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2013 (10) TMI 277 - AT - Income TaxDisallowance u/s 14A of the Income Tax Act – Held that:- If there are funds available both interest free and overdraft and/or loan taken, then a presumption would arise that investments would be out of interest free funds generated or available with the company, if the interest free funds were sufficient to meet the investments - Looking at the facts in the present case, since the shareholders funds are far in excess of the investments, it can be presumed that investments are out of interest free shareholders funds and therefore no disallowance on account of interest can be made in the present case – Decided against the Revenue. Allowance of de-merger expenses of Rs. 1,66,666/- - Held that:- There is a break up of de-merger expenditure amounting to Rs. 3,27,332/- - Same has to be borne by Madhusudan Oils and facts Ltd. is not available from details filed - Fact remains that this is a capital expenditure which is required to be disallowed - At the same time, in view of clear provisions of law appellant's claim of deduction u/ 35DD has to be allowed - If 50% is borne by Madhusudhan Oils and Fats Ltd. then the Assessing Officer would take the balance of Rs. 1,63,666/- for the purpose of section 35DD and allow 1/5th of the same – Decided partly against the Revenue. Prior period expenses allowability – Held that:- Appellant have four divisions where the net figure after adjustment of prior period expenses had been worked out. However, while examining the same, the Assessing Officer has made a mistake to the extent of taking the net figure where short provision of earlier years have also been written back and adjusted with provisions made relating to earlier years expenses – Only expenditure related to prior period is disallowed - Therefore, out of disallowance of Rs. 5,17,785/-, Rs. 2,10,807/- is hereby confirmed.
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