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2014 (1) TMI 1699 - AT - Income TaxDisallowance u/s 14A - Held that:- As the entire interest expenditure is attributable to business in which the income is assessable to tax, such interest expenditure cannot be considered for the purpose of proportionate disallowance as per Rule 8D. In the light of these findings of learned CIT(A) that entire borrowed funds on which interest was paid were used for business purpose and no portion was used for making investment, the amount of interest expenditure cannot be considered for proportionate disallowance under Rule 8D. Out of total disallowance made by the Assessing Officer u/s 14A of ₹ 67.75 lac, the disallowance of Rs. 66.79 lac is out of interest expenditure and therefore, to this extent, the disallowance is deleted. The remaining disallowance of ₹ 0.96 lac is on account of other expenditure to the extent of 0.5% of average value of investment this part disallowance of ₹ 0.96 lac is confirmed. - Decided partly in favour of assessee Disallowance of interest claimed u/s 36(1)(iii) - CIT(A) deleted the addition - Held that:- Respectfully following the earlier Tribunal order in assessee’s own case, we decide this issue in favour of the assessee and against the Revenue. addition on account of valuation of closing stock - CIT(A) deleted the addition - Held that:- Respectfully following the earlier Tribunal order in assessee’s own case, we decide this issue in favour of the assessee and against the Revenue. Disallowance of expenses incurred on transmission line and contribution paid to UPPCL - CIT(A) deleted the addition - Held that:- The finding given by learned CIT(A) is confirmed as that the assessee has right to use the power line for transmitting power generated in its factory to UPPCL but it would not enjoy ownership right on the asset. He has also given a finding that the ownership on the asset would be with UPPCL in future. He has also given a finding that the assessee acquired right to make use of the asset for facilitating efficient conduct of its business and making it more profitable but without getting any advantage of enduring benefit to itself and, therefore, the assessee did not acquire any asset. On the basis of these findings, it was held by learned CIT(A) that the expenditure was of revenue nature. See L. H. Sugar Factory Pvt. Ltd. (1980 (8) TMI 1 - SUPREME Court) - Decided against revenue Computation of book profit u/s 115JB - Held that:- In our considered opinion, as per clause (f) of Explanation 1 to section 115JB, the amount or expenditure relatable to any income to which section 10 or section 11 or section 12 apply (excluding section 10(38), such expenditure has to be added back. Hence, we do not find any force in this contention of learned A.R. of the assessee that the disallowance made by the Assessing Officer u/s 14A cannot be added for computing book profit. However, regarding the amount of such disallowance to be added into book profit u/s 115JB, we find that since the disallowance u/s 14A has been upheld by us only to the extent of ₹ 0.96 lac, for the purpose of computing book profit u/s 115JB also, only this much amount should be added on account of disallowance u/s 14A. We hold accordingly. This ground is partly allowed.- Decided partly in favour of assessee
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