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2012 (10) TMI 215 - AT - Income TaxDisallowance u/s 14A - 0.5% of average investments yielding tax free income - Held that:- No working on the disallowance are found, and how the assessee has arrived at figure of ₹ 8,16,657/- and how and why 0.5% of average of investment yielding tax free income was excessive. In this sense, it would be appropriate to restore the issue to the file of the AO, as done in the preceding year with a direction, that a reasonable disallowance under section 14A may be arrived at, as per law. Disallowance of prior period expenses - Held that:- As decided in Union Bank of India Vs ACIT [2012 (6) TMI 500 - ITAT MUMBAI] even though such expenses are treated technically as prior period expenses, it relates to a continuous flow of expenditure. Therefore, there is no justification in disallowing the expenditure, otherwise normally eligible for deduction - in favour of assessee. Disallowance of lease premium expenses - Held that:- The claim of expenses made by the assessee have been treated as capital in nature and hence cannot be allowed, has been decided by the Special Bench in the case of JCIT Vs Mukund Limited [2007 (2) TMI 358 - ITAT MUMBAI], as conceded by the AR. Respectfully following the decision rendered by the Hon’ble Special Bench, we sustain the disallowance of ₹ 1,55,20,622/-, as made by the revenue authorities - against assessee. Short allowance u/s 36 - Held that:- CIT(A) erred in not deciding on the issue of short allowance under section 36(1)(viia), based on total income computed by the AO. We, therefore, set aside the order of CIT(A) on this issue and direct the AO to decide the issue afresh - in favour of assessee by way of remand. Disallowance of bad debts claimed - CIT(A) allowed claim - Held that:- As decided in M/s. Vijaya Bank Versus Commissioner of Income Tax & Anr. [2010 (4) TMI 46 - SUPREME COURT] though a mere debit to the profit and loss account would constitute a provision for a bad and doubtful debt, yet that would not constitute actual write off. But where besides debiting the profit and loss account and creating a provision for bad and doubtful debt, the assessee has simultaneously obliterated the said provision from its accounts by reducing the corresponding amount from loans and advances/debtors on the assets side of the balance-sheet, and, consequently at the end of the year, the figure in the loans and advances or the debtors on the assets side of the balance-sheet is shown as net of the provision for “impugned bad debt”, the assessee will be entitled to the benefit of deduction under section 36(1)(vii), as there is an actual write off by the assessee in his books. Disallowance cannot be made on an apprehension that if the assessee failed to close each and every individual account of its debtor, it may result in the assessee claiming deduction twice over - in favour of assessee.
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