2019 (2) TMI 1932

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....9,70,000/- u/s 40A(2)(b) of the Income Tax Act, 1961. 2. Without prejudice to Ground No. 1 above, the Commissioner of Income tax (A) VI, has erred in law as well as in fact in enhancing the disallowance made by AO u/s 40A(2)(b) of the Income Tax Act, 1961. The enhancement made by the Commissioner of Income Tax (A) VI be deleted. 3. Without prejudice to Ground No. 1 and 2 above, in the facts and circumstances of the case, the disallowance be restricted to a reasonable amount. 4. In the facts and circumstances of the case, the Commissioner of Income Tax (A) VI, has erred in law as well as in fact, in confirming the addition u/s 14A for Rs. 55,386/- even when no expenses are actually incurred to earn the said exempted income. 5. In....

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....f commission of Rs. 9,90,000/- instead of ad-hoc disallowance. 5. Aggrieved with the said decision of the CIT(A), the assessee is in further appeal before the Tribunal with above extracted grounds of appeal. 6. Referring to grounds no.1, 2 and 3, ld. Counsel submitted that this is a case where the Assessing Officer disallowed a sum of Rs. 1,48,500/- at the rate of 15% of commission paid of Rs. 9.90 lakhs, debited to the Profit and Loss Account, invoking the provisions of section 40A(2)(b) of the Act. The CIT(A) disallowed the entire claim under the said provisions. However, neither of the officials have gathered any comparable cases of such transaction of payment of commission in order, to demonstrate that the payments made by the ass....

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....d no.4 relates to the disallowance of Rs. 55,386/- u/s 14A of the Act read with Rule 8D(2)(ii) of the I.T. Rules, 1962. While Rs. 50,225/- disallowing under clause (ii) of Rule 8D(2) of the Rules, Rs. 5161/- was disallowed under clause (iii) of Rule 8D(2) of the Rules. As per the discussion given in para 6.1 to 6.3 of the assessment order, the Assessing Officer made addition of Rs. 55,386/-. During the assessment proceedings, the Assessing Officer noted that the assessee earned exempt income by way of dividend and PPF interest amounting to Rs. 55,293/-. The CIT(A) directed the Assessing Officer to delete the disallowances and rework the same. The contents of para 6.1 to 6.2 of the order of the CIT(A) are relevant in this regard. For the sak....