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2014 (11) TMI 12 - AT - Income TaxReversal of provision for revaluation of liability Held that:- The assessee has revalued its liability to M/s. Ambalal Sarabhai Enterprises Ltd. (ASE Ltd.) and increased the same by ₹ 28,23,735 - in normal parlance such increase in liability is not an expense incurred wholly and exclusively for the purposes of business and is therefore not allowable as deduction to the assessee - on similar revaluation made during the year when a debit has arisen in the profit and loss account because of write back of the liability which was written down in earlier year, such debit amount in the profit and loss account to the extent to which it was assessed as taxable income in the AY 1996-97 ought to be allowed as deduction as business loss to the assessee - when no cessation or increase in real liability takes places then the taxable income of the assessee is not effected merely because of passing entry of revaluation of liability in the books of the assessee - when no cessation of liability took place in the AY 1996-97 when the assessee by a book entry reduced its liability on revaluating the amount of reduction was treated by the Department as taxable income of the assessee and therefore when to that extent when liability is again enhanced by the assessee in its books of account, the enhanced amount is to be allowed as deduction from taxable income on the very same analogy - ₹ 28,23,735/- enhanced as liability during the year being part of ₹ 82,47,082/- which was reduced as liability during the AY 1996- 97 and assessed as taxable income of the assessee for that AY thus, the order of the CIT(A) is modified Decided against revenue. Disallowance u/s 14A Held that:- No material was brought on record by the assessee to show that the investments in shares of M/s. Paras Petrofills Ltd. were not made out of interest bearing funds of the assessee and that the assessee had sufficient interest free funds for making such investments in shares there was no reason to interfere with the order of CIT(A) Decided against assessee. Confirmation of adhoc disallowance out of staff welfare expenses Held that:- CIT(A) confirmed the action of the AO - assessee contended that the disallowance was made without pointing out the items of the expenses in respect of which the assessee had not maintained the vouchers and therefore, the AO is not justified in making disallowance of expenses on ad-hoc basis - AO has not pointed out for which items of the expenditure the assessee has not maintained the vouchers Decided in favour of assessee. Payment made to employees contribution to the Provident Fund and ESI Held that:- Following the decision in CIT v. Gujarat State Road Transport Corporation, [2014 (1) TMI 502 - GUJARAT HIGH COURT] - if the assessee has not credit the employees' contribution to the employees' account in the relevant fund or funds on or before the due date mentioned in the Explanation to section 36(1)(va), the assessee shall not be entitled to deduction of such amount in computing the income referred to in section 28 thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO Decided in favour of revenue. Disallowance out of vehicle expenses Held that:- The tax is payable to the RTO for plying of vehicle on the road - Till immediately preceding year, the RTO was collecting tax every year and only in this year the RTO decided to levy life time tax on the vehicle of the assessee which was already used by the assessee and was not a case of acquisition of any new vehicle - By making this payment the assessee has not acquired any new asset - By making this payment to the RTO, the assessee is entitled to ply vehicle on road without which the assessee would not be able to ply the vehicle on road - the collection of road tax by RTO as one time payment was revenue expenditure the order of the CIT(A) is upheld Decided against revenue.
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