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2015 (8) TMI 1086 - AT - Income TaxDisallowance under the head foreign travelling expenses - Held that:- The assessee had furnished the details about the encashment/ surrender of foreign exchange before both the lower authorities. The Assessing Officer or the first appellate authority had not doubted the foreign tours undertaken by the employees of the assessee-company. After considering the material on record and the judgment of Krishnonics Ltd. [2007 (12) TMI 406 - ITAT AHMEDABAD] we are of the opinion that the addition upheld by the first appellate authority was not based on facts available on the record. The assessee had filed all the details before the Assessing Officer. - Decided in favour of assessee. Disallowance of diminution in value of inventories of work-in-progress - Held that:- There was no change in the method of valuing the stock and therefore the assessee was not required to report the change in the return about valuing the stock. It is a fact that because of the recession, the assessee could not export the goods or sell the goods in the local market. Considering the peculiar circumstances it revalued the inventory. In our opinion the Assessing Officer/first appellate authority should have made further enquires in this regard. We find that in the case of Alfa Laval India Ltd. v. Deputy CIT [2003 (9) TMI 43 - BOMBAY High Court ] had held that in the subsequent assessment year the goods in question were sold at the lesser price than shown in the closing stock. We find that the Assessing Officer had not carried out any exercise in this regard. In our opinion, in the interest of justice, the matter should be restored back to the file of the Assessing Officer for fresh adjudication. - Decided in favour of assessee for statistical purposes. Disallowance made under section 14A - FAA deleted addition - Held that:- Assessing Officer had invoked the provisions of section 14A of the Act without understanding the real nature of the transactions. The assessee had not shown any income under the head exempt income under Chapter III of the Act for which it had claimed incurring of expenditure. Until and unless both these conditions are fulfilled provisions of section 14A cannot and should not be invoked. The first appellate authority had given a categorical finding of fact in this regard. Secondly, the Assessing Officer has not found any evidence that the interest expenses incurred by the assessee were not for wholly and exclusively for the business of the assessee. Order of the first appellate authority on both the counts-deletion of section 14A disallowance and allowing the interest expenditure under section 37 has to be upheld - Decided in favour of assessee Addition under the head cessation of liability, under section 41 - FAA deleted addition - Held that:- As per the taxation jurisprudence the very first condition for invoking section 41(1) of the Act is that an allowance or deduction ought to have been made in the assessment for any year in respect of any loss, expenditure or trading liability incurred by the assessee. The Assessing Officer has not discussed as to when the deduction was allowed. On the contrary the records reveal that no allowance or deduction had been made in the assessment of the assessee in any earlier year. Consequently, there was no question of invoking section 41(1). So, in our opinion the order of the first appellate authority does not suffer from any legal infirmity. - Decided in favour of assessee
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