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2010 (12) TMI 581 - AT - Income TaxDisallowance - Deduction u/s. 80 HHC – Hence, the issue is covered in favour of the assessee by the Hon'ble Supreme Court judgement in the case of Ajanta Pharma Ltd v CIT, 327 ITR 305(SC) - Therefore, direct the Assessing officer to grant deduction of Rs. 78,85,986/- on account of deduction u/s. 80 HHC in computation of book profit under section 115JB as was claimed by the assessee. expenditure on catalysts - lease rentals - since the matter has not reached finality inasmuch as the issue has traveled in appeal before the higher forum, it is necessary to keep the grievance alive as a measure of abundant caution. In view of the facts submitted by the learned counsel for the assessee, the grievances so raised above must be dismissed as infructuous at this stage. Sundry balances written off – As per the Hon'ble Supreme Court judgement in the case TRF Ltd vs CIT (323 ITR 397), wherein, the Hon'ble Supreme Court has held that a mere write off of the debt is enough to claim deduction as bad debt and that the assesse is required to establish that amounts have actually become bad, the assesse must succeed in his claim - Decided in favour of assessee. Disallowance u/s. 40A(2)(b) - the assesse pointed out, that both the related enterprises are in the highest tax brackets and even it is assumed that the market price is unreasonable or excessive, such transaction will be entirely tax neutral – Hence, there is lesser motive for manipulating price on which related organisations entered into transactions -Ffind it difficult to approve the disallowance sustained by the CIT (A) because not only that the authorities below are completely disregarded the quality aspect but also,any variation in transaction price on the given facts is tax neutral and, therefore, there is no good reason to do so – Thus, direct the AO to delete the disallowance. Disallowance u/s.14A - The disallowance @ 10% for the proportionate management expenditure indeed appears to be excessive inasmuch as no reasons have been assigned by any of the authorities below to demonstrate any direct expenses incurred for earning the dividend income or to demonstrate that such a higher percentage of overall expenditure can indeed be attributed to the activities relating to earning of dividend income-particularly it is not even the case of the revenue that any borrowed funds have been used in making the investment - Therefore, direct the Assessing Officer to restrict the quantum of disallowance to 2% of the dividend income - The assesse gets relief accordingly
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