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2018 (10) TMI 1288 - ITAT MUMBAIDisallowance of interest in respect of advances to companies / other concerns - Held that:- The issue of disallowance of interest in respect of advances to companies / other concerns has been subject matter of deliberation from AYs 1993-94 to 2001-02 where the ITAT, after considering relevant submissions and by following the judgement of Hon’ble Supreme Court in the case of S.A. Builders vs CIT[2006 (12) TMI 82 - SUPREME COURT] has restored the matter to the file of the AO for fresh consideration. We set aside the issue to the file of the AO to be considered afresh. Adjustment to closing stock of finished goods - Held that:- We direct the AO to make suitable adjustments towards opening stock in respect of Modvat adjustment made to closing stock of finished goods. Disallowance of pooja expenses - Held that:- Since, the facts involved in this year are identical to the facts which have been considered by the ITAT for earlier assessment years, by following the Tribunal’s order in assessee’s own case, we decide the issue in favour of the assessee and direct the AO to delete disallowance made towards disallowance of pooja expenses. Payments to relatives of deceased employees to be allowed. Disallowance of expenditure in relation to exempt income u/s 14A - Held that:- We find that the co-ordinate bench has considered similar issue for AY 2001-02 wherein by following the decision of Hon’ble jurisdictional High Court in the case of Godrej & Boyce Mfg Co Ltd [2010 (8) TMI 77 - BOMBAY HIGH COURT] has restored the matter back to the file of the AO for fresh consideration. Disallowance of loss on compensation of enforcement of security - deduction u/s 37(1) claimed - Held that:- We do not find any merit in the findings of the AO for the reason that the AO has not denied the fact that the assessee has borrowed loan from M/s ILFS for the purpose of its business. In the process, the assessee has pledged NOCIL shares held by two of its subsidiary companies with the lender for security of loan. As per the contractual agreement between the parties, the assessee has reimbursed loss incurred by two subsidiary companies. Therefore, said loss is incurred wholly and exclusively in connection with the business of the assessee and accordingly, the AO was incorrect in disallowing loss on account of compensation on enforcement of security. Loss claimed by the assessee the assessee has arrived at a loss by taking into account the price of shares of NOCIL as on the date of pledging such shares with ILFS and reduced from the sale price of shares, then the total loss claimed by the assessee can be allowed in total. The facts are not clear. Though the assessee has filed copies of returns filed by two subsidiary companies for AY 2002-03, on perusal of statement of long term capital loss computed by the companies, it appears that the companies have applied the benefit of indexation to arrive at a loss. Therefore, we are of the considered view that the issue needs to be reexamined by the AO for the limited purpose of verification of facts with regard to computation of loss arrived at by the parties in terms of their agreement. Accordingly, we set aside the issue to the file of the AO and direct him to cause necessary enquiries in the light of our discussion hereinabove, after providing reasonable opportunity of hearing to the assessee. Appeal filed by the assessee is partly allowed, for statistical purpose.
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