AMBIKA GHORPADE,BELLARY vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, BELLARY

This appeal by assessee is directed against order of NFAC for the assessment year 2014-15 dated 10.10.2023 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”).

The first ground for our consideration is with regard to disallowance u/s 14A read with Rule 8D of the Income Tax Rules, 1962. 2.1 The ld. A.R. submitted that the assessee has earned exempt income to the tune of Rs.31,600/- only by way of dividend. As such, the disallowance made u/s 14A of the Act at Rs.4,05,636/- is unjustifiable and same to be deleted.

Next ground in this appeal is with regard to disallowance of following expenses incurred by assessee u/s 37(1) of the Act: a) Entertainment expenses - Rs.29,306/- b) Repairs & Maintenance expenses - Rs.4,65,822/- c) Travelling expenses - Rs.5,26,795/- 4.1 In the assessment year under consideration, these expenses were disallowed by AO on the reason that the assessee is engaged in Mining activities, which is not categorized as “C” Category and in the assessment year under consideration assessee was not permitted to carry on Mining operation. According to ld. AO, assessee has not incurred expenditure wholly and exclusively for the purpose of business. However, the NFAC noted that assessee has not substantiated its expenditure and disallowed the same and the same has been confirmed by the NFAC. 4.2 Before us, ld. A.R. submitted that due to non-permission by the Government, assessee has not carried on mining business in the assessment year under consideration. However, the assessee has continued to be in business and required to incur this expenditure. Further, it was submitted that observation of the NFAC that assessee