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2015 (4) TMI 881 - HC - Income TaxDisallowance u/s 14A - Held that:- A judgment of a Division Bench of this Court in the case of Godrej & Boyce Manufacturing Company Limited vs. Deputy Commissioner of Income Tax [2010 (8) TMI 77 - BOMBAY HIGH COURT] wherein held that Rule 8D is prospective and not retrospective. Even otherwise the AO must give finding with respect to the nexus of this expenditure with that of the exempted income before disallowance and must point out to any expenditure, whatsoever, which is relatable to the exempted income - no disallowance at all should be made covers the controversy against the Revenue - Decided in favour of assessee. Disallowance u/s 35 - expenses on scientific research development - AO found that this claim cannot be granted as the expenditure has not been capitalised in the books of account but shown as waiting as such - whether there was no requirement of any project being completed or the entire amount capitalised in the books of account as reported by the auditors? - Held that:- . The Tribunal found that once there is no dispute that such expenditure is incurred and the legal provision not warranting any further capitalisation of the amont and in the books of account, the Assessing Officer and the Commissioner erroneously rejected this claim. The Tribunal has also taken care to observe that when the Assessing Officer found that the expenditure on research and development is eligible for deduction under the same provision in the subsequent year then the view taken by the Assessing Officer all the more cannot be sustained. - Decided against revenue. Deduction U/S 43B - Held that:- There was no question of section 43B being invoked and at the stage when the interest was not payable. The loan itself was availed of on 26th December, 2002, and for one year. It was payable with interest. However, the interest had not become payable and hence the question of relying on section 43B to disallow the claim does not arise. By the plain language of this provision and given the factual and admitted position, we do not think that the Tribunal erred in the view that it has taken and hence even with regard to this question. No substantial question of law. - Decided against revenue.
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