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2014 (11) TMI 405 - AT - Income TaxInterest and administrative expenses disallowed u/s 14A r.w Rule 8D Held that:- Both the revenue authorities have made inconsistent observations to come to a finding that the interest and expenses have to be disallowed - the application of Rule 8D has retrospective effect, relying upon ITO vs Daga Capital Management (P) Ltd [2008 (10) TMI 383 - ITAT MUMBAI] - Rule 8D shall be applicable with effect from 2008-09 and onwards - a reasonable disallowance out of tax free income would suffice thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO Decided in favour of assessee. Advance Written off as bad debt written off Held that:- The AO has disallowed the claim mainly on the ground that the assessee did not comply with the conditions prescribed u/s 36(2) of the Act for allowing the deduction of bad debt claimed u/s 36(1)(vii), and further the assessee did not prove its bona fides in making this claim - the CIT(A) has taken an altogether different view of the matter and held that "Controlling of group companies" cannot be regarded as business of the assessee, since mere controlling will not generate any profit or loss, which is sine qua non of any business activity - M/s Dytek was already a subsidiary of the assessee company and in order to revive the operations of M/s Dytek, the assessee had infused funds in the form of ICDs - the assessee has put in new claim before the CIT(A) that it categorized itself as "Non Banking Financial Company" duly registered by the Reserve Bank of India and accordingly it is engaged in the business of lending and borrowing as well as investment - the provisions of section 36(1)(vii) r.w.s 36(2)(i) provide for allowing deduction of bad debt, if the same represents money lent in the ordinary course of the business of banking or money lending, which is carried on by the assessee - Since the assessee claims that it is a NBFC and since the revenue authorities have not examined the claim of the assessee from the angle of NBFC, the matter required examination by AO to determine whether the ICD, made by the assessee would at all fall in the category of money lent in the ordinary course of business thus, the order of the CIT(A) is set aside and remitted back to the AO for fresh examination Decided in favour of assessee.
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