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2011 (1) TMI 923 - AT - Income TaxInterest income whether taxable on due or receipt basis - the ld. AR submitted that the Special Bench has decided this issue in assessee’s favour - ground is allowed Regarding deduction u/s 14A - in the case of Godrej & Boyce Mfg. Ltd. v. DCIT (2010 -TMI - 78448 - BOMBAY HIGH COURT) - held that disallowance of expenses is called for u/s.14A in such circumstances. However, the manner of computation of such disallowance has been restored to the file of AO for making on some reasonable basis. It has further been held in this case the provisions of Rule 8D are prospective - Appeal is allowed by way of remand Regarding deduction u/s 44C - head office expendtiture - Revised return - AO, while finalizing the assessment, noted that the said expenditure of Rs.2,18,99,306 was in the nature of general administration expenses and thus restricted it within the limits prescribed u/s.44C of the Act - it would be relevant to note that broadly there may be two types of head office expenses, viz., those incurred by the head office in common to be shared by the benefitting branches and those incurred exclusively for the Indian branch - It is in this context that the report of the TPO is relevant, which has elaborated on the correctness of the allocation of these expenses. The TPO was verifying whether the allocated costs claimed by the assessee were really incurred for its business and whether these were backed by some relevant evidence - It cannot be the converse situation to argue that the existence of the primary evidence should be presumed from such report, which is again not specific - Even if such remittance is proved in the succeeding year, the inclusion of such amount in the overall limit for sec. 44C will be justified The next two items of allocation of which have not been allowed by the TPO are out of allocation of general and administration costs, being Advertising at BD 3,390 and Others at BD 6,641 - It is not a case where the Head Office did not raise any invoice or debit note in respect of such expenses - It is made clear that the AO will work out the amount deductible u/s 44C afresh as per law by considering sum total of items (‘B’) and (‘C’) and shall not restrict himself only to the claim originally made by the assessee in the return - Appeal are allowed for statistical purpose
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