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2012 (7) TMI 736 - AT - Income TaxGrant reliefs as per the BIFR’s order - DR submitted since the department was not made a party to the BIFR proceedings, therefore no effect can be given to the same - Held that:- Wherever the order of the BIFR in an approved scheme of reconstruction/rehabilitation directs that the reliefs be allowed under the Income Tax Act the effect to such orders be given immediately. It is only when BIFR recommends that the relief under Income Tax Act 1961 may be considered by the Central Government and the Department is not a party or no chance is given to the department to support its views, then the effect of BIFR recommendations is to be given only after such recommendations are considered by the CBDT - An examination of the BIFR order shows that the same is directory and not recommendatory in nature. Further after the original order was passed by the BIFR on 16-12-1999 the department has objected for not giving any opportunity for which the BIFR issued notice for draft modification. Despite such opportunity given the department sought adjournment which was not accepted by the BIFR and passed the final order on 19-08-2003. Therefore, it cannot be said that the department was not given any opportunity - direction given by the BIFR is binding on the Assessing Officer - merit in the submission of the learned counsel for the assessee that if the reliefs are denied now the department has to provide a solution to the assessee as how to undo the amalgamation - in favour of assessee. Dis allowance of Expenditure incurred for earning dividend income - Held that:- There is no finding given by the AO that assessee has incurred any expenditure on account of interest on borrowed capital for earning the tax free dividend income. Further the submission of the assessee that the assessee has received only 5 dividend cheques amounting to Rs. 4.11 Crores could not be controverted by the learned DR.Thus disallowance of 5% of the dividend income is unjustified - order of the learned CIT(A) restricting the disallowance to Rs. 50,000/- on adhoc basis appears to be reasonable.
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