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2015 (4) TMI 92 - AT - Income TaxPre-operative income - Held that:- Assessee was in receipt of ₹ 38 lacs prior to commencement of operation which was adjusted against the capital expenditure. By applying the decision of Hon’ble Supreme Court in the case of Tuticorin Alkali Chemicals & Fertilizers Ltd. (1997 (7) TMI 4 - SUPREME Court), the A.O. has taxed the same as ‘income from other sources’. The ld. A.R. has relied on the decision of Triveni Engineering Works Ltd. vs. CIT,[1997 (11) TMI 77 - DELHI High Court], CIT vs. Bokaro Steel Ltd. (1998 (12) TMI 4 - SUPREME Court) and Indian Oil Panipat Power Consortium Ltd. vs. TO (2009 (2) TMI 32 - DELHI HIGH COURT) and contended that such pre-operative receipt was liable to be adjusted against capital receipt. However, the nature of such receipt whether intrinsically connected with the assets acquired for implementation of project has not been explained. In the interest of justice, we restore this issue back to the file of A.O. for deciding the same afresh after considering the nature of receipt vis-à-vis intrinsic connection with the capital expenditure incurred by the assessee. - Decided in favour of assessee for statistical purposes. Provident fund dues - disallowance u/s 37 deleted by CIT(A) - Held that:- CIT(A) has allowed the claim by applying the provisions of section 43B of the Act wherein deduction n respect of provident fund was allowed on payment basis. The ld. CIT(A) held that the amount has been paid during the year under consideration and therefore deduction has to be allowed during the year itself. We do not find any infirmity in the order of ld. CIT(A) deleting the addition made by the A.O. - Decided in favour of assessee. Disallowance of club entry fee - disallowance u/s 37 deleted by CIT(A) - Held that:- CIT(A) for allowing club fees by following the decision of Otis Elevators [1991 (4) TMI 53 - BOMBAY High Court] and the decision of Gujarat Estate Export Corporation Ltd. ( 1993 (9) TMI 52 - GUJARAT High Court). As the expenditure was incurred was revenue in nature as held by the Hon’ble High Court, we do not find any infirmity in the order of ld. CIT(A) deleting the disallowance - Decided in favour of assessee. Disallowance of brand service fees treated as capital expenditure - Held that:- brand servicing fee was paid by the assessee since last several years and in the earlier assessment orders, this expenditure has been held to be revenue in nature by the A.O. himself. No distinguishing feature was brought on record by the A.O. during the year under consideration to justify the disallowance of assessee’s claim. Accordingly, we do not find any infirmity in the order of ld. CIT(A) deleting the disallowance of brand servicing fee paid by the assessee insofar as findings recorded by the ld. CIT(A) had not been controverted by the ld. CIT - DR by bringing any positive materials on record. - Decided in favour of assessee. Disallowance of interest for interest free loans advanced to subsidiaries - CIT(A) deleted the disallowance - Held that:- found that Tata Group were promoters of idea Cellular Ltd. and they were in land line telephone service in area of Madhya Pradesh. Because of this operation of Tata’s in Madhya Pradesh and because of connection between Tata’s and assessee company, assessee could not have entered into Mobile telephone services in the area of Madhya Pradesh. However, assessee wanted to enter into Madhya Pradesh for providing Cellular facilities. They have therefore given funds to its own subsidiary. Thus the advances to subsidiaries were out of this commercial consideration. The decision of Hon’ble Supreme Court in the case of S.A. Builders [2006 (12) TMI 76 - SUPREME COURT OF INDIA] is applicable to the facts of the case. The findings recorded by the ld. CIT(A) with regard to the fact that there was direct commercial expediency in advancing funds to subsidiaries have not been controverted by the Revenue by bringing any positive material on record, therefore do not find any reason to interfere with the order of ld. CIT(A) deleting the disallowance of interest attributable to funds advanced to subsidiaries - Decided in favour of assessee.
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