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2018 (7) TMI 2009 - AT - Income TaxAddition u/s 36(2) - bad debts claim related to the amount due from sister concerns of the assessee - HELD THAT:- Perusal of the ledger accounts of the sister concerns would show that they are franchisees of the assessee carrying on share broking business. The ledger account shows that the bills raised by the assessee against them for purchase and sale of shares. Accordingly we notice the transactions with the sister concerns were regular business transactions. The Ld A.R submitted that the sister concerns, being franchisees of the assessee’s share broking business, could not repay the debts due to heavy losses incurred by them. The contention of the Ld A.R could not be controverted by the Ld D.R. In this view of the matter, we are of the view that there is no reason to doubt the genuineness of claim. Accordingly we modify the order passed by Ld CIT(A) and direct the AO to allow the claim of ₹ 71.38 lakhs, referred above. Claim of depreciation on Electrical fittings - @ 25% OR @ 15% - HELD THAT:- This issue has been decided in favour of the assessee by the co-ordinate bench in AY 2004-05 [2013 (9) TMI 262 - ITAT MUMBAI], wherein the Tribunal has followed the decision rendered in assessee’s own case 2013 (9) TMI 561 - ITAT MUMBAI] relating to AY 2005-06. The Tribunal has noticed that the electrical fittings have already entered into the block of Plant and Machinery prior to AY 2003-04 and accordingly held that the AO cannot segregate electrical fittings out of the block. Accordingly it was held that the depreciation should be allowed at the rate applicable to Plant & Machinery. Accordingly, following the decision rendered by the co-ordinate benches, we direct the AO to allow depreciation on Electrical fittings @ 25%. Disallowance of claim for carry forward of business losses and unabsorbed depreciation of earlier years - CIT(A) disallowed the above said claim on the ground that the assessee has not carried on any business activity during the year under consideration - HELD THAT:- This issue has been decided in favour of the assessee by the co-ordinate bench in AY 2004-05 [2013 (9) TMI 262 - ITAT MUMBAI], wherein the Tribunal has followed the decision rendered in assessee’s own case 2013 (9) TMI 561 - ITAT MUMBAI] . Tribunal has come to the conclusion that the assessee could not do the business for the reasons beyond its control, i.e., because of the ban imposed on its trading by SEBI and the order so passed by SEBI has been challenged by the assessee. Following the order passed by the Tribunal in AY 2005-06 (which is an order pertaining to the year subsequent to AY 2003-04), we direct the AO to allow carry forward of business loss and unabsorbed depreciation. Disallowance made u/s 14A - HELD THAT:- Since the year under consideration falls prior to AY 2008-09, the assessee contended that Rule 8D will not apply to this year as per the decision rendered in the case of Godrej & Boyce Mfg Co. Ltd [2010 (8) TMI 77 - BOMBAY HIGH COURT] . Accordingly the disallowance has to be made on reasonable basis. Accordingly we modify the order passed by Ld CIT(A) on this issue and direct the AO to compute disallowance u/s 14A of the Act on reasonable basis. Charging of interest u/s 234D - HELD THAT:- The assessment has been completed in the present case on 12-12-2005, i.e. after 01-06-2003. As per the Explanation 2 to sec.234D, the provisions of sec. 234D shall also apply to an assessment year commencing before the 1st day of June, 2003 if the proceedings in respect of such assessment year is completed after the said date. Hence the provisions of sec. 234D shall apply to the year under consideration, since the assessment order was passed after 01-06-2003. Accordingly we dismiss this ground of the assessee. Bad debts claim of the assessee - HELD THAT:- We have noticed that the first appellate authority has allowed the claim by following the decision rendered by the Special bench of Tribunal in the case of Shri Shreyas Morarkhia [2010 (7) TMI 455 - ITAT MUMBAI] . The decision rendered by the Special bench has since been approved by Hon’ble jurisdictional Bombay High Court in its decision [2012 (3) TMI 103 - BOMBAY HIGH COURT] in the very same case. Hence we do not find any infirmity in the order passed by Ld CIT(A) on this issue.
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