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2017 (5) TMI 1702 - ITAT CHENNAIDisallowance u/s.14A r.w.r. 8D - CIT-A directing to exclude the investment made by assessee in subsidiary companies and investments which did not yield exempt income while computing the disallowance u/s.14A r.w.Rule 8D - HELD THAT:- It is appropriate to remit the issue to the file of AO to consider the disallowance u/s.14A r.w.Rules 8D to find out whether interest bearings borrowed fund were used to acquire the shares in the companies or making advance to the subsidiaries. With this observation, we restore the issue to the file of AO for fresh consideration. Payment of royalty - Nature of expenditure - capital expenditure or revenue expenditure - HELD THAT:- As decided in own case payment made for the user of the logo is always revenue in nature MAT computation - addition relating to expenditure incurred for exempt income while computing the book profit u/s.115JB - HELD THAT:- Disallowance made u/s.14A r.w. Rule 8D cannot be added while computing book profit u/s.115JB of the Act that the disallowance is only disallowance for the purpose of computing taxable income of the assessee in the normal course. There is no provision in the Act to add these kind of disallowance while computing book profit u/s.115JB and it cannot change the book profit on this count. Therefore even if there is an addition in view of provision u/s.14A r.w.Rule 8D, that cannot be added back to compute the book profit u/s.115JB. This ground is allowed. Transfer to Reserve Fund as required under Section 45-IC of the Reserve Bank of India Act and claimed the same as appropriation of funds by overriding title - HELD THAT:- As decided in ow case [2016 (8) TMI 1204 - ITAT CHENNAI] assessee claims that it is only an appropriation of funds by overriding title. This Tribunal examined the very same issue for assessment years 2003-04 to 2009-10 and found that the transfer of funds, as required under Section 45-IC of the Reserve Bank of India Act, is only an application of income, therefore, liable for taxation. In view of the decision of this Tribunal in the assessee's own case, for assessment years 2003-04 to 2009-10, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. Addition of interest u/s. 234D - HELD THAT:- As decided in ow case [2016 (8) TMI 1204 - ITAT CHENNAI] DR rightly submitted by the Ld. D.R., interest is charged under Section 234D of the Act on the excess amount refunded to the assessee while processing a return under Section 143(1) of the Act. Even though it is an interest levied on the amount refunded to the assessee, in fact, it is an interest for delayed payment of tax. In other words, the amount refunded to the assessee while processing return under Section 143(1) of the Act was considered as nonpayment of tax and interest was charged for the period in which the assessee was holding the amount. Therefore, the interest paid by the assessee cannot be construed as expenditure for earning the income or for business purpose Disallowance made u/s.40(a)(ia) - The main contention of the ld.A.R is that nothing is payable at the end of the close of the Financial year, as such the issue is squarely covered by the order of the Special Bench of the Tribunal in the case of Merilyn Shipping and Transports v. Addl. CIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] - HELD THAT:- There is a force in the argument of the ld.A.R and the Special Bench cited supra considered this issue and decided the issue in favour of the assessee. We are inclined to remit this issue to the file of the ld. Assessing Officer with similar direction. These grounds raised by the assessee is allowed for statistical purposes. Bad Debts disallowance u/s 36 (1)(vii) - AO rejected the claim of bad debts of the assessee at the threshold on the reason that it was not written off in its books of accounts maintained by the assessee under Companies Act, 1956 and the A.O has not examined whether it was written off in its books of accounts maintained for income-tax purposes - HELD THAT:- The Income Tax Act requires for the assessee to follow a parellelly consistent method of accounting in accordance with section 145 thereof. The books maintained for the purposes of the Income Tax Act shall comply with the provisions of section 145 and shall form the basis for an assessment thereunder. The error in the order of assessment is the juxtaposition of the two books by the assessing officer. The creation of a provision for bad debts in the corporate accounts thus does not, in any way, impact the claim of bad debt u/s 36(1)(vii) of the Act in the regular computation of income. This submission of the department stands rejected. (Para 7) Thus, it is clear that the claim of bad debts relates to debts actually written off and not a provision made in this regard and therefore, in accordance with the provisions of Section 36 (1)(vii), written off the bad debt and the claim is allowable As per the judgement of the Hon’ble Supreme Court in the case of TRF Ltd. v. CIT [2010 (2) TMI 211 - SUPREME COURT] as held that after 01.04.1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. Hence, it is appropriate on our part to remit the entire issue as done by the Tribunal in the earlier occasion to the file of AO for his due examination of the books of accounts maintained by the assessee under the Income Tax Act, 1961and the ld. Assessing Officer decides thereupon.
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