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2014 (4) TMI 1097 - AT - Income TaxDisallowance of interest - interest free advances given by the assessee to its other group companies - CIT(A) deleted the disallowance - Held that:- The relevant advances having been given by the assessee to its subsidiary company wholly and exclusively for the purpose of its business, the disallowance of interest attributable to the said advance was not justified. Following this Third Member decision for A.Y. 1989-90, the Tribunal has consistently decided a similar issue in favour of the assessee in the subsequent years up to A.Y. 2002-03. As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to that of the earlier years, we respectfully follow the decision rendered by the Tribunal in assessee’s own case for the earlier years and uphold the impugned order of the ld. CIT(A) deleting the disallowance - Decided in favour of assessee. Disallowance of interest amount on share application pending allotment - A.O. alleging that there was diversion of borrowed funds by the assessee for non-business purpose - CIT(A) deleted the disallowance - Held that:- In A.Y. 1995-96, it was held by the Tribunal that there being no diversion of interest bearing funds for non-business purpose as alleged by the A.O., there was no justification in making any disallowance on account of interest paid on the borrowed funds. It was noted by the Tribunal that the share application money was finally returned to the assessee with interest @ 19% and the interest so received was duly offered by the assessee in the relevant year. A similar view has been taken by the Tribunal in the subsequent years i.e. assessment years 1996-97 to 2002-03. As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to the earlier years, we respectfully follow the orders of the Tribunal for the said years and uphold the impugned order of the ld. CIT(A) giving relief to the assessee on this issue. - Decided in favour of assessee. Disallowance of expenditure on the replacement of carpets - Held that:- A similar disallowance on account of expenditure incurred by the assessee on replacement of carpets was made by the A.O. treating the same as capital expenditure in the earlier years and the Tribunal consistently gave relief to the assessee by holding the expenditure on replacement of carpets as revenue expenditure - Decided in favour of assessee. Expenditure incurred on the replacement of linen - CIT(A) treated as Revenue expenditure instead of capital expenditure - Held that:- This issue is similar to the issue relating to the assessee’s claim for deduction on account of expenditure incurred on replacement of carpets and the same has also consistently decided by the Tribunal in favour of the assessee in earlier years. Respectfully following the orders of the Tribunal in assessee’s own case for the earlier years upto A.Y. 2002-03 on a similar issue, we uphold the impugned order of the ld. CIT(A) allowing the deduction claimed by the asssessee - Decided in favour of assessee. Transfer pricing adjustments - Held that:- No justifiable reason to interfere with the impugned order of the ld. CIT(A) deleting the TP adjustment made by the A.O./TPO in respect of the international transactions involving availing of sales promotion services by the assessee from its AE in US. CIT(A) has erred in excluding operating fee and receipt from Taj Lounge from total receipts of business for computing deduction u/s 80HHD without appreciating that the said receipt being part of total receipts of the business cannot be excluded from the purview of total receipts for the purpose of computation of deduction
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