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2015 (5) TMI 150 - AT - Income TaxDisallowance of administrative expenses u/s.14A - Held that:- Since the assessee had sufficient profits generated this year and it had mixed funds and no nexus is established by the AO as to whether investment was made out of interest bearing funds, disallowance of interest cannot be made. Similarly no disallowance out of administrative expenditure can be made as there is no direct nexus. As a result, this grounds is allowed. See 2011 (2) TMI 1351 - ITAT AHMEDABAD - Decided in favour of assessee. Disallowance of liquidated damages - CIT(A) deleted addition - Held that:- The issue regarding liquidated damages requires a fresh look by the AO. He would allow the claim on actual basis. Wherever the other party has claimed liquidated damages against the assessee in the current year Asst.Year it should be allowed. The assessee would submit individual account and the AO will examine such accounts and take a decision as per law. See 2011 (2) TMI 1351 - ITAT AHMEDABAD. This ground is allowed but for statistical purposes. Disallowance of bad-debts - CIT(A) deleted addition - Held that:- There is no case for interference in the order of ld.CIT(A). It is admitted position that assessee has actually written off the amounts. Once it is so then matter is squarely covered by the decision of Hon.Supreme Court in the case of TRF Ltd. vs. CIT (2010 (2) TMI 211 - SUPREME COURT) wherein it is held that w.e.f. 1.4.1989 in order to obtain a deduction in relation to bad debts it is not necessary for the assessee to establish that the debt in fact has become irrecoverable. It is enough if the bad debt is written off and the bad debt is irrecoverable in the account of assessee. Following the above decision of Hon.Supreme Court, we confirm the order of ld.CIT(A) and dismiss this ground of Revenue. Disallowance of provision for warranty expenses - Held that:- The assessee has to submit present value of warranty expenses. It has to be properly ascertained and discounted on accrual basis. A proper calculation on this issue will be submitted to the AO who will examine the same and allow the claim as per decision of Hon.Supreme Court in Rotork Controls India (P) ltd. (2009 (5) TMI 16 - SUPREME COURT OF INDIA) as above. This ground of Revenue is allowed but for statistical purposes. Disallowance of proportionate interest expenses made by the AO u/s.36(1)(iii) - CIT(A) allowed claim - Held that:- .CIT(A) had given a finding on fact that there assessee had sufficient interest free fund and it had not diverted the interest bearing fund same remained unrebutted. Therefore, we do not find any reason to take a contrary view than taken by the Hon’ble Coordinate Bench - Decided against revenue. Disallowance of royalty - CIT(A) allowed claim - Held that:- CIT(A) has given a finding on fact that the assessee has not acquired any ownership rights. It has got the right of user only. Since, AY 1989- 90, the user charges claimed as royalty have been allowed in the assessments, the rate of user charges is 1% of the sales during the year under consideration. TDS has been made in respect of royalty payments. As it is a recurring expenditure payable on the basis of sales and the appellant has not acquired any capital asset or permanent right, the payment of royalty is allowable as business expenditure. The Revenue has not controverted this fact by placing any material on record, therefore, we do not find any infirmity in the order of the ld.CIT(A), the same is hereby upheld - Decided in favour of assessee.
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