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2014 (12) TMI 675 - AT - Income TaxUndervaluation of closing stock of sugar – Facts on record properly verified or not – Held that:- As decided in assessee’s own case decided in The Commissioner of Income Tax And Another Versus The Dhampur Sugar Mills Ltd [2013 (10) TMI 16 - ALLAHABAD HIGH COURT] wherein it has been held that change in method of accounting adopted from 1991-92 to 1997-98 was more scientific and did not result any evasion of payment of tax - no addition can be made for undervaluation of closing stock - Since the method of accounting has been consistently followed by the assessee, CIT(A) has rightly deleted the addition made on account of undervaluation of closing stock – the order of the CIT(A) is upheld – Decided against revenue. Allowability of expenses u/s 14A r.w. Rule 8D - Facts on record properly verified or not – Whether the assessee has already added back in the computation of income for the relevant assessment year – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been rightly held that the investment was an old investment made in 1993 in the subsidiaries for acquiring their shares and such investment was made out of own funds of the assessee - the entire borrowed funds, on which interest was paid, were used for business purposes and no portion was used for making investment - The amount of interest expenditure cannot be considered for proportional disallowance under rule 8D of the rules - CIT(A) has not made any disallowance on account of other expenditures as per sub-rule (2)(iii) of rule 8D – thus, the order of the CIT(A) is modified and the AO is directed to compute the disallowance at 0.5% of the average value of investment on account of other expenditures – Decided partly in favour of revenue. Disallowance of balance written off deleted – Held that:- CIT(A) rightly held that ₹ 35.63 lakhs were accounted for in earlier years as income and the Revenue has not brought anything on record to dispute these facts - once there is a compliance of provisions of section 36(2) of the Act, the same should be allowed as bad debt on its written off - assessee is entitled for the loss on its written off in the books of account either in the form of bad debt or in the form of business loss – thus, the order of the CIT(A) is upheld – Decided against revenue. Disallowance of trial run expenses deleted – Held that:- As decided in assessee’s own case decided in The Commissioner of Income Tax And Another Versus The Dhampur Sugar Mills Ltd [2013 (10) TMI 16 - ALLAHABAD HIGH COURT] wherein it has been held that pre-operational expenses in trial run were revenue expenses and not capital expenses – thus, the order of the CIT(A) is upheld – Decided against revenue. Disallowance of proportionate interest deleted – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that CIT(A) rightly deleted the disallowance of proportionate interest made by the AO - nothing has been brought on record by the revenue that these advances were given during the impugned AY, the advances on which proportionate disallowance was made are considered to be old advances, on which no disallowance made in earlier years – the order of the CIT(A) is upheld – Decided against revenue.
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