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2018 (8) TMI 1838 - AT - Income TaxAddition u/s 14A - HELD THAT:- In assessee own case for preceding years on identical facts we consider that the assessee’s own interest free funds in the forms of share capital and reserve and surplus were much more than the investment made for earning tax fee income. AO has failed to disprove that borrowed funds were utilized for making investment to earn exempt income. In view of the above facts and finding, we do not find any infirmity in the decision of CIT(A) in respect of deleting addition of interest part u/s. 14A. Disallowance of administrative expenses u/s. 14A we restrict the disallowance on account of administrative expenses to the amount of ₹ 15 lakhs for the year under consideration. Therefore, the appeal of the assessee is partly allowed and ground of appeal of revenue is dismissed. Liability towards equal pay for equal work as per memorandum of understanding made with the workers of the company - Liabilities as per Memorandum of Understanding with Workers was disallowed by the AO on the ground that the liability was not crystalized during the year - HELD THAT:- CIT(A) has directed the assessing officer to allow such expenditure in the year in which the same was actually paid. After considering the material on record and the findings of the CIT(A), we do not find any error in the order of the CIT(A) directing the assessing officer to allow the claim of the assessee on payment basis . Therefore, this ground of appeal of the assessee is dismissed. Business loss on trading of fertilizer bonds - HELD THAT:- As decided in the case of the assessee pertaining to assessment year 2008-09 we restore this issue to the file of assessing officer to allow the claim of the assessee as business loss after verification of the year in which income was offered and the loss was occurred. Accordingly the appeal of the assessee is allowed for statistical purposes. Disallowance of prior period expenses - AO disallowed the claim on the ground that assessee company was following mercantile system of accounting, therefore, it was not entitled to claim expenses which was not related to assessment year 2010-11 - HELD THAT:- ITAT in the case of the assessee for the assessment year 2009-10 wherein the issue was set aside to the assessing officer to allow after verification that the expenditure were crystalized during that year. Similarly, the claim of the assessee in respect of prior period expenses is also restored to the file of the assessing officer to allow the same after verification if it is crystalized during the year under consideration after affording adequate opportunity to the assessee. Accordingly, the appeal of the assessee is allowed for statistical purposes. Interest on refund u/s 244A(1) - HELD THAT:- No merit in the appeal of the assessee on this issue after considering the decision of the Special Bench of the Tribunal in the case of Avada Trading Co. P. Ltd. vs. ACIT [2006 (1) TMI 465 - ITAT MUMBAI] wherein it is held that interest on refund under section 244A(1) would be assessable in the year in which it is granted. Accordingly, this ground of appeal of the assessee is dismissed. Addition u/s. 14A r.w. Rule 8D for the purpose of computing book profit u/s. 115JB - HELD THAT:- In the case of the assessee itself has restricted the amount to be added for computation of book profit u/s 115 JB of the act to the extent of disallowance of administrative expenses of ₹ 10 lacs and ₹ 15 Lacs confirmed by the ITAT. After taking into consideration the above cited decision of the coordinate bench on identical facts and similar issue, we restrict the amount to be added for computation to the extent of disallowance of administrative expenses of ₹ 15 lacs sustained in the case of the assessee as supra in this order. Therefore, this ground of appeal of the assessee is partly allowed.
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