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2020 (7) TMI 283 - ITAT KOLKATADisallowance u/s 14A r.w.r. 8D - HELD THAT:- As the interest free funds are in excess of the investments, the presumption that arises is that interest free funds have been invested in investments which do not yield taxable income as held in the case of CIT vs. Reliance Utilities & Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT]. We find no infirmity in the order of the ld. CIT(A). Thus, we uphold the deletion of the disallowance made under Rule 8D(2)(ii) of the Rules. Disallowance made under Rule 8D(2)(iii), CIT(A) has directed the AO to consider only those investments which have earned dividend during the year for the purpose of computation of disallowance under the Rules. This direction is in line with the propositions of law laid down in the case of CIT vs. M/s. REI Agro Ltd. [2014 (4) TMI 713 - CALCUTTA HIGH COURT] and in the case of Vireet Investment Pvt. Ltd. [2017 (6) TMI 1124 - ITAT DELHI]. Thus, we see no reason to interfere with the direction of the ld. CIT(A) on this issue. Thus we dismiss ground no. 1 of the Revenue. Allowability of deduction us. 80IA - HELD THAT:- Assessee is a developer, and not merely a works contractor and is eligible for deduction u/s. 80- IA. Accordingly, the claim for deduction u/s. 80-IA(4) is hereby allowed. Disallowance of employees’ contribution to PF & ESI - HELD THAT:- This issue is covered in favour of the assessee by the judgement in the case of PCIT vs. Rajasthan State Beverages Corporation Ltd. [2017 (7) TMI 1087 - SC ORDER].Thus we dismiss this ground of the Revenue. Deductibility of the provision for future losses - Revenue’s contention is that these are unascertained liability and hence not deductible - HELD THAT:- AO has merely rejected the claim of the appellant by calling it a contingent and unascertained expenditure. However, as per the discussion, in the various decisions discussed above it has been held that applicability of AS-7 is acceptable. In this case it has been argued that as the unbilled revenue has been offered for taxation therefore the provision for future losses, as per AS-7 should be allowed. The AO has not pointed out any defect in the estimate or application of AS-7. In fixed price contracts, the appellant having credited all its revenue, as per the contract, has to provide for all the foreseeable expenses which it is bound to incur as per the contract. The accounting standard AS-7 provides for such an eventuality. In view of the facts discussed above it is observed that the; company has followed AS-7 and has debited the future losses - deduction for Future loss is allowable. Disallowance u/s 14A of the Act while computing book profits u/s 115JB - HELD THAT:- This issue is covered in favour of the assessee by the order of the Tribunal for the AY 2011-12 in assessee’s own case as well as the judgement of the Special Bench of the Delhi Tribunal in the case of Vireet Investment Pvt. Ltd.. [2017 (6) TMI 1124 - ITAT DELHI]
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