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2016 (1) TMI 1120 - AT - Income TaxAddition made on account of license fee and spectrum charges while computing book profits u/s 115 JB - Held that:- In view of our finding that the license fee and spectrum charges have to be allowed in full, we delete this adjustment made to the book profit u/s 115 JB of the Act to the extent sustained by the First Appellate Authority. In the result, consistent with the view taken on the issue of allowability of license fee and spectrum charges, we allow the ground of the assessee and dismiss the ground of revenue. Allowability of depreciation - Held that:- Tax depreciation should be allowed to the appellant on the written down value of the assets as reported in the Income Tax return of the respective year. Thus this issue stands settled in favour of the assessee. See Bharat Sanchar Nigam Ltd. Versus Deputy Commissioner of Income And other [2013 (5) TMI 416 - DELHI HIGH COURT]. Adjustment made on account of excess claim of depreciation, while computing book profits u/s 115 JB - Held that:- After hearing rival contentions, in view of our decision in the ground against part disallowance of depreciation, the addition made to the book profits u/s 115 JB of the Act on the ground that there is excess claim of depreciation is hereby deleted. In the result we allow all the grounds of the assessee on this issue and dismiss the revenue’s ground on this issue. Addition on loan granted by the Government of India to the assessee, is a revenue receipt - Held that:- The assessee has not demonstrated before us, that the amount in question, which is a perpetual loan with no liability for repayment of principal or interest, was in fact utilised for acquisition of capital assets. The purpose of the loan is to establish telephone services in rural areas. As no evidence is produced, we uphold the order of the revenue authorities on this issue. The contention of the assessee that the A.O. for the A.Y. 2011-12 has treated a similar amount as received on capital account does not persuade us to reverse the order of the Ld.CIT(A) for the reason that, the addition is based on the fact of non filing of the required evidences. Hence we dismiss this ground of the assessee Adjustment made by adding the above said loan granted by the Government of India while computing book profits u/s 115 JB - Held that:- No such adjustment can be made to the profits determined under Schedule VI of the Companies Act, as the item in question i.e. loan received from government is not that which is specified in Explanation II to S.115 JB of the Act. In our view reliance placed by the assessee on the judgement of Hon’ble Apex Court in the case of Apollo Tyres reported in (2002 (5) TMI 5 - SUPREME Court ) applies in this case. Disallowance of interest on MTNL Bonds - Held that:- In view of the MOU between the BSNL and Govt. Of India, the genuineness of the expenditure cannot be doubted. The expenditure incurred is for the business of the assessee and hence the same was rightly directed to be allowed by the First Appellate Authority. In the result we uphold the order of the First Appellate Authority and dismiss this ground of the Revenue. Addition on reversal of excess income booked in earlier years cannot be reversed this year - Held that:- We are of the view that as the fact that the income in question is not recoverable and that i is written off is not in dispute. The Ld.CIT(A) was right in allowing the claim of deduction of reversal of income. Hence this ground of the Revenue is dismissed. Disallowance made by the A.O. u/s 43B on account of provision made for gratuity - Held that:- The assessee had submitted before the revenue authorities that there is no liability for gratuity payable by the assessee company and hence there is no question of providing for such expenses. The Ld.CIT(A) held that such submission does not have any sanctity, unless the same is verified. The Ld.CIT(A) refused to admit additional evidence produced by the assessee on the ground that the assessee failed to rectify the error found during the course of assessment. In our view the First Appellate Authority should have admitted the additional evidence and verified the claim of the assessee that there was an error in the tax audit report. When the assessee has not been put to notice about this particular disallowance, the question of the assessee replying to the allegation during the course of assessment proceedings does not arise. In the result this ground is set aside to the file of the AO for fresh adjudication. Disallowance of expenses on the ground that they are capital in nature - Held that:- we are of the considered opinion, that the Ld.CIT(A) should have admitted the additional evidence under Rule 46A, as the assessee was not put to notice of this disallowance to be made by the A.O. When the assessee has pointed out that in the tax audit report the actual figure is ₹ 11.32 lakhs, it is not correct on the part of the Ld.CIT(A) to confirm the disallowance made by the A.O. of ₹ 113.26 crores. In view of the above discussion, we set aside the matter to the file of the AO for fresh adjudication, in accordance with law, after considering the evidence to be produced by the assessee. Disallowane of gift - Held that:- We are unable to uphold the adhoc disallowance of 20% of the total expenditure by the Ld.CIT(A). The Ld.CIT(A) should have allowed the entire expenditure for the reason that he recorded that the assessee’s accounts were subject to CAG audit, statutory audit, internal audit, tax audit etc. and that there was no adverse observation in any of these audits etc. As there is no justification for the Ld.CIT(A) to retain disallowance of 20%, we delete this disallowance and allow this ground of the assessee. Disallowance u/s 14A of the Act r.w.Rule 8D - Held that:- Admittedly the assessee has no exempt income during the year. Hence no disallowance can be made u/s 14A
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