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2017 (2) TMI 1428 - AT - Income TaxDisallowance u/s 14A r/w rule 8D - HELD THAT:- Commissioner (Appeals) while deciding the issue of disallowance under section 14A has directed the Assessing Officer to compute it by applying rule 8D. However, as held in Godrej & Boyce Mfg. Co. Ltd. v/s DCIT, [2010 (8) TMI 77 - BOMBAY HIGH COURT] the provisions of rule 8D is applicable prospectively from the assessment year 2008–09 onwards. The Hon'ble Jurisdictional High Court in the said decision has also observed that for prior assessment years disallowance under section 14A can be worked out on a reasonable basis. We have noted, identical issue arose in assessee’s own case for the assessment year 2004–05 [2016 (10) TMI 1271 - ITAT MUMBAI] restored the issue back to the file of the Assessing Officer as held 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 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. Disallowance of non–compete fee paid to ex–directors - HELD THAT:- In the latest order in assessee’s own case [2016 (10) TMI 1271 - ITAT MUMBAI] for the assessment year 2004–05, the Tribunal while deciding the issue followed its decision in the earlier assessment year and upheld the disallowance. Disallowance of deduction claimed on account of payment made towards employee’s contribution to PF/ESIC - sum not paid either within the due date or the grace period provided under the relevant statute - HELD THAT:- Undisputedly, the assessee has paid the aforesaid amount within the due date of filing of return of income as provided under section 139(1) of the Act. Therefore, keeping in view the provision under section 43B, the deduction claimed is allowable. In this context, it is necessary to observe, the second proviso to section 43B which was omitted by Finance Act, 2003 w.e.f. 1st January 2004, provided that unless the deduction claimed towards payment to PF/ESIC is actually paid on/or before the due date prescribed under Explanation below section 36(1)(va), no deduction shall be allowed. However, after omission of the said proviso the situation is different. The Hon'ble Jurisdictional High Court in CIT v/s Hindustan Organic Chemicals Ltd. . [2014 (7) TMI 477 - BOMBAY HIGH COURT] taking note of the aforesaid amendment made to section 43B, has held that if the employees contribution to PF is paid within the due date of filing of return of income under section 139(1), no disallowance can be made. Disallowance of interest on advances to subsidiary companies - HELD THAT:- Assessee was having sufficient self–generated / interest free funds available with it to make interest free advance of ₹ 25,67,46,923. In fact, the learned Commissioner (Appeals) has also observed, advances have been made out of common funds available with the assessee which includes both self–generated funds and borrowed funds. As held by the Hon'ble Jurisdictional High Court in CIT v/s Reliance Utilities and Power Ltd. [2009 (1) TMI 4 - BOMBAY HIGH COURT] when mixed funds are available with the assessee, the presumption would be, the interest free advances have been made out of the interest free funds available with the assessee. Therefore, applying the ratio of the Hon'ble Jurisdictional High Court (supra), no notional disallowance / adding back of interest attributable to interest free advances can be made. The addition made is, therefore, deleted. Nature of expenditure - disallowance of expenditure for software by treating it as capital expenditure - HELD THAT:- What is the nature of software for which the payments were made have not at all been examined by either of the Departmental Authorities. At least the nature of software purchased is not discernable from the discussion made either in the assessment order or in order of the learned Commissioner (Appeals). Before us also, neither of the parties have produced material to show the exact nature of software. Moreover, out of the total expenditure claimed what is the amount spent towards purchase of software and what is the amount incurred for monitors, printers, etc., have not been placed. It is further worth mentioning, as per depreciation schedule provided under the income rules computer including software is subject to depreciation. This aspect has also not been examined by the Departmental Authorities. In view of the aforesaid, we consider it appropriate to restore the issue to the file of the Assessing Officer for deciding afresh Change of accounting method - assessee has changed the method of valuation of stores and spares from first in first out (FIFO) to weighted average method - HELD THAT:- As could be seen from the observations of the learned Commissioner (Appeals) in Para–13.2 of his order, he has not given any reasoning why assessee’s claim is not acceptable. He has disposed off the ground raised by the assessee without passing a speaking order. Therefore, we restore this issue back to the file of the Assessing Officer for considering afresh after providing reasonable opportunity of being heard to the assessee. The Assessing Officer while deciding the issue must keep in view the decisions which the assessee may rely upon. Ground allowed for statistical purposes. Addition on account of unutilised MODVAT credit to closing stock - HELD THAT:- As decided in own case issue has been rightly decided by the learned CIT(A) and the valuation of closing stock is already in consonance with section 145A. His order is, therefore, confirmed on this issue.” Following the aforesaid decision of Coordinate Bench of this Tribunal in the assessee‟s own case for A.Y. 2001-02, we uphold the decision of the learned CIT(A) in directing the AO to delete the addition made in the closing stock towards unutilized Modvat credit Addition made on account of claim of bad debt written–off - HELD THAT:- In terms of the principles laid down by the Hon'ble Supreme Court in TRF Ltd. v/s CIT, [2010 (2) TMI 211 - SUPREME COURT] , deduction claimed is allowable. As per the decision of the Hon'ble Supreme Court it is not necessary for the assessee to establish that the debt have actually become irrecoverable. We have also noted that the learned Commissioner (Appeals) in assessee’s own case for subsequent year also has allowed the claim of bad debt. In view of the aforesaid, we do not find any infirmity in the order of the learned Commissioner (Appeals). Accordingly, we uphold the same by dismissing the ground no.2, raised by the Revenue. Adjustment for provisions made while computing book profit under section 115JB - HELD THAT:- earned Authorised Representative has fairly submitted before us that by virtue of retrospective amendment to section 115JB, the deduction claimed is not allowable. He also submitted, the issue has been decided against the assessee by the Tribunal while deciding assessee’s appeal for assessment year 2003–04 and 2004–05. On a perusal of the Tribunal’s order date for the assessment year 2004–05, we have noticed that following its earlier order in assessee’s own case for assessment year 2003–04, the Tribunal has decided the issue against the assessee
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