompute the income u/s.115JB(2) with reference to the disallowance sought u/s.14A r.w.r.8D, in terms of the detailed discussion in the order of the Special Bench in the case of Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI]. Addition of obsolete stock written off - Held that:- In the instant case before us it is not clear as to whether the items wrote off were part of plant and machinery and forming part of block of assets or same was in the nature obsolete stock having no marketable value, we therefore, restore the matter back to the file of AO for deciding afresh after considering the nature of obsolete stock. We direct accordingly. X X X X Extracts X X X X X X X X Extracts X X X X ..... nt determination, as earlier prevailing, would become applicable. 6. On the other hand, learned DR relied on the order of the lower authorities. 7. We have considered rival contentions and carefully gone through the orders of the authorities below. From the record, we found that during the course of scrutiny assessment, AO made an addition of ₹ 47,52,634/- to the returned income by applying the provisions of Rule 8D read with Section 14A of the Act. The A.O. has discussed the issue in para 4 of the assessment order. During the curse of assessment proceedings, the assessee company was asked to furnish details of expenses incurred for earning exempt income and also to show cause as to why the expenses incurred and claimed in respect of exempt income should not be disallowed as per the provisions of Section 14A read with Rule 8D. We found that assessee has furnished detailed working and offered disallowance of ₹ 9,90,000/-, ₹ 6,93,852/-, ₹ 2,41,311/- and ₹ 9,91,574 for the A.Y.2008-09, 2009-10, 2010-11 & 2011-12 respectively. 8. In the working so furnished and placed at page 26,22,3 and 16 of the paper book of the respective assessment years, nowhere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Rule 8D is that he must record his dissatisfaction with the correctness of the claim of expenditure made by the assessee or with the correctness of the claim made by the assessee that no expenditure has been incurred. It is only when this condition precedent is satisfied, that the AO is required to determine the amount of expenditure in relation to income not includable in total income in the manner indicated in Rule 8D(2). Furthermore, in view of the judicial pronouncements Section 14A read with Rule 8D is not applicable to investments which have not yielded any exempt income. Hence, while computing Rule 8D such investments must be excluded. 13. Keeping in view the totality of facts and circumstances of the case and applying the proposition of law laid down by Hon'ble Bombay High Court, part of which has been affirmed by the Hon'ble Supreme Court, we restore the matter back to the file of the AO for deciding afresh the disallowance warranted under Rule 8D having regard to the guidelines laid down by the Hon'ble Supreme Court in the case of Godrej And Boyce Mfg. Co. Ltd., in its order dated 08/05/2017. We direct accordingly. 14. Similar grounds have been taken in all the fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 31.03.2006. The said Board Resolution was passed on 01.09.2008. AO observed that the write off was only on account of diminution in the value. The AO held that such reduction was in the nature of provision for diminution in the value of asset and hence cannot be claimed as deductible from the profits. As the assessee company followed mercantile system of accounting, the AO was of the view that any event occurring after the closure of the balance sheet has no bearing on the profitability of the year ending on 31st March, 2008. It was only for the purpose of claiming deduction that the materials were claimed to have been written off in the AYr.2008-09. He further held that mere writing off of the stock in the books of accounts cannot be allowed for computing the income and that there has to be something positive to show that the value had become negligible in the year of claim of deduction and that it is only when the material has been disposed off that there can be any justifiable claim for deduction. Relying on the decision in the case of CIT v/s. Herdilla Chemicals Ltd. reported in 225 ITR page 532, AO held that the assessee company had not brought anything on record to indicate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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