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2014 (4) TMI 431 - AT - Income TaxDeletion of disallowance of Deduction u/s 80IA(4) of the Act – Held that:- As decided in assessee’s own case for the previsous assessment years’, it has been held that the deduction u/s 80IA(4) of the Act is allowed on captive power plant, where the profit was calculated on the basis of market rate of power unit on captive power plant production of unit – thus, the deduction u/s 80IA is allowed on the basis of market rate of power unit computing the profit from the eligible unit u/s. 80IA(4) – Decided in favour of Assessee. Disallowance u/s 14A of the Act – Interest and other expenses incurred in relation to exempted income of dividend and tax free interest – Held that:- The decision in Godrej and Boyce Mfg Co. Ltd. [2010 (8) TMI 77 - BOMBAY HIGH COURT] Rule 8D is not applicable retrospectively and applicable for A.Y. 08-09 - reasonable disallowance is to be made by the AO after analyzing the borrowed fund used for the business purposes, non-business purposes and interest paid and also other disallowance for under the administrative head - the assessee did not supply the information called for by the AO at the time of assessment - the issue cannot be decided at this level – the matter is remitted back to the AO for fresh adjudication – Decided in favour of Revenue. Allowability of adjustment under Explanation to section 115JB of the Act – Wealth tax liability – Held that:- As decided in assessee’s own case for the previsous assessment years’, the decision in JCIT vs. Usha Martin Industrial Ltd.[2006 (12) TMI 171 - ITAT CALCUTTA] followed – Decided against Revenue. Deduction u/s 80HHC of the Act – Book profits u/s 115JB of the Act – Held that:- The AO rightly held that that assessee had claimed deduction u/s. 80HHC while calculating its book profit u/s. 115JB by filing revised e-return - deduction u/s.80HHC was not available under the normal provisions of the IT Act w.e.f. 01.04.2005 - The assessee gave reasonable opportunity of being heard on the issue, which was afforded by the assessee - After considering the assessee’s reply, no deduction was allowed - The amendment made u/s 115JB is effective from 01.04.2005 and as per item no. iv of Explanation 1, the deduction u/s. 80HHC is not allowed and is to be reduced from 115JB profit – thus, the order fo the CIT(A) set aside – Decided in favour of Revenue. Disallowance u/s 14A for computing profit u/s 115JB of the Act – Held that:- As the issue has been set aside to the AO for re-computation of disallowance u/s. 14A, however, for making adjustment u/s. 115JB, in M/s. Essar Teleholdings Ltd. Versus The DCIT, Mumbai [2013 (5) TMI 116 - ITAT MUMBAI] it has been held that, provisions of sub-Section 2 & 3 of Section 14B cannot be imported into Clause (f) of the Explanation to Section 115JB of the Act - As per Clause (f) of Explanation 1 to Section 115JB refers to amount debited to the P&L account, which can be added back to the book profit while computing the book profit u/s. 115JB - adjustment made by the AO is not as per law – Decided against Revenue. Addition of provision for doubtful debts – Computation of book profits u/s 115JB of the Act – Held that:- The decision in CIT vs. Yokogawa India Ltd. [ 2011 (8) TMI 766 - KARNATAKA HIGH COURT ] followed - provision made for bad debt cannot be added back in accordance with Explanation (c) to Section 115JB(1) as same is not an ascertained liability - the provision for bad debt has been analyzed and as per Section 36(1)(vii), the assessee has to show net of the provision for bad debt in the balance sheet - Even Explanation (c) has been inserted retrospectively, then no increase can be made u/s. 115JB or 115JA - The amendment came by the Finance Act, 2008 w.e.f. 01.04.2001 - The assessee had made provisions for bad debt in earlier year and added back in the computation of income of that year and actual bad debt had been claimed by debited the provision for bad debt and claimed u/s. 36(1)(vii) of IT Act – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee.
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