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2018 (11) TMI 1628 - AT - Income TaxDisallowance of deduction u/s 80IC - amount received as Transport subsidy and sales tax rebate given under sales tax deferment rebate scheme - HELD THAT:- A relying on M/S SHREE BALAJI ALLOYS [2016 (4) TMI 1161 - SC ORDER] aforesaid receipts of the assessee on account of sales tax / VAT deferment subsidy and Transport subsidy are held to be capital in nature and not taxable. Since the receipts have been held to be capital in nature, hence, no addition is attracted on account of these receipts into the income of the assessee. Deduction u/s 80IC - interest income on FDRs obtained from ILC/ FLC for purchase of raw material - HELD THAT:- Tribunal passed in the own case of the assessee wherein, this issue has been remanded back by the Tribunal to the file of the Assessing officer with a direction to decide the same afresh keeping in view the decision in the case of ‘Vishal Tools & Forging Pvt Ltd. v CIT’ [2011 (5) TMI 1093 - PUNJAB AND HARYANA HIGH COURT]. VAT Deferment excluded while computing book profits u/s 115JB as being the capital receipt and not liable to tax in view of the proposition laid down in the case of Shree Balaji Alloys & Ors [2016 (4) TMI 1161 - SC ORDER]. Addition u/s 36(i) (iii) on account of interest free advances given by the assessee - HELD THAT:- Assessee was possessed of own surplus funds more than the interest free advances given. He has observed that the assessee had share capital of ₹ 10.10 crores and free reserves of ₹ 43.06 crores, whereas, the interest free advances given to the assessee were to the tune of ₹ 12.28 crores. No reason to interfere in the well justified order of the CIT(A) on this issue and, therefore, this issue is accordingly decided in favour of the assessee. Disallowance of proportionate interest on investments made - HELD THAT:- CIT(A) has discussed this issue in para 8 of the impugned order, wherein, he has observed that the assessee was possessed of sufficient own funds to make the aforesaid investments. We do not find any infirmity in the order of the CIT(A) on this issue also. Disallowance of deduction claimed u/s 80IC in respects of Misc. receipts - HELD THAT:- AO held that the Misc. receipts of ₹ 1,64,980/- was not income earned from the business activity of the assessee and, hence, was not eligible for deduction u/s 80IC . CIT(A), however, has given a finding that these receipts were in fact re-imbursement of the expenditure claimed by the assessee in earlier years and, hence, these were relating to the business activity of the assessee and thus the reimbursement of the same goes into increase the income of the assessee which otherwise was eligible for deduction u/s 80IC of the Act. Penalty u/s 271(1)(c) - addition on account of disallowance of deduction u/s 80IC on Transport Subsidy, Deferred VAT Liability and interest income - deduction u/s 80IC on Transport subsidy and Deferred VAT liability is concerned, the same has been dealt with by us while deciding the appeal of the assessee - HELD THAT:- We have already held the same as capital receipt and in the alternative eligible for claiming of deduction u/s 80IC hence, the levy of penalty on this issue does not survive. So far as the claim regarding interest income is concerned, the issue has already been restored by us to the file of the AO of adjudication afresh, hence, at this stage; penalty is not sustainable on this issue also.
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