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2012 (12) TMI 189 - AT - Income TaxDis-allowance u/s 14A - expenses attributable to exempt income - Held that:- Admittedly, assessee was having sufficient interest free funds to cover the investment made in shares of which income is exempt u/s 10. In case of CIT vs. Hero Cycles Limited (2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT ) it has been held that disallowance u/s 14A is not permissible where no nexus between the expenditure incurred and income generated has been established. If the investment is made out of the assessee’s own interest free funds, no disallowance can be made u/s 14A - Decided in favor of assessee Depreciation on trucks used for its own business for transportation of milk from collection centre to the processing plants of the assessee company - higher depreciation @ 30% as claimed by assessee or 15% - Held that:- Issue is squarely covered in favour of the Revenue by the judgment in the case of CIT vs. Anupchand & Co.(1999 (6) TMI 25 - MADHYA PRADESH HIGH COURT ) Dis-allowance of deduction u/s 80-IB - AO on observation that assessee was having two units (deduction is available u/s 80IB on Kosi unit) and and utilise common funds to earn income, apportioned income between two units on sale basis and dis-allowed deduction in respect of Dholpur unit - Held that:- CIT(A) rightly rejected the AO’s formula of apportion method of other income on the basis of sale between two units on observation that once the assessee is maintaining separate Profit & Loss account for the unit on which section 80-IB is available, deduction u/s 80-IB is to be calculated accordingly - Decided against Revenue Dis-allowance of deduction u/s 80-IB in respect of other income viz Insurance claim, other charges, interest received, miscellaneous receipts and scrap sales - Held that:- Insurance claim in respect of receipt/income on goods damaged in transit is eligible for deduction u/s 80-IB, however insurance claim of car is rightly disallowed. Deduction u/s 80-IB - Held that:- In respect of other charges it is observed that these are petty amounts on account of difference in sale bills which is pertaining to the assessee’s business and such petty receipts are income derived from Industrial Undertaking. Therefore, deduction u/s 80-IB is allowed. Deduction u/s 80-IB - Interest received - Held that:- Interest income accrued to the assessee, from investment in bank could not be treated as income derived from Industrial Undertaking merely because the original nucleus funds which had yielded the interest came from an Industrial Undertaking. Deduction u/s 80-IB - Miscellaneous receipts comprising of cancellation charges against supply order of SMP and income transfer from H.O v- Held that:- Cancellation charges against supply order is income derived from Industrial Undertaking. Therefore, the same is allowable u/s 80IB. Other petty amount of transfer from HO is treated to be same nature. Deduction u/s 80-IB - Scrap sales - Held that:- Scrap sale is income derived from Industrial Undertaking and allowable u/s 80IB Addition on account of interest attributable to the payment of Income Tax - increase in interest cost presumed to be towards payment of huge income tax - Held that:- Assessee was having sufficient own funds, therefore, such lump sum disallowance on presumption basis is not warranted. Therefore, the same is deleted. Addition towards capital work-in-progress - lump sum dis-allowance on presumption basis that the borrowed fund has been used for the purpose of capital work-in-progress - Held that:- Issue is squarely covered in favour of the assessee by the judgement of the Apex Court in the case of DCIT vs. Core Health Care Limited (2008 (2) TMI 8 - SUPREME COURT OF INDIA). Dis-allowance of deduction u/s 80IB on the ground that the assessee made purchase of finished goods and sold the same - Held that:- A.O. had disallowed the claim of the assessee u/s 80-IB on presumption basis without determining the exact amount of disallowance. It is not the case of the A.O. that the said amount is not from the Industrial Undertaking. Such disallowance of deduction u/s 80IB is not sustainable in law.
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