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2017 (4) TMI 1352 - AT - Income TaxWhether the interest and finance expense should be disallowed u/s 36(1)(iii) due to transfer of loan to the assessee in case of demerger - Held that:- interest expenditure was reversed while finalizing the accounts of AY 2007–08 and was credited to the Profit & Loss account as prior period income - since the said amount has already been assessed in AY 2007–08, it should be allowed as a deduction in the impugned assessment year - the same income cannot be assessed twice at the hands of the assessee - thus the case is restored to the AO with a direction to verify assessee’s claim and if upon such verification it is found that the said amount forming part of the interest expenditure, then deduction to that extent should be allowed - allowed for statistical purposes. Disallowance of set–off of brought forward loss and unabsorbed depreciation due to demerger - Held that:- re–construction authority or body are transferred to one or more resulting companies on a going concern basis - thus Explanation–4 to section 2(19AA) are satisfied in case of present assessee - hence relief is granted with a rider that only the finally assessed loss / depreciation of MSEB should be allowed to be set–off - decided in favor of assessee. Whether the prior period expenditure be allowed as deduction - Held that:- when the AO accepts the prior period income offered by the assessee with reference to the audited Profit & Loss account, logically, he should also have allowed assessee’s claim of prior period expenditure - decided in favor of assessee.
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