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2019 (6) TMI 1441 - AT - Income TaxDeduction u/s 80IA - enhancement of income of the appellant being allocation of head office expenses to Power Project at Akrimota Unit - HELD THAT:- Taking into consideration the nature of expenditure we find some of them may not be directly linked with the concerned Power Project Unit at Akrimota; the share transfer fee, seminar expense, security expenses, donation, sundry balances, telephone expenses ought not to have been allocated on the basis of the turnover to various units. They are neither required to be allocated to the Power Project Unit as well. We find no justification and/or rational as to how these expenses linked to the power project unit particularly. On the other hand though some of the expenditure pertain to the eligible unit but proper linkage has not been pointed out which should have been made by the Learned CIT(A) upon considering the concrete documents of such expenditure to the said power project unit. Neither it is ascertainable from the order that any verification during the appellate proceeding was made before enhancing the income of the assessee by reducing the allocation of head office expenses to the said unit. In that view of the matter, we find it fit and proper to set aside the issue to the file of the Learned CIT(A) for verification of the same after going through the details of expenditure incurred by the head office in respect of Akrimota Power Project Unit and upon establishing linkage and/or nexus of such expenditure to that of the eligible Power Project Unit to pass the order in accordance with law keeping in view of the nature of expenditure as mentioned above. Therefore, the Learned CIT(A) should give categorical finding in respect of the expenditure which cannot be allocated to Akrimota Power Project Unit after due verification of the supporting documents provided by the assessee - Assessee’s appeal is allowed for statistical purposes. Disallowance u/s 36(1)(iii) - assessee could not prove nexus of interest of interest free loans given to others with interest free fund - CIT(A) in directing to make proportionate disallowance - HELD THAT:- Only upon considering the similar details including details relating to the interest on fixed term loan pertaining to head office borrowing amounting to ₹ 9,86,301/-, interest on Over Draft and other miscellaneous interest pertaining to head office amounting to ₹ 1,60,000/- and ₹ 7,399/- for Mata’s Madh which are general purpose interest expenditure the Learned CIT(A) came to a conclusion that the same cannot be attributed for specific purpose. The Learned CIT(A) worked out the interest expenditure to the tune of ₹ 11,53,706/- following the earlier decision taken by him in assessee’s own case as for A.Y. 2010-11. The Learned CIT(A) further directed the Learned AO to re-compute the proportionate disallowance by taking the total interest expenditure at ₹ 11,53,706/- which in our considered view is without any ambiguity. Hence, we find no infirmity in the order passed by the first appellate authority so far as to warrant interference. The question is accordingly answered in the affirmative, i.e. in favour of the assessee and against the revenue. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- Since certain disallowance had already been made by the Learned CIT(A) u/s 36(1)(iii) of the Act it was also observed by the Learned CIT(A) that total disallowance should not exceed to the total interest expenditure of the said amount of ₹ 11,53,706/- which according to us without any infirmity and/or any error. So far as the administrative expenditure is concerned the fact that the assessee has not earned interest income in respect of investment of ₹ 29.20 crores has been rightly taken into consideration and therefore disallowance u/s 14A has been disregarded by the Learned CIT(A) Jurisdictional High Court in the case of Corrtech Energy Pvt. Ltd. [2014 (3) TMI 856 - GUJARAT HIGH COURT] where it has held that if no exemption on account of income generated from investment has been claimed, no disallowance u/s 14A should be made. It was further observed by the Learned CIT(A) that since the appellant itself made disallowance to the tune of ₹ 51,66,612/- on account of administrative expenses by taking 0.5% of the average value of investment, no further disallowance on account of administrative expenditure is called for. The justification given by the Learned CIT(A), in our considered view is proper and does not warrant interference. Hence, the same is upheld. In the result, revenue’s appeal is dismissed. Disallowance of depreciation - HELD THAT:- Issue decided in favour of assessee as relying on own case for A.Y. 2001-02 Deduction u/s 80IA to be allowed.
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