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2014 (11) TMI 264 - AT - Income TaxApplicability of provisions u/s 14A r.w Rule 8D – Held that:- In Godrej & Boyce Manufacturing Co. Ltd. Vs. DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] it has been held that Rule 8D is application from AY 2008-09 - disallowance for earlier period to be determined on reasonable basis U/s 14A – the AO is directed to re-compute the disallowance U/s 14A of the Act after providing reasonable opportunity of being heard to the assessee. Depreciation on investment in respect of securities shifted from "Held For Trading" category to "Available for Sale" category disallowed – Held that:- All the banks are regulated by the RBI and all instructions issued by the RBI are binding on every banks - The RBI also prescribed the valuation method of securities as per the circular should be done at the acquisition cost/book value/market value on the date of transfer, which is the least and the depreciation if any on such transfer should be fully provided for - CIT(A) referred the CBDT instruction No. 17/2008 vide letter no. F.No.228/3/2008-ITA-III dated 26/11/2008 wherein RBI guideline dated 26/10/2000 had been clarified - CIT(A) has not controverted the calculation made and claimed by the appellant that there is no net depreciation - Since the appreciation of securities in the category of Available for Sale is more than the depreciation of securities in the same category i.e. Available for Sale - the assessee had rightly claimed depreciation on transfer from securities Held for Trading category to Available for Sale category – following the decision in State Bank of Mysore Vs. DCIT [2009 (5) TMI 610 - ITAT BANGALORE] – Decided in favour of assessee. Prior paid expenses and Misc. expenses disallowed – Held that:- The period expenses were claimed by the assessee have been crystallized during the year - The assessee has number of branches in all over the India and certain expenses of previous year were claimed after the closing of books of account, which has been clarified by the auditor in audit report - The genuineness of the expenses has not been doubted by the lower authorities – the expenses were allowable in respective year to which they pertained but information of expenses with evidence received by the appellant from the various branches after closing of books of account – as decided in assessee’s own case for the earlier assessment year, it has been held that such difference cannot be categorized as an error or omission – As decided in assessee’s own case for the earlier assessment year, it has been held that the refusal to the department by the committee as the income from interest on Government securities/debentures etc. is thus directed to be taxed on due basis - The effect of this for the year, be that the income assessed by the A.O. would increase by ₹ 2,26,89,880/- Decided in favour of assessee.
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