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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 ..... es of phosphorous, trading, leasing and hire purchase, bill discounting and financing. During the course of scrutiny assessment for the A.Y.2008-09, the AO made disallowance u/s.14A r.w.r 8D. While assessing income u/s.115JB, AO added the amount disallowed u/s.14A r.w.r. 8D. 4. Learned AR invited our attention of the working furnished by the assessee with regard to the amount offered for disallowance u/s.14A r.w.r.8D. Our attention was also invited to the STT paid by the assessee in the A.Y. 2009-10 to 2011-12. Attention was also invited to the bifurcation of the exempt income in the form of dividend on shares, dividend on mutual funds and long term capital gains. 5. It was vehemently argued by learned AR that disallowance so offered by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome 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 Rs. 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded any satisfaction for invoking Rule 8D and for A.Y. 2010-11 & 2011-12 not recorded any objective satisfaction. 10. We also found that dividend from Mutual Fund as a percentage of total dividend income as under:- A.Y.2008-09 85.57% A.Y. 2009-10 89.26% A.Y.2010-11 95.80% A.Y.2011-12 95.43% 11. Assessee has suo-moto disallowed STT expenses over and above 14A disallowance computed by assessee. However the AO has mechanically proceeded to compute the notional disallowance under Section 14A read with Rule 8D. Rule 8D can be invoked only if the AO, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee. For this proposition, reliance can be placed on Godrej & Boyce Mfg. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 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 four years under consideration, following the reasoning given hereinabove, we restore the disallowance made under Rule 8D back to the file of the AO for deciding afresh in terms indicated hereinabove. 15. Assessee is also aggrieved for disallowance u/s.115JB r.w.s. 14A and r.w.r 8D. 16. At the outset, learned AR placed on record the order of the ITAT Special Bench in case of Vireet Investment Pvt. Ltd., in ITA No.502/Del/2012 dated 16/06/2017, wherein issue has been decided in favour of the assessee. Our attention w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rials. The assessee was asked to furnish the details and copy of Board Resolution authorizing the write off of obsolete stock. On perusal of the minutes of the meeting furnished by the assessee company, the AO observed that the company has resolved to write off stores materials as obsolete amounting to Rs. 15,35,101/- in its profit and loss account for the year ended 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of asset. As per amendment brought in by Finance Act, 2009, the same is required to be added back u/s.115JB of the Act. Accordingly, he made an addition of Rs. 15,35,101/- to the book profit u/s.115JB of the Act. 21. We have considered rival contentions and found from record that during the A.Y.2008-09, the assessee claimed expense of Rs. 15,35,101/- on account of write off of obsolete stores materials. The write off was pursuant to Board resolution dated 01/09/2008. As per Board resolution write off was of items 5-7 years old belonging to plant whose operations were closed. Same was made on the basis of engineer's and auditor's report. A.O. added the said write off under normal computation of income as well as u/s. 115JB as diminuti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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