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2017 (1) TMI 1435 - AT - Income TaxLeave encashment - Held that:- This tribunal in assessee’s case itself for preceding assessment year has upheld the very disallowance. He however points out that the impugned sum includes opening balance of the above leave encashment head amounting to ₹ 2,04,973/- as already disallowed in immediate preceding assessment year. The Revenue fails to rebut this factual position. We thus direct the Assessing Officer to pass consequential order ensuring that the very sum does not face double disallowance in preceding as well as the impugned assessment year. This first substantive ground is accordingly partly accepted for statistical purpose. Interest disallowance from 7.25% of the average cost of borrowing - Held that:- See CIT Vs. Raguvir Synthetics, (2013 (7) TMI 806 - GUJARAT HIGH COURT) holding that interest free advances in case of a sister concern have to be appreciated from commercial expediency point of view instead of maximum profits angle. We thus adopt the very reasoning herein as well to accept the instant substantive ground. Addition of write of business advances - Held that:- Lower authorities have not even adverted to nature of assessee’s advances as to whether the same amounts to a trading loss or business loss nor do they discuss each and every advance had recorded in books of accounts. The Revenue is fair enough in making a limited plea that the Assessing Officer could be directed in such facts to ascertain the true character of each and every transaction before coming a conclusion of allowability of trading or business loss. We thus direct the Assessing Officer to re-decide the issue afresh as per allow after affording adequate opportunity of hearing to the assessee. This ground is partly accepted for statistical purpose. Disallowance of loss caused due to fire - Held that:- The assessee is very much entitled to claim the impugned loss caused by fire in this assessment year itself and the same is indeed in the nature of an accrued liability. The Assessing Officer is accordingly directed to allow the impugned claim of loss caused due to fire amounting to ₹ 2.34 crores in question. Research and development expenses - Held that:- The impugned weighted deduction under section 35(2AB) would not be disallowed for the purpose of expenditure prior to issuance of form 3CM. We repeat that the assessee’s case rather stands on a better footing since the impugned expenditure is post-facto form 3CM as approved in form 3CL hereinabove qua almost the entire expenditure amount. We further find that a coordinate bench in ACIT Vs. Torrent Pharmaceuticals [2009 (11) TMI 819 - ITAT AHMEDABAD] also holds that once an assessing officer accepts revenue expenditure claim, the very sum eligible for impugned weighted deduction. Learned departmental representative does not rebut the above factual and legal position. We thus accept assessee’s arguments qua the latter head of revenue expenditure disallowance for the purpose of section 35(2AB) weighted deduction. The Assessing Officer shall accordingly frame consequential assessment. Disallowance of section 80IB deduction - Held that:- Allow the assessee’s deduction claim under section 80IB of the Act on consequential assessment. Disallowance of claim of deduction pertaining to non-compete fee paid to M/s.Apollo Hospitals Ltd. - Held that:- Non-compete fees results in acquisition of business of commercial right under section 32(1)(ii) of the Act entitled for depreciation relief. We thus accept assessee’s arguments and direct the Assessing Officer to allow depreciation claim on assessee’s above non-compete fees as per law. Addition provision of doubtful debts by invoking section 115JB explanation 1(i) - Held that:- Learned counsel fails to rebut application of the above specific clause in the facts of the case as pertaining to provision of diminution of value of its investment as stated in the CIT(A)’s order. We thus reject assessee’s instant limb of substantive ground in question. Addition under section 115JB for disallowance u/s 14A by invoking explanation 1(f) of the former statutory provisions - Held that:- CIT Vs. Alembic Ltd. [2017 (1) TMI 513 - GUJARAT HIGH COURT] upholding tribunal’s view restricting the impugned addition to the extent of section 14A disallowance only. We repeat that we have confirmed the said disallowance to the extent of exempt income of ₹ 7680/- only. We thus direct the Assessing Officer to confine the impugned addition upto the sum involved of ₹ 7680/-.
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