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2013 (12) TMI 360 - AT - Income TaxDisallowance out of depreciation and disallowance out of travelling, repairs, insurance expenses – The assessee-company has discontinued its operation of pigment manufacturing at Kavesar factory and there was no activity of manufacturing carried out in the said factory - Held that:- Following Hindustan Chemical Works Ltd. v. CIT [1979 (2) TMI 16 - BOMBAY High Court] - The expenses incurred to protect the business assets should be allowed as deduction - The assets of any other unit having already entered the block of assets of the assessee, depreciation thereon could not be disallowed on the ground of non-user as the use of block of assets was to be considered and not the use of individual assets – Decided in favour of assessee. Disallowance of deduction under section 35D – The expenses were incurred in relation to the issue of right shares - Held that:- Following the decision in assessee’s own case for the A.Y. 1999-2000 – The expenses are allowed as deduction – Decided in favour of assessee. Disallowance of expenses u/s 14A – The assessee has earned dividend income of ₹ 3,58,40,888 and interest on tax-free bonds of ₹ 1,17,45,137 - Held that:- Following assessee’s own case for the A.Y. 2001-02 and Godrej and Boyce Mfg. Co. Ltd. v. Deputy CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] - The Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The Assessing Officer must adopt a reasonable basis or method consistent with all the relevant facts and circumstances – Decided in favour of assessee. Addition on account of transfer pricing adjustment – Held that:- The rate of 4 per cent. taken by the Transfer Pricing Officer as arm's length rate of royalty has also been justified/supported by him by pointing out that the royalty of 5 per cent. paid to associated enterprise was also for use of a particular trade mark of that company to which he attributed the royalty payment to the extent of one per cent. on the basis of Government policy of automatic route - the use of trade mark was undoubtedly allowed by Oshima Japan to the assessee along with supply of technology for a royalty payment of 5 per cent. of domestic sales and irrespective of whether the assessee had manufactured the goods with the said trade mark or not, it was entitled to do so on payment of royalty at the rate of 5 per cent. as agreed between the parties - There is nothing brought on record to point out any infirmity in the rate of 4 per cent. determined by the Assessing Officer/Transfer Pricing Officer as arm's length rate of royalty paid/payable by the assessee to its associate enterprise - The learned Commissioner of Income-tax (Appeals) has already allowed a further relief to the assessee by revising the said rate upwardly at 4.5 per cent – Decided against assessee. Disallowance on account of Deduction u/s 80HHC – Held that Following assessee's own case for the earlier years, i.e., assessment years 2000-01 and 2001-02 and CIT v. K. Ravindranathan Nair [] - 90 per cent. of the other income such as, insurance claim, interest, rent etc. was liable to be excluded from the profits of the business while computing deduction under section 80HHC – the amount of sale of raw material was liable to be included in the total turnover of the assessee for the purpose of computation of deduction under section 80HHC - Decided against assessee. Disallowance of interest on the loans taken from bank as well as on fixed deposits received from public – Held that:- Following judgement in assessee's own case for the assessment year 2001-02 – If the assessee has sufficient interest-free funds at the relevant time to make investment in the shares of its subsidiary company, it is presumed that the investments are made from non interest bearing funds – Decided in favour of assessee.
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