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2016 (10) TMI 196 - ITAT KOLKATACess on green leaf - whether it is allowable expenditure or not? - Held that:- As decided in CIT-vs- AFT Industries Ltd. [2004 (7) TMI 81 - CALCUTTA High Court] the assessee should have been allowed cess on green leaf by the AO - Decided against revenue Subsidy received - whether taxable as income of the Assessee u/s 41(1) or income from other sources - Held that:- There is no dispute of the amount on subsidy received, is taxable as income of the assessee under section 41(1) of the Act. The subsidy under consideration is a operative expenses/ direct expense of the business, therefore, it should be shown under the head ‘income from business or profession’ only. It is always open for the assessee to raise new ground which was not raised by the assessee before the AO. Addition u/s 14A - Held that:- As the assessee had sufficient own funds to finance its investment and the AO failed to establish the linkage and the nexus between exempt income and the expenditure incurred by the assessee. Apart from this, the AO has not recorded any satisfaction with regard to provision of section 14A read with rule 8D. Therefore, we are of the view that the addition made by the AO under rule 8D (2)(ii) ₹ 44,85,098/- should be deleted. So far the addition by the ld. AO under rule 8D(2)(iii) at ₹ 12,30,089/- is concerned, it is towards general and administrative expenses which normally a company incurs while making investment decision. In the investment decisions, the Board of Directors of the companies are involved and the finance department is also involved therefore, there should be some expenditure. Therefore, there are certainly some expenses which the company might have incurred to earn the exempt income. Therefore, the disallowance made by the ld. AO under rule 8D (2) (i) ₹ 100,000/- and Under Rule 8D(2)(iii) at ₹ 12,30,089/- is confirmed by us and the addition made under rule 8D(2)(ii) amounting to ₹ 44,85,098/- is deleted.
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