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2013 (9) TMI 535 - AT - Income TaxDisallowance of Commission - Held that:- similar commission was allowed by the A.O. in A.Y. 02-03, total turn over had gone up during the year - The Board had increased the salary on the basis of extensive knowledge, business skill, managerial experience and capability increasing in net profit and commercial expediency - The Revenue had not brought any material on record which contradicts the factual finding of the year under consideration to A.Y. 03-04 – Decided in favour of Assessee. Disallowance of Deduction u/s 80IA - Held that:- The market value for electricity would be one at which it was supplied by GEB to other assessees inclusive of duty - Therefore, the rates taken by the assessee for the purpose of supplying electricity from CPP unit to general unit is upheld. The assessee succeeds on this point - Following ACIT vs. Jindal Steel & Power Ltd.[2007 (6) TMI 308 - ITAT DELHI ] - the market rate postulated by section 80IA (viii) shall be the price at which the assesses purchases electricity from the Electricity Board - the market value postulated by the provisions of section 80IA shall be the price at which the assessee purchases electricity from Electricity Board and not the one which is fixed by the legislative mandate – Decided in favour of Assessee. Adjustments u/s 145A - Addition on Account of Modvat Credit in Opening Stock and Closing Stock – Held that:- Section 145A has been amended and as per Section all the taxes or cess whatever name it was called is to be added in the valuation of the closing stock in preparing the accounts of the appellant – Following COMMISSIONER OF INCOME TAX Versus MAHAVIR ALLUMINIMUM LTD. [2007 (11) TMI 41 - HIGH COURT, DELHI] - The A.O. only added excise duty / modvat credit in purchase, sale and closing stock but had not allowed any adjustment in opening stock – decided in favour of Assessee. Addition of Book Profits u/s 115JB – Dividend Stripping u/s 94(7) – Held that:- As per Section 94(7), any loss on security or unit was to be ignored for the purposes of the computing his income chargeable to tax where the transactions made within a period of 3 months prior to the recorded date and sales these securities within 3 months or within 9 months after such date. Ld. A.O. had given details of security purchased and sold in the assessment order, which were made within 3 months before the recorded date - The Explanation (f) of Section 115JB was clearly applicable in case of the appellant - The amount or amounts of expenditure relatable to any income to which [Section 10 (other than the provisions contained in Clause (38) thereof) or Section 11 or Section 12 applied] is to be increased by him – Decided against Assessee. Notional Disallowance u/s 14A – Interest Expenses u/s 115JB - The matter had been already allowed by the CIT(A), particularly, on the calculation of interest which had been accepted by the ld. Counsel in his argument. Therefore, the issue was restored back to the A.O. to re-calculate the disallowance as per the submission made by the appellant - The appellant had borrowed funds which were interest bearing - Therefore it can be said that if there were surplus funds then the appellant could have reduced its interest burden and by not doing so it was very clear that the interest bearing funds were in fact utilized for the purpose investment and therefore the disallowance of interest for earning of dividend income u/s.14A is in order. Disallowance of Depreciation - Held that:- The appellant had changed the method of depreciation in A.Y. 02-03, which had been accepted by the department - Now he had changed the method of depreciation from SLM to WDV method on Vareli as well as Jolva power plant - As per sub-section 2 of Section 115JB, the appellant can adopt the method and rate for calculating the depreciation, this shall be same as have been adopted for the purpose of preparing such account including P&L Account and laid before the company at its annual general meeting in accordance with the provisions of Section 210 of the Companies Act, 1956, which was conducted on 28.09.2004 by the Management - on adjustment u/s. 115JB, it was held that the A.O. doesn't have any power to make adjustment except provided in Section 115JB itself - Thus, we direct the A.O. to calculate thebook profit u/s. 115JB on the basis of depreciation WDV method.
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