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2010 (11) TMI 665 - AT - Income TaxPayment on account of compensation for delayed deliveries - held that:- the disallowance of Rs.4,12,260/- on account of liquidated damages on the basis of reason given by the assessing officer is not sustainable - order of CIT(A) upheld. Direct cost of installation - amount paid to worker for executing installation work - no vouchers/hotel bills/receipts worth the name are forth-coming to justify the expenses - Held that:- Dis allowance is unwarranted - decided in favor of assessee. Payment of guarantee commission - u/s 40A(2)(b) - Held that:- When ABB Holdings stood as a guarantor for the assessee for availing of credit facility which has not been disputed either by the AO or the first appellate authority, the legitimate claim of guarantee commission paid - that too at 0.6% - cannot be denied on a flimsy ground - Therefore, of the firm view that the AO was not justified in disallowing the claim and also the stand of the Ld. CIT(A) in sustaining such a disallowance - It is ordered accordingly. Provision for warranty written back during the year - held that:- the issue is remitted back on the file of the AO with a specific direction to look into the grievance of the assessee and to take appropriate action in accordance with the law - While doing so, the AO shall keep in view and ensure that the said sum of Rs.9.16 lakhs is not subjected to be taxed twice - It is ordered accordingly. Finished product - information about the yield of finished produce, percentage of yield, shortages were not given in Annexure XVII (Clause 28(b)(A) of the Tax audit report. - Held that:- Since the AO had not brought any documentary proof to suggest the basis on which addition of Rs.5 lakhs has been made that too on an ad-hoc basis - It was well settled that no addition could be made on an ad-hoc basis which doesn't stand the testimony of law - Therefore, decided in favour of assessee. Debts written off -As per the Hon'ble highest judiciary of the land in its recent verdict in the case of T.R.F. Ltd. v. CIT (2010 -TMI - 76626 - SUPREME COURT), observed that - after the amendment of section 36(1)(vii) of the Income-tax Act, 1961, with effect from April 1, 1989, in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable; it is enough if the bad debt is written off as irrecoverable in the accounts of the assessee - Decided in favour of assessee. Co-ordination expenses for the projects - it is abundantly clear that the Revenue has not disputed the bonafide of the expenditure - The only grouse of the Revenue is that this expenditure pertains to prior period - However keeping in mind the concept of materiality, held that the denial of expenditure for Rs.3,65,054 being too meagre comparing to the operations of the company is unwarranted - It is ordered accordingly. Misc. expenditure - Hence, the CIT (A) was of the view that the details of Misc expenditure was provided in pages 224 to 228 of the Paper Book - The same were perused. In fact, it is part of schedule 20, however, the vouchers were neither produced before the AO or before me - It is pleaded that vouchers were not shown because it was not asked for which seems only a plea negated by the Para 12 of the assessment order - The identical issue was raised by the Revenue alleging that the Ld. CIT (A) erred in sustaining only 50% as against 100% of disallowance on miscellaneous expenditure - Thus, upheld the finding of the CIT (A) on this count - Decided against of assessee. Capital loss - Provision made for diminution in the value of investment in Gujarat Investments Ltd. - As per the Hon'ble Gujarat High Court in the case of CIT v. Jaykrishna Harivallabudas [1997 -TMI - 17111 - GUJARAT High Court], considered that the assessee is entitled to avail the benefit of capital loss and, accordingly, the issue is remitted back on the file of the AO to address to the grievance of the assessee and to take appropriate action in accordance with the provisions of the Act, of course, after affording an opportunity to the assessee of being heard - Hence, ordered accordingly.
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