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2021 (10) TMI 162 - ITAT DELHITDS u/s 194H - Addition u/s 40(a)(ia)- assessee has paid Bank Guarantee Commission to Scheduled Banks approved by RBI - HELD THAT:- As decided in M/S NALWA STEEL AND POWER LTD [2021 (6) TMI 66 - ITAT DELHI] considering the Notification No. 56/2012 dated 31.12.2012 so-called bank guarantee commission is not in the nature of commission paid to an agent but it is in the nature of bank charges for providing one of the banking service. The requirement of Section 194H of the Act, therefore, would not arise. In the present case it is one of the banking services provided by the Scheduled Banks to the assessee as per the norms of the RBI. It cannot be said to be a "commission" as intended to u/s 194H of the but it is in the nature of Bank charges charged by the bank for provision of services to the assessee. Now this issue has been decided in M/S. LARSEN & TOUBRO LTD. [2018 (12) TMI 991 - BOMBAY HIGH COURT] as well as per Notification No. 56/2012 of the CBDT the said provisions will also applied to earlier period than the date of issue of notification. Appeal of the assessee allowed. Addition on account of accrued interest - real income theory - taxation of hypothetical income - assessee was following mercantile system of accounting and the arbitration award give a right to the assessee to charge simple interest @ 5% per annum on the amount of advance given to M/s Karsan till the date of payment - HELD THAT:- As decided in own case [2017 (5) TMI 485 - DELHI HIGH COURT] the notional interest awarded by the International Court of Arbitration, which has now attained finality is a hypothetical income which cannot be subjected to tax. Merely because the said amount has been awarded by way of an order, does not mean that the assessee has received such income. The assessee followed mercantile system of accounting where there cannot be a situation of hypothetical income being taxed - since no part of the principal amount could actually be recovered by the Assessee, there was no ‘real income’ and the question of adding any notional accrued interest to its income on such amount does not arise. - Decided against revenue. Disallowance of demurrage and wharfage charges - Scope of provision of the Railway Act, 1989 and Explanation 1 to Section 37(1) - CIT-A deleted the addition - HELD THAT:- As decided in own case [2017 (5) TMI 485 - DELHI HIGH COURT] question already stands answered in favour of the Assessee and against the Revenue by the judgment of this Court in Mahalaxmi Sugar Mills Company [1984 (5) TMI 6 - DELHI HIGH COURT]and of the Allahabad High Court in Nanhoomal Jyoti Prasad v. Commissioner of Income Tax [1979 (8) TMI 38 - ALLAHABAD HIGH COURT] - Decided against revenue. Addition of write-off value of slow moving stores and spares - scope of provisions of section 145 - assessee is not allowed to adopt any Accounting Standard of its choice as and when it deemed to be beneficial to it - CIT-A deleted the addition - HELD THAT:- As decided in own case [2017 (2) TMI 1226 - DELHI HIGH COURT] there is nothing on the record to doubt the bonafides of the valuation. In the event of likelihood of the stocks realizing higher amount than the value shown, the same would be reflected in the subsequent year in the income or profit of the assessee, the Revenue’s contention is without any merit - no reason to subscribe and uphold the AO’s adverse observations that the change in method of valuation was without basis. In fact the observations of the CAG in this case led to the change and adoption of AS-2, which was not previously resorted to. Disallowance on account of excess depreciation claimed on UPS (Uninterrupted Power Supply) - UPS as an integral part of computer - HELD THAT:- As decided in own case [2011 (7) TMI 1202 - ITAT DELHI] we uphold the order of the learned CIT(A) in accepting the assessee’s claim of depreciation @ 60% on UPS and LAN/WAN. Disallowance u/s 14A - HELD THAT:- As in the absence of any exempt income, disallowance under Section 14-A of the Act of any amount was not permissible. The decision in Cheminvest Limited[2015 (9) TMI 238 - DELHI HIGH COURT] was followed - as no exempt income was earned during the year, thus, disallowance u/s 14A of the Act will not be applicable. Additional depreciation claimed u/s 32(1)(iia) - HELD THAT:- The electricity has been held as good as per the decision of the Hon’ble Apex Court in case of State of Andhra Pradesh vs. NTPC [2002 (4) TMI 694 - SUPREME COURT] - To deny the benefit of additional depreciation to a generating entity on the basis that electricity is not an article or thing is an artificially restrictive meaning of the provision. Thus, the benefit of additional depreciation under Section 32(1)(iia) has to be granted to the assessee and w.e.f 01.04.2013, the provision has been amended by the Finance Act, 2012 wherein the assessees engaged in the generation of power have expressly been included in the ambit. Thus, the CIT(A) rightly deleted the disallowance. Addition on account of repair and maintenance expenses - CIT-A deleted the addition - HELD THAT:- It is pertinent to note that disallowance made by the Assessing Officer is an ad-hoc disallowance. The submission of the Ld. AR that there is no estimate that the annual repair and maintenance should be in consonance with the percentage of sales, is accepted as the Assessing Officer has not given any particular reason on why the said expenses has to be disallowed on ad-hoc basis. The contention of the Ld. DR that Section 37 (1) was not properly followed is also not correct to say as the details of the expenses were before the Assessing Officer which was totally ignored by the Assessing Officer. Thus, the CIT(A) rightly deleted this disallowance. Expenditure actually incurred on the Corporate Social Responsibility - HELD THAT:- These expenditure was incurred in compliance of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014. This can be seen from the records itself produced during the assessment proceedings by the Assessee. Thus, these expenditure were incurred as the statutory obligation of the assessee. The case laws referred by the Ld. AR are applicable in the present case. In fact, the Explanation 2 to Section 37(1) will be applicable in the Assessment Year 2015-16 and not that of present Assessment Year i.e. 2014-15. Thus, Ground Nos. 2(i) and 2(ii) of the Assessee’s appeal is allowed.
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