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2016 (10) TMI 1249 - AT - Income TaxDeemed dividend addition u/s 2(22)(e) - transfer of shares of UPL and UEL owned by the assessee-company to NCPL as gift - HELD THAT:- it is not a case of distribution of accumulated profits to its shareholders. It is an undisputed fact that NCPL per se is not a shareholder in the assessee-company. - Transfer transaction of shares of UPL & UEL by the assessee-company to the NCPL constitutes the "gift transaction" and also they are outside the scope of section 2(22)(a) of the Act. Further, the CIT (A) is not justified legally to issue certain directions to the AO to apply the provisions of section 115-O of the Act in respect of NCPL as the same is not before the CIT (A). - Decided in favour of assessee. Disallowance u/s 14A - HELD THAT:- In case, if interest free funds are found available, he presumption of use of interest free funds for investment in the dividend yielding shares is required to be honoured. We order AO accordingly. As such, no case is made out by the assessee that the Assessing Officer erroneously applied the provisions of clause-(iii) of Rule 8D(2) of the IT Rules, 1962. Therefore, the order of the CIT (A) on this issue stands. Thus, Ground no.1 raised by the assessee is allowed in the above mentioned manner. Addition in respect of transactions reported in AIR qua the interest income - HELD THAT:- Addition made by the AO and confirmed by the CIT (A) is required to be deleted ads if in case of double taxation in both the AYs. Relevant facts and conclusions of the CIT (A) in this regard are given in paras 6.1 to 6.3 of the CIT (A)'s order. As per the assessee, interest income accrued from the Bank of Baroda is ₹ 4,53,453/- and the same is credited to the P & L Account on the basis of the entries appearing in the bank statements. However, in Form No.26AS, an amount of ₹ 4,68,250/- was reflected. Assessee claims that as per the principle of mercantile system of accounting, which is consistently followed by the assessee, an excess amount was offered. Assessee further submitted that when the amount shown in Form No.26AS is lesser, in such cases the addition of ₹ 14,797/- is uncalled for. - Decided in favour of assessee. Disallowance in respect of advances written off - HELD THAT:- Revenue disallowed the claim of the assessee for want of evidence that the said advances are given in ordinary course of business of hat merged companies. Para 7.3.2 of the CIT (A) order is relevant in this regard. herefore, we are of the opinion, the matter is required to be remanded to the file of he AO for fresh adjudication. We order accordingly and direct the AO to examine he issue in the light of the above said precedents and facts of the case. Further, in our view, the assessee is under obligation to explain the fulfilment of the conditions specified in the said conditions. Addition of purchases -Evidences provide before AO - Power of CIT(A) HELD THAT:- It is an undisputed fact that the items purchased were already partly sold and partly shown in the closing stock account. Relevant documents and bank transactions are undisputed by the Assessing Officer. There is no direct evidence suggesting the hawala nature of the transactions. The GP related errors were also not identified. In these circumstances, we are of the opinion the directions of the CIT (A) who does not have power of setting aside the matter are unsustainable in principle. As such, here is no case of making additions by the AO on this account. Considering the above factual matrix of the case, we are of the opinion, ground no.2 raises by the assessee is required to be allowed.
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