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2014 (11) TMI 211 - AT - Income TaxBad debts written off to pharma division – Held that:- The assessee actually wrote off which is what the assessee had claimed as a deduction against income of the discontinued business - prima facie even though sale of unit has been made on going concern basis, the debtors are transferred only on realization @ 95% since admittedly bad debts cannot exceed 5%, and, to that extent, the assessee continues to have financial exposure for realization of debtors - as there is no clear factual and legal findings about the very basic aspects of this disallowance, the matter is to be remitted back to the AO for fresh adjudication – Decided in favour of assessee. Disallowance u/s 14A r.w. Rule 8D – Held that:- The provisions of rule 8D can only be applied prospectively and, there was no relevance so far as assessments for the assessment years prior to 2008-09 – relying upon Maxopp Investments Ltd Vs CIT [2011 (11) TMI 267 - Delhi High Court] - there are no direct expenses incurred in earning this dividend income, the amount is restricted by the disallowance u/s 14A to dividend income – Decided partly in favor of assessee. Advertisement expenses yield any benefit to the assessee or not – Held that:- The TPO has accepted profitability of these transactions on the basis of TNMM and yet picked up this reimbursement, which constitutes a charge on such profitability, for rejection – the expenses were incurred on behalf of the assessee, and this position remains uncontroverted - Whether the assessee was under an obligation to incur these expenses or not is, therefore, not really relevant - The question of incidental benefit to the assessee, for expenses incurred by the AE, would arise only when the expenses are incurred by the AE in its own right though for the common benefit of group as a whole – thus, the order of the CIT(A) is to be set aside – Decided in favour of assessee.
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