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2018 (4) TMI 1754 - AT - Income TaxDisallowance of peripheral expenditure - Allowable revenue expenditure - HELD THAT:- AR referred to the nature of the expenditure incurred through the corporate office at Bhubaneswar and further substantiated that the assessee has evidence to prove the claim. Therefore, we, considering the apparent facts and material on record, are of the opinion that the claim of the assessee in respect of incurring of expenditure at peripheral areas as per the order of the Govt. is not disputed and the reasons recorded by the lower authorities in respect of sustenance of the addition to the extent of ₹ 56,27,609/- cannot be overlooked. Accordingly, in the interest of justice, we remit this issue to the file of AO to verify the nature of expenditure incurred on the peripheral areas and decide the same on merits. This ground of appeal is allowed for statistical purposes TDS u/s 194C - disallowance of wheeling charges for non-deduction of TDS under section 40(a)(ia) - scope of second proviso to Section 40 Sub-clause (ia) of clause (a), which was inserted by the Finance Act, 2012 with effect from 1st April, 2013 - HELD THAT:- Hon’ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (P) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] held that the proviso added u/s.40(a)(ia) of the Income Tax Act,1961 was retrospective in operation and the assessee is entitled to the benefit of the same. Accordingly, if the assessee substantiates with evidence that GRIDCO has offered the income in their income tax assessment, the assessee cannot be treated as “assessee in default”. Accordingly, we are of the opinion that the matter needs to be examined and we remit this disputed income to the file of the AO and the assessee shall cooperate and submit the income tax particulars in the assessment proceedings for early disposal of the case and this ground of appeal of the assessee is allowed for statistical purposes. Disallowance of additional depreciation u/s.32(1)(iia) - HELD THAT:- We restore this matter to the file of the AO for fresh adjudication in respect of the claim of additional depreciation u/s.32(1)(iia) of the Act and this ground of appeal of the assessee is allowed for statistical purposes. Disallowance of provision for leave encashment u/s.43B(f) - HELD THAT:- The assessee has made the provision for leave encashment and the provision was not added back in the computation of income. As the ld. AR submitted that the above issue is covered by the order of the coordinate bench of the Tribunal in the case of Baitarani Gramya Bank [1762067] remit this issue to the file of the AO to examine and allow the claim and this ground of appeal is allowed for statistical purposes. Disallowance of expenditure on departmental meetings, official lunch and dinner and company guests - expenditure on ceremonial expenses, other staff welfare expenses and cultural activities and also disallowance under other miscellaneous expenses - HELD THAT:- Tribunal in assessee’s own case and restrict the disallowance to ₹ 10,00,000/- under other miscellaneous expenses as against ₹ 34,85,383/- disallowed by the AO and in respect of estimation of expenses, departmental meeting, official lunch and dinner and company guests, ceremonial expenses, other staff welfare expenses and expenses on social & cultural activities, we rely on the Tribunal decision and are of the opinion that the expenses were incurred wholly and exclusively for the business and allowable u/s.37(1) of the Act and accordingly direct the AO to delete the addition and allow this ground of appeal of the assessee. Disallowance under prior period adjustments - HELD THAT:- We considering the material aspects and the concept of income and expenditure remit this disputed issue to the file of AO to verify the claims and grant the set off of prior period income against the prior period expenses and passed the order on merits and the assessee shall cooperate in submitting the information and this ground of appeal of the assessee is allowed for statistical purposes. Disallowance of amounts written off in respect of claims/receivables - AO has disallowed the claim of receivables as the assessee has not furnished any explanations with regard to the allowability - HELD THAT:- We found that the assessee has claimed ₹ 1,86,07,855/- on account of write off scraps and the same was considered by the CIT(A) and granted partial relief. This issue of claim of receivables of the company pertains to earlier years but the AO has not brought on record these facts that the assessee has not disclosed. Whereas ld. AR before us prayed that the assessee is eligible to write off the claim as they are pertaining to earlier years and prayed for an opportunity before the AO. We find strength in the submissions of the ld AR. Accordingly, we remit this issue to the file of AO and this ground of appeal of the assessee is allowed for statistical purposes. Disallowance of Electricity Duty u/s.43B - HELD THAT:- Claim allowed as relying on assessee own case Claim on account of diminution in the value of non-moving stores & spares allowed Addition u/s 40A - payment to benevolent scheme - HELD THAT:- We find in the instant case that the CIT(A) is justified in allowing the deduction towards the claim of payment under benevolent scheme. Accordingly, we dismiss this ground of Revenue. Addition on account of pot-reling expenses - HELD THAT:- Assessing Officer white making the addition has not made a case that by relining the pots and the assessee has virtually obtained an asset which could have been resulted into enduring benefit for the assessee to treat such expenditure as capital in nature. Apart from above facts, we have also considered the fact that the claim of the assessee was accepted by the Ld. CIT in succeeding year and the Department is not in appeal against the order of the Ld. CIT before this Tribunal. Allowability of peripheral development expenses - HELD THAT:- We find that the CIT(A) while considering this issue has dealt on the submissions of the assessee and findings of the AO and decided the disputed issue based on the order of the Government of Orissa and treated the entire expenditure on development of the two districts viz.: Angul and Koraput as peripheral development expenditure incurred wholly and exclusively for the purpose of business and restricted the disallowance to ₹ 56,27,609/- and granted relief to the assessee for ₹ 7,62,83,499/-. Hence, we are not inclined to interfere with the order of CIT(A) on this ground Gift coupons to the employees - HELD THAT:- AO disallowed the claim of the assessee because the payments made by the assessee were in the nature of ex-gratia payments. The CIT(A) held that the expenditure is clearly incurred wholly and exclusively for the purpose of business and has to be allowed as a deduction u/s.37(1) of the Act. We find that the similar expenditures were claimed in the earlier years and the Revenue has accepted the same. In our considered view the CIT(A) has rightly deleted the disallowance made by the AO on account of gift coupons to the employees. Accordingly, we upheld the action of the CIT(A) and dismiss the ground of appeal of Revenue.
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