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2012 (7) TMI 587 - AT - Income TaxDisallowance under section 14A - investment made by the assessee in the shares totaling ₹ 3.01 crores - Held that:- where a business strategy had been adopted by the assessee by way of investment in shares of sick company in order to take over the said company for widening its operation of business, cannot be held to be investment per se - as the assessee has no intention to earn any dividend from the said investment as the company in which the amount was invested was running into losses - Rule 8D are applicable from assessment year 2008-09 and are not retrospective and year under appeal is assessment year 2006-07 - in favour of assessee. Disallowance under section 36(1)(iii) of the interest expenditure - Held that:- In the case of the assessee where it has mixed funds available for its business activity, the plea of the assessee that it had interest free funds available for the purposes of advancing to its subsidiary cannot stand - transfer of funds in the range of ₹ 5 lacs from month to month also does not justify the plea of commercial expediency - against assessee. Disallowance on account of interest capitalized for the period prior to putting the assets to use - Held that:- Considering the facts and circumstances of the case where the assessee has failed to establish its case of availability of non-interest bearing funds and specially in view of the mixed pool of funds available with the assessee no merit in the present ground of appeal raised by the assessee - against assessee. Dis allowance of deduction u/s 80IB/80IC on AMC charges - Held that:- as AMC charges received by the assessee are directly relatable to the business carried on by the assessee of manufacturing, commissioning and erection of cooling system and consequently the assessee is eligible to the claim of deduction u/s 80IB/80IC - in favour of assessee. Dis allowance of deduction u/s 80IB/80IC on bad debts recovered - Held that:- The amount received on recovery of bad debts is income derived from industrial undertaking and as the outflow of bad debts written off is allowable as a deduction while computing the income of the industrial undertaking eligible for deduction under section 80IB/80IC consequently, the inflow of the amount of bad debts recovered is includible as profits of eligible unit, on which deduction under section 80IB/80IC is claimed - in favour of assessee. Dis allowance of deduction u/s 80IA - Held that:- assessee is entitled to the benefit of deduction under section 80-IA both on the manufactured items and the bought out components, used for the erection of cross flow (XE series) and counter flow (CM series) cooling tower and is not entitled to any deduction under section 80-IA on Round Bottle (RB) Cooling Towers and bought out components used for erection of Round Bottle Cooling Towers - partly in favour of assessee. Dis allowance of deduction u/s 80IB/80IC on bought out components - Held that:- Even after assembling the unit the assessee was also providing the services by the AMC of the said unit in entirety and we find no merit in the observation of the Assessing Officer to the contrary - in favour of assessee. Charging of interest u/s 234B and 234C being consequential is dismissed - in favour of assessee.
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