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2016 (1) TMI 1437 - AT - Income TaxDisallowance of broken period interest Settlement paid to Standard Chartered Bank - HELD THAT:- We find that this ground raised by the assessee is covered in favour of the assessee by the orders and decisions of various courts including those of the co-ordinate benches of the Tribunal in the assessee’s own case [2015 (11) TMI 1792 - ITAT MUMBAI] . Respectfully following the aforesaid decisions, we reverse the order of the CIT(A) in confirming the disallowance on account of broken period interest and allow the assessee’s claim in this regard. Consequently ground no. 1 of the assessee’s appeal is allowed. Interest accrued but not due - HELD THAT:- Tribunal in the assessee’s own case [2015 (11) TMI 1792 - ITAT MUMBAI] issue is covered against the assessee and therefore uphold the order of the ld. CIT(A) on this issue. Disallowance of NRI Deposit Mobilization Expenses - HELD THAT:- Revenue has not been able to bring on record any material evidence to controvert the view taken therein, we, therefore, following the decisions of the co-ordinate benches of this Tribunal in Asst. Year 1999-2000, rendered at paras 59 to 62 thereof, allow the assessee’s claim put forth in ground no. 3 of its appeal. Disallowance of penal interest paid to RBI - HELD THAT:- Penal interest charged by RBI for violation of its guidelines/directives in respect of CRR, SLR etc. is not in the nature of infraction of law and is therefore allowable as deduction while computing the business income of the assessee and therefore allow the assessee’s claim in this regard Settlement paid to Standard Chartered Bank - HELD THAT:- The client ‘SCB’ claimed that the securities delivered to it were not those listed out by it for which an amount of ₹ 70.25 crores was admittedly paid by it, but others purchased from different counter parties. Obviously, ‘SCB’ being a reputed client and keeping in mind, its own market reputation, the matter was settled through mediation agreement and Deed of Release and Indemnity by which the dispute was settled by the assessee making payment of ₹ 34.50 crores to ‘SCB’. On a careful appreciation of the facts and material on record and the judicial decisions cited, we are of the view that the decision of the co-ordinate bench in the assessee’s own case [2015 (11) TMI 1792 - ITAT MUMBAI] for Asst. Year 2000-01 cited by the assessee, where a similar issue of claim of business loss on payment to a client was allowed, we are of the view that the payment of ₹ 34.50 crores to ‘SCB’ by the assessee was also made in the normal course of its business and is to be allowed. Salary paid to expatriate employees – HELD THAT:- In the factual matrix of the case, in this year, i.e. Asst. Year 1995-96, we find that it is similar to those prevailing in the case on hand for Asst. Year 1992-93. As brought out by the co-ordinate bench in its order [2015 (11) TMI 1792 - ITAT MUMBAI] after considering the CBDT’s circular no. 685, the assessee’s admitted position being that the taxes were not deducted or paid as per the requirements of Chapter XVII-B, it is hit by the provisions of section 40(a)(iii) of the Act and therefore the assessee’s claim cannot be entertained Disallowance u/s 37(2A) payment of subscription to Clubs - HELD THAT:- Issue decided in favour of assessee as relying on own case [2015 (11) TMI 1792 - ITAT MUMBAI] following the decision of the Hon’ble Bombay High Court in Otis Elevators [1991 (4) TMI 53 - BOMBAY HIGH COURT] We also find that this issue in question is no longer res integra in view of the decision of the Hon’ble Apex Court in the case of United Glass Manufacturing [2012 (9) TMI 914 - SUPREME COURT] Expenditure on entertainment disallowed - HELD THAT:- As decided in APPAREL EXPORT PROMOTION COUNCIL [2008 (5) TMI 730 - DELHI HIGH COURT] assessee is entitled to deduction for the expenditure incurred for entertainment of staff as well as outsiders for the promotion of business. Exemption of interest on tax free bonds - HELD THAT:- We find that the issue of the assessee’s claim for exemption of interest on investment in purchase of tax free bonds has been considered and adjudicated upon by a co-ordinate bench of this Tribunal in the assessee’s own case [2015 (11) TMI 1792 - ITAT MUMBAI] the co-ordinate bench affirmed the order of the ld. CIT(A) for that year wherein the ld. CIT(A) had relied upon his predecessors order for Asst. Year 1998-99 dt. 4.6.2001; which incidentally is the order and assessment year under consideration in this appeal.
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