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2023 (5) TMI 957 - AT - Income TaxDeduction u/s 35(2AB) - 100% of capital expenditure incurred on in-house R&D facility - Assessee unable to substantiate its claim that the capital expenditure pertained to Research and Development - HELD THAT:- CIT(A) has given a categorical finding of fact, while denying assesses claim of 100% capital expenditure incurred on research and development as per section 35(1)(iv) assessee was unable to substantiate its claim of having incurred capital expenditure for Research and Development. In the absence of any representation on behalf of the assessee, the said finding of fact by the CIT(A) has remained uncontroverted before us. No reason to interfere in the order of the Ld.CIT(A) denying assesses claim of 100% deduction of capital expenses incurred on Research and development u/s 35(1)(iv) - Also since the assesses claim of having incurred capital expense is not established its alternate claim of allowance of depreciation on the same also is not tenable. Decided against assessee. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- DR was unable to either controvert the facts relating to the issue that the exempt income earned by the assessee nor was he able to controvert the legal proposition that disallowance u/s 14A of the Act could not exceed exempt income. As noted the decision of Corrtech Energy Ld. [2014 (3) TMI 856 - GUJARAT HIGH COURT], disallowance u/s 14A of the Act cannot exceed the exempt income - in the absence of the ld.DR being able to controvert the finding of the ld.CIT(A), either on facts or in law, we therefore, see no reason to interfere in order of the ld.CIT(A) deleting the disallowance u/s 14A to the extent of Rs.1,58,643/-. Disallowance of prior period expenses - CIT-A deleted the addition noting that the AO has not doubted genuineness of the expenditure, and if it is not allowable in the impugned year, it is to be allowed in the earlier year and the entire exercise is revenue neutral - HELD THAT:- DR was unable to distinguish the decisions relied upon by the ld.CIT(A)for the proposition that the disallowance of prior period expenses being a tax neutral exercise no disallowance was warranted, while deleting the disallowance - in the absence of the ld.DR being able to controvert the finding of the ld.CIT(A), either on facts or in law, we see no reason to interfere in order of the ld.CIT(A) deleting the disallowance of prior period expenses. Disallowance of deduction u/s.80JJA - whether assessee fulfilled the conditions required under the law for claiming deduction under section 80JJA, i.e. whether it used bio-degradable waste for producing biological agents as claimed by the assessee? - CIT-A allowed entire claim of deduction - HELD THAT:- DR has been unable to point out any infirmity in the finding of the ld.CIT(A) that items purchased by the assessee, classified as bio-feed, did qualify as biodegradable waste as defined in section 80JJA and item produced by the assessee from these bio-feed i.e. enzymes, qualified as “biological agents” as required by section 80JJA, and that the basis of allocation of expenditure by the assessee between the units and eligible for deduction under section 80JJA of the Act and not eligible for deduction 80JJA adopted by the assessee was consistent and correct. The ld.DR having unable to disturb the finding of the ld.CIT(A) either on facts and or in law, we see no reason to interfere in the order of the ld.CI(A) allowing the assessee’s entire claim of deduction under section 80JJA of the Act. MAT - disallowance made under section 14A while computing MAT income as per the provisions of section 115JB - HELD THAT:- We find that the issue on hand is no more remain res integra because in the case of ACIT vs. Vireet Investments (P.) Ltd [2017 (6) TMI 1124 - ITAT DELHI] held that disallowance under section 14A of the Act shall not apply to MAT computation. In holding so, the Tribunal has relied upon the decision of Hon’ble Delhi High Court in the case of Bhushan Steel Ltd [2015 (9) TMI 1424 - DELHI HIGH COURT] where it has been held that the computation under the MAT provisions is to be made without resorting to the computation as contemplated under section 14A read with Rule 8D of the Income Tax Rules. Disallowance of interest u/s.36(1)(iii) - Sufficiency of own funds - CIT-A deleted the addition - HELD THAT:- Undoubtedly, there is no evidence with the AO to controvert that the borrowed money was utilised for the purpose of advance for nonbusiness purposes. We are satisfied that the assessee has substantial amount own funds in the form of reserve/ surplus which the assessee could utilise for giving advances. In the absence of any contrary material with the AO to negate the claim of the assessee, we are unable to disturb the finding of the ld.CIT(A) on the above. Assessee’s claim of expenditure under section 36(1)(iii) of the Act is to be allowed. Decided against revenue.
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