2017 (6) TMI 777

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....s under:- i. The Assessing Officer has erred in adding the disallowance u/s 14A of Rs. 1,79,709/- when no administrative expenses have been incurred or debited to the profit & loss account. Even CIT(A)-7 has not given any relief but directed the A.O. to give opportunity to the appellant and rework the disallowance but the CIT(A) - 7 has not given his finding but send it back to the A.O. ii. The assessing officer has erred in disallowing PMS fees deductable in working out the short term capital of Rs. 1,27,640/-. The PMO fees has not been written off to the profit and loss account, but incurred to improve the investment in shares, the CIT(A) (7) has up held the view of A.O. without giving his view at all. ....

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.... that since no expense has been incurred, disallowance u/s 14A or Rule 8D is not called for. 3.3 The learned DR relies on the order passed by the learned CIT(A). 3.4 We have heard the rival submissions and perused the relevant material on record. In the instant case, the assessment year is 2007- 08. We find that the AO has worked out the disallowance u/s 14A r.w.r. 8D. The same rule is not retrospective as it was notified on 24/03/2008 and would be applicable only from AY 2008-09. In Godrej & Boyce Mfg. Co. Ltd. (supra), it has been held that Rule 8 D is not retrospective. The Hon'ble Bombay High Court in CIT vs. M/s. Godrej Agrovet Ltd vide Income Tax Appeal No. 934 of 2011, dated 8.1.2013, has held that percentage of the exempt inco....

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....e disallowance of Rs. 4,48,137/-. 5.2 Before us, the learned counsel of the assessee submits that the rate adopted by the A.O. @ 9% on the pretext that the interest paid to Union Bank of India is at 8.71% whereas the actual rate paid to the said bank is 13.06%. The calculation filed by the learned counsel is extracted below: Total interest paid to Union Bank of India Rs.3,76,947/- Financial charges due to exchange fluctuation (please refer to the addition to the fixed assets schedules against item containers) Rs.1,13,190/- Total cost of funds (interest) Rs.4,90,137/- Average amount of loan outstanding Rs.37,52,678/- % of interest to average loan 13.06% Interest paid to Director and Relatives 13% &nb....