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2011 (4) TMI 792 - AT - Income TaxDeduction of bonus disallowed - Amendment to section 43B - Bonus paid prior to the due date of filing of return of income u/s 139(1) - Held that:- In view of judgment of CIT v. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] deletion of second proviso to section 43B by Finance Act, 2003 is retrospective and it would operate with effect from 1-4-1988 - Accordingly, the amount paid before the date of filing of the return u/s 139(1) is not hit by disallowance u/s 43B - No doubt, the assessee is required to furnish evidence of such payment along with the Income-tax return but then in the present case, the return was filed on 24-10-2005 and the bonus payment is made after the date of filing of the return i.e., 30-10-2005 - substantive requirement is payment within the time permissible for filing of Income-tax return u/s 139(1) and furnishing the evidence is a procedural requirement. The evidence of payment was duly furnished before the CIT(A)- Decided in favour of assessee. Payment of donation - exemption u/s 80G - Held that:- It is noted that the assessee has paid ₹ 5,000 towards donation for temple construction but no proof of exemption, under section 80G, was filed at any stage of proceedings - Against assessee. Deduction of interest on borrowed fund - Held that:- Since, the assessee is quite justified in contending that no part of the interest paid on borrowings could be treated as having been used for the purposes of investments, and, accordingly, no disallowance u/s 14A can be made in respect of the same. The disallowance in respect of interest is deleted - Having held so, however, a reasonable portion of management expenses can indeed be disallowed under section 14A, and for that limited purpose and for fresh adjudication in the light of principles laid down in the case of Godrej & Boyce Mfg. Co. Ltd. v Dy. CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT], the matter is restored to the file of the Assessing Officer. Indexation benefit denied - loss on sale of preference shares - Held that:- Second proviso to section 48 provides that, "where long-term capital gain arises from the transfer of a long-term capital asset, other than capital gain arising to a non-resident from the transfer of shares in, or debentures of, an Indian company referred to in the first proviso, the provisions of clause (ii) shall have effect as if for the words "cost of acquisition" and "cost of any improvement", the words "indexed cost of acquisition" and "indexed cost of any improvement" had respectively been substituted" - Once shares are specifically covered by indexation of costs, and unless there is a specific exclusion clause for ‘preference shares’, it cannot be open to the Assessing Officer to decline indexation benefits to preference shares. Net profit as per clause (iii) to Explanation 1 to section 115JB - Held that:- The Authority for Advance Ruling, not being a part of the judicial hierarchy, cannot lay down a binding precedence for anyone - the revenue, the assessees or the appellate authorities - It was not open to the CIT(A) to simply brush them aside on the ground that the issue is covered against the assessee by an AAR ruling - The CIT(A) was, therefore, clearly misguided in treating the matter as covered against the assessee by the AAR ruling - He ought to have decided the matter on merits and by way of a speaking order dealing with all the contentions of the assessee by way of a speaking order.
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