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2014 (12) TMI 881 - AT - Income TaxLease Equalization Reserve disallowed – Held that:- As decided in assesse’s own case for the earlier assessment year, the concept of Lease equalization charge is discussed and accordingly restored the matter back to the file of the AO for carrying out fresh examination – Decided in favour of assessee. Disallowance made u/s 14A – Held that:- The AO has not examined contentions of the assessee about the availability of own funds - in any case, the assessee is required to prove the nexus between own funds and investments on the date of making investment - since the claim of the assessee requires verification of factual aspects, thus issue also required examination by AO – thus, the order of the CIT(A) is set aside and the matter is remitted back to the AO for fresh consideration. Addition of the amount disallowed u/s 14A – Computation of ‘Book Profit’ u/s 115JA – Held that:- In CIT Vs. Goetz India Ltd [2013 (12) TMI 607 - DELHI HIGH COURT] wherein it has been held that the amount disallowed u/s 14A of the Act under the normal provisions of the Act is required to be added while computing the book profit u/s 115JA of the Act - since the matter relating to the disallowance to be made u/s 14A is remitted to the AO, this issue is also remitted back for adjudication. Claim of provision for bad debts disallowed – Held that:- A specific query was put to assessee as to whether it would be acceptable to the assessee if the disallowance of Provision for bad debts is confirmed in these two years and a direction is given to the AO to exclude the amount so offered (reversal of provision) in subsequent years from the total income, the assessee, after consulting the company’s representative, agreed to the same - the disallowance of amount claimed as ‘Provision for bad debts’ in both the years stand confirmed – the AO is directed to exclude the amount offered by the assessee by reversal of Provision for bad debts in the years in which it was so offered. Expenses on clubs – Held that:- The club membership fees paid for employees is allowable u/s 37 - the issue requires fresh examination in the light of decision rendered by Hon’ble Supreme Court – thus, the order of the CIT(A) is set aside and remitted back to the AO for fresh consideration – Decided in favour of revenue. Interest claimed u/s 36(1)(iii) - part of interest has to be capitalized or not – Held that:- As decided in assessee’s own case for the earlier assessment year, it has been held that the assessee is entitled to claim interest expenditure u/s 36(1)(iii) in respect of capital borrowed for acquiring capital assets in these years and the order of the CIT(A) is upheld – Decided against revenue. Claim of depreciation on leased assets – Held that:- In earlier assessment year also, by following the decision in M/s ICDS. LTD. Versus COMMISSIONER OF INCOME TAX. MYSORE & ANR. [2013 (1) TMI 344 - SUPREME COURT] it has been held that the assessee is entitled to depreciation, if it has leased out the assets under operating lease – CIT(A) rightly was of the view that lease transactions were genuine in nature – Decided against revenue.
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