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2017 (5) TMI 1491 - AT - Income TaxTP adjustments - Held that:- The proportionate adjustment, as presented before us during the hearing of appeal, is within permissible limits of 5% and hence no TP adjustment is required to be made. Accordingly, we decide the first effective ground of appeal in favour of the assessee Disallowance u/s. 35 - Held that:- This issue should be restored back to the file of the AO for fresh adjudication, in the interest of Justice. He is directed to verify the claim made by the assessee in light of the evidences produced before us. In case he is of the opinion that the claim made by the assessee cannot be allowed u/s. 35, then he should consider the availability of the expenditure u/s. 37 or section 32 of the Act. Second effective ground of appeal is decided in favour of the assessee, in part. Disallowance of of bad debts - AO did not allow the claim made by the assessee holding that the sale proceeds of the assessee were reduced from the block off assets and were never treated as revenue receipt - Held that:-The AO had given a finding of fact that the sale proceeds were never treated as revenue receipt in books of accounts. Nothing was brought over notice to controvert the fact. Therefore, in our opinion the amount should be added back to the WDV and the assessee should be allowed depreciation accordingly. Fourth effective ground of appeal (GOA-9 and 18) is allowed, in part. Addition of liquidated damage - Held that:- Liquidated damage received by the assessee were penal in nature and has been rightly assessed under the head income from other sources. - Decided against the assessee. Allowability of unabsorbed depreciation and un-utilised scientific research allowance of the amalg-amating company and set off and carry-forward of business losses and unabsorbed depreciation of the earlier years in case of amalgamated company - Held that:- We decide the issue of carry forward of losses/unabsorbed depreciation of the AY. s. 1997-98 to AY. 2001-02 in favour of the assessee. Similarly, we hold that losses of the amalgamated company for the preceding eight assessment years has to be allowed as per the law and the unabsorbed depreciation is to be allowed as per amended provision of section 32 (2) and in line with the decision of the Hon’ble Bombay High Court in the case of Hindustan Unilever (2016 (7) TMI 1245 - BOMBAY HIGH COURT). Last effective ground of appeal is decided in favour of the assessee.
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