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2015 (8) TMI 1267 - AT - Income TaxDisallowance of subscription of UP, Co-operative Sugar Factories Federation Ltd. - CIT(A) deleted the disallowance - Held that:- CIT followed his order for the assessment year 2003-04 and allowed the claim of the assessee. In fact the AO in his order disallowed the amount by merely following his order for the assessment year 2003- 04. The department accepted the order of the first appellate authority for the assessment year 2003-04. Under these circumstances we see reason to interfere in the order of the first appellate authority, specifically as the subscription is allowable u/s 37 (1) of the Act. The amount paid as subscription to federation is necessary business expenditure. The necessity / requirement of incurring this expenditure is explained. - Decided against revenue Disallowance of interest paid to federation - Held that:- CIT(A) gave a finding that the assessee has taken loan from Govt. of India and UP Government, for the purpose of business, and that this is evident from the sanctioned letters and hence the interest in question is allowable u/s 36(1). As the interest in question is payable to Govt. Of India and the statement of UP Government, section 43(B)(d) does not apply. - Decided against revenue Disallowance of additional income on the ground that it is in the nature of penalty - Held that:- CIT(A) has rightly held that the expenditure in question i.e additional interest, is a contractual obligation and hence allowable as expenses. He followed his predecessor’s order on the same issue for the assessment year 2002-03 and revenue has accepted this order. Thus we dismiss this ground of the revenue. - Decided against revenue
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