2018 (4) TMI 1952

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....ises two substantive grounds in the instant appeal. Its first grievance is that the CIT(A) has erred in confirming GP addition of Rs.1,74,945/- @ 28.96% on AUDA and electric connection charges expenses of Rs.6,04,095/- in lower appellate proceedings vide following detailed discussion:- "4.3. I have considered the facts of the case and submission made by the appellant. The AO has made addition of Rs.6,71,481/- being additional G.P. on construction activity. The AO has observed that in the working of work in progress (WIP) of construction account the assessee has not taken all the expenditure having a direct bearing on the WIP to arrive at the value of WIP of Bungalows sold by the assessee to his clients. Out of the total direct expe....

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....ready forming part of WIP of earlier years and G.P. on these have already reflected as income of the respective years is not verifiable. Therefore, the action of the A.O is correct. In the alternative the appellant has contended that there is a mistake in quantifying the amount of the addition at Rs.6,71,481/-. The appellant has contended that the AO has held that the G.P. @28.96% should also be applied to expenses such as AUDA charges of Rs.4,96,436/- and electric connection charges of Rs. 1,07,5597- aggregating to Rs.6,04,095/-. The appellant has submitted that applying G.P @28.96% on the aggregate amount of Rs.6,04,095/- works out to Rs.1,74,945/- and not Rs.6,71,481/- as quantified by the A.O. The appellant has contended that this mista....

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....tion as per the relevant facts in preceding assessment year. The assessee therefore fails in his former substantive ground. 5. We are now left with assessee's latter issue of correctness of section 14A read with rule 8D of disallowance of Rs.1,27,549/- qua its exempt income of Rs.63,889/- . 6. There is no dispute about the fact that both the lower authorities have applied rule 8D whilst computing the impugned disallowance as applicable from assessment year 2008-09 onwards. The hon'ble apex court recent decision in Maxopp Investment Ltd. vs. CIT, [2018] 91 taxmann.com 154 (SC), settles the law that relevant expenditure in case of exempt income has to be apportioned between taxable and non-taxable income. The assessee's arguments theref....