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2012 (11) TMI 59 - ITAT, AHMEDABADDisallowance u/s.14A - Held that:- As decided in Maxopp Investment Ltd. & Others Versus Commissioner of Income Tax [2011 (11) TMI 267 - DELHI HIGH COURT] the expression “expenditure incurred” refers to actual expenditure and not to some imagined expenditure - A.O. in the present case A.O. has estimated the expenses at 1.5% of the exempted income. He has not given any finding with respect to the expenditure incurred on administrative-head by the assessee & has disallowed it on adhoc basis - in favour of assessee. Write off of inter-corporate deposit (ICD) - disallowance as the assessee is not in the business of non-banking financing company - Held that:- From the records it can be concluded the assessee had taken the plea that the write off be allowed as business loss or as bad debts. The assessee had not taken the plea of considering the same to be a capital loss and its allowability before the A.O. or CIT (A). This plea is taken for the first time before us therefore the matter of allowability of Rs.75 lakhs as capital loss needs to be examined as it was not examined earlier - matter remitted back to the file of A.O. for its verification and to decide it as per law - in favour of assessee for statistical purposes. Contribution of sponsorship expenses for the construction of Mehasul Bhavan (Collector Office) - Revenue v/s capital - Held that:- As decided in Shri Venkata Satyanarayana Rice Mill Contractors Co. vs. CIT [1996 (10) TMI 2 - SUPREME COURT] any contribution made to the welfare fund was not opposed to public policy and that the same was motivated purely by commercial consideration, and that the deduction was allowable under section 37(1) - as in the present case assessee has paid Rs.20 lakhs for construction of Mehsul Bhavan but the assessee is not the owner of the Asset and has also not acquired any capital asset. The expenses have been incurred for the purpose of business, thus to be allowed as revenue expenditure - in favour of assessee. Write off of obsolete meters - CIT(A) deleted the disallowance - Held that:- The assessee has explained that the three phase electro meters were lying idle since long in the inventory & were was found that they were susceptible to tempering by the customers. The assessee has contacted suppliers for modification of meters but it was found to be not feasible & in the meantime with introduction of electronic meters, mechanical meters became outdated and obsolete - as the assessee follows the policy of valuing inventories after taking into consideration the net realizable value & in the case of inventory written off, the assessee had already considered the salvage value while writing off the obsolete meters A.O. has presumed that 30% value of such meters would be realized in future and accordingly made disallowance, thus disallowance has been made on the basis of presumption and without placing any material on record - in favour of assessee.
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