Appeal allowed for business expenses, directs verification for regular business income, not additional income.

The Tribunal allowed the appeal regarding the disallowance of business expenses, directing the AO to consider and allow the claim of the assessee for expenses as regular business expenses after verification. The Tribunal emphasized that these expenses were incurred against regular business income, not the additional income declared during the survey. The appeal was allowed for statistical purposes. The issue of disallowance under section 14 A r.w. rule 8D was dismissed as it was not pursued during the appeal, highlighting the importance of proper verification and merit-based allowance of expenses.

---

---

Issues: Disallowance of business expenses, Disallowance under section 14 A r.w. rule 8D

Issue 1: Disallowance of Business Expenses
The appeal was against the disallowance of business expenses amounting to Rs.19,19,182/- after the declaration of additional income of Rs.30 lakhs during a survey. The assessee, engaged in the business of builders & developers, recognized revenue based on the method of accounting under section 145 of the Income-tax Act. The AO disallowed the expenses, alleging they were an afterthought, and the Ld.CIT(A) upheld this decision. However, the Tribunal referred to a previous decision in a similar case and held that the expenses should be allowed after verification. The Tribunal emphasized that the expenses were regular business expenses incurred during the post-survey period against regular business income, not against the additional income declared during the survey. Therefore, the Tribunal set aside the Ld.CIT(A)'s decision and directed the AO to consider and allow the claim of the assessee for the expenses as regular business expenses on merit after necessary verification. The Tribunal allowed the appeal for statistical purposes, following the precedent set in similar cases.

Issue 2: Disallowance under Section 14 A r.w. rule 8D
Ground No. 2 of the revised grounds of appeal, relating to disallowance under section 14 A r.w. rule 8D, was not pressed by the ld. AR of the assessee. As a result, the Tribunal dismissed this ground as not pressed, indicating that the issue was not pursued during the appeal.

In conclusion, the Tribunal allowed the appeal for statistical purposes regarding the disallowance of business expenses, following the precedent set in similar cases. The issue of disallowance under section 14 A r.w. rule 8D was dismissed as it was not pressed during the appeal. The Tribunal's decision emphasized the importance of considering expenses as regular business expenses incurred during the post-survey period against regular business income, highlighting the need for proper verification and merit-based allowance of such expenses.

---