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2014 (10) TMI 154 - AT - Income TaxAddition u/s 14A on indirect expenses for earning exempt income – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that the major investment of the assessee is in its group companies - CIT(A) has restricted the disallowance to ₹ 1. 87 lakhs – there is no reason to interfere with the findings of the CIT(A) – Decided in favour of assessee. Provision made u/s 40(a)(ia) disallowed – Held that:- The AO had invoked the provisions of section 40(a)(ia), though he has also discussed the principles of contingent liability, while making the disallowance - FAA has passed a non-speaking order and just endorsed the views of the AO but he was also of the opinion that provisions of section 40(a)(ia) were applicable - assessee had specifically mentioned during the assessment proceedings, that it had not received the bills under various heads, that provisions of tax deducting at source were not applicable for the provisions made – Relying upon Mahindra & Mahindra Limited, Versus The Deputy Commissioner of Income Tax, 2(2) [2013 (9) TMI 522 - ITAT, MUMBAI] - TDS provisions were not applicable for the provisions made at the year-end - the assessee had made provisions but had not received the bills, that in the subsequent year the provisions made by it were offered for taxation – Decided in favour of assessee. Provision made for leave salary disallowed u/s 43B(f) – Held that:- As it has been decided in assessee’s own case for the earlier assessment year, following the decision in Srikakollu Subba Rao And Co. And Others Versus Union Of India And Others (and Other Writ Petitions) [1988 (3) TMI 46 - ANDHRA PRADESH High Court] - in order to apply the provisions of Sec. 43B not only should be the liability to pay the tax or duty be incurred in the accounting year but also should be statutorily payable in the accounting year - the provision for leave salary is not a statutory liability but only a contractual liability which is payable only if the employees resigns or retired from the services – Decided in favour of assessee. Allocation of Head Office expenses – Claim of deduction u/s 80IA – Held that:- As it has been decided in assessee’s own case for the earlier assessment year, following the decision in M/s. Procter & Gamble Hygiene and Health Care Limited Versus DCIT/ACIT Cir. 7(1), Mumbai [2013 (3) TMI 195 - ITAT MUMBAI] the AO is directed not to reduce the claim of deduction u/s. 80IB of the Act by allocating Head Office expenses to profits derived from eligible units – Decided in favour of assessee. Deduction in exemption u/s. 10B - allocation of head office expenses/expense of other division and interest income earned by 100% EOU under normal income and MAT provisions – Held that:- As it has been decided in assessee’s own case for the earlier assessment year, the issue of interest income earned by the 100% EOU and allocation of head office expenses of other division have been decided in favour of the assessee-company – Decided in favour of assessee. Depreciation on goodwill on acquisition made ongoing concern basis – Held that:- As it has been decided in assessee’s own case for the earlier assessment year, that the AO be directed to allow the depreciation on goodwill and to reduce the total income accordingly – Decided in favour of assessee. Adjustment on carry forward losses not allowed – Held that:- The assessee had made the claim of carry forward of unabsorbed depreciation of the amalgamated company during the assessment proceedings, that in the return such claim was not made, that the FAA had decided the issue against the assessee as he was of the opinion that all the claims of deductions/exemption/set off should be made in the original return only – the matter is remitted back to the AO for fresh adjudication in light of the decisions of Commissioner of Income Tax. Central-I Versus M/s. Pruthvi Brokers & Shareholders Pvt. Ltd. [2012 (7) TMI 158 - BOMBAY HIGH COURT] – Decided in favour of assessee. Allowabilty of MAT credit – Held that:- The assessee had failed to follow the directions of the FAA - But, that does not take away his rightful claim of adjustment of tax credit - By not getting credit for so many years it has been sufficiently penalised for disregarding the orders of the FAA - AO, as the representative of the State has a duty towards the tax payers also and that is only due income should be taxed and only due amount of tax should be collected – thus, the matter is remitted back to the AO for verification of the claim made by the assessee - Decided partly in favour of assessee. Unutilised Modvat Credit in closing Stock – Held that:- Following the decision in Commissioner of Income-Tax Versus Indo Nippon Chemicals Co. Ltd. [2003 (1) TMI 8 - SUPREME Court] - the Modvat credit could not be added back to the income of the assessee. - that merely because the Modvat credit was an irreversible credit available to manufacturers upon purchase of duty-paid raw material, that would not amount to income which was liable to be taxed under the Act - income was not generated to the extent of the Modvat credit on unconsumed raw material - it was not permissible for the AO to adopt the “gross method” for valuation of raw materials at the time of purchase and the “net method” for valuation of stock on hand – Decided against revenue.
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