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2016 (10) TMI 1271 - AT - Income TaxDisallowance u/s 14 r.w. Rule 8D - HELD THAT:- It is settled position of law that the provisions of Rule 8D of the I.T. Rules, 1962 are applicable prospectively for and from A.Y. 2008-09 and would not operate for the assessment years prior thereto. In this view of the matter, the learned CIT(A)’s directions to the AO to work out/compute the disallowance under section 14A of the Act by applying Rule 8D of the Rules is erroneous and we therefore delete the same and in the fitness of things, we direct the AO to recompute the disallowance under section 14A of the Act afresh, in accordance with the law prevalent for the year under consideration, after affording the assessee adequate opportunity of being heard and to file details/submissions required in this regard. Grounds I and II of the assessee’s appeal are treated as allowed for statistical purposes. Disallowance of non-compete fee paid to ex- Directors - HELD THAT:- We find that this issue has been held in favour of Revenue and against the assessee in the decisions of the Coordinate Bench of the Tribunal in the assessee’s own case for A.Y. 2003-04 [2016 (8) TMI 1450 - ITAT MUMBAI] - we uphold the orders of the authorities below and against the assessee. Consequently, ground III of assessee’s appeal is disallowed. Setting off of losses while computing deduction under section 80HHC - HELD THAT:- We hold this issue against the assessee, and uphold the orders of the authorities below following, inter alia, the decisions of the Hon'ble Apex Court in the case of CIT vs. Shirke Construction Equipment Ltd.[2007 (5) TMI 194 - SUPREME COURT] and J.K. Industries vs. ACIT [2013 (5) TMI 152 - KARNATAKA HIGH COURT]. Deduction of Miscellaneous income while computing deduction under section 80HHC - HELD THAT:- CIT(A) has rejected the assessee’s claim and confirmed the AO’s action holding that there was no direct nexus between the nature of income clubbed under the head ‘miscellaneous income’ and the export business of the assessee, without considering the breakup of the aforesaid income brought on record by the assessee. Following the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2003-04 [2016 (8) TMI 1450 - ITAT MUMBAI] , to which both of us are party, we set aside the finding of the authorities below on this issue and restore this issue to the file of the AO with respect to examination of assessee’s claim of inclusion of ‘miscellaneous income’ and other items while computing the eligible deduction under section 80HHC of the Act. Needless to add, the assessee is to be afforded adequate opportunity of being heard and to file submissions/details in this regard by the AO before adjudicating this issue. Not allowing set off of incentives against the profits (‘DEPB’/ ‘DDB’) - HELD THAT:- Respectfully following the decision of the Hon'ble Apex Court in the case Avani Exports ( 2015 (4) TMI 193 - SUPREME COURT ) and the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2003-04 (supra), to which both of us are party, we hold that the impugned order of the learned CIT(A) on this issue is unsustainable and reverse the same. Accordingly, we hold this issue in favour of the assessee and consequently allow ground No. VII of assessee’s appeal. Addition of unutilized Modvat Credit to closing stock - HELD THAT:- We find that, as submitted by the learned counsel for the assessee, the very same issue was considered and held in favour of the assessee and against Revenue by a Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2001-02 held that this amount as added by the assessing officer is not of unutilised Modvat but it was the amount of deposit made by the appellant with the excise authorities. Therefore, there was no reason for making this disallowance by the assessing officer hence this addition is deleted Deduction under section 80HHC and net interest - HELD THAT:- This issue is well settled by the judicial pronouncements cited as in the case of ACG Associated Capsules (P) Ltd. vs. CIT (2012 (2) TMI 101 - SUPREME COURT ), Shri Ram Honda Power Equipments (2007 (1) TMI 86 - HIGH COURT, DELHI ) and Lalsons Enterprises (2004 (2) TMI 294 - ITAT DELHI-E ) Respectfully following these decisions (supra), we confirm the decision of the learned CIT(A) in holding and directing the AO, that for the purpose of computing the deduction under section 80HHC if the Act, the net interest is to be considered. ‘Book Profits’ under section 115JB - Adjustment for provisions - HELD THAT:- We find, as submitted by the learned D.R., that this issue was considered and adjudicated in favour of the Revenue, by Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2003-04 [2016 (8) TMI 1450 - ITAT MUMBAI] in view of the amendments to the provisions of section 115JB of the Act being operational retrospectively, we are unable to sustain the impugned order of the learned CIT(A) on this issue and therefore set aside/reverse his finding in the matter and restore that of the AO. Consequently, Revenue’s ground No. 4 is allowed.
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