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2014 (6) TMI 1041 - AT - Income TaxDisallowance u/s 14A - as argued entire investment was made in the earlier years by erstwhile Gujarat Electricity Board (GEB) which got de-merged in the immediately preceding year. The assessee was one of the seven de-merged companies thereof - HELD THAT:- Respectfully following the precedent we restore this issue back to the file of the Assessing Officer for adjudication afresh with the same directions as given by the Tribunal in the Assessment Year 2006-07 [2013 (9) TMI 1071 - ITAT AHMEDABAD] as held that the investments were in the form of shares of subsidiary companies as part of the financial restructuring plan approved by the Government of Gujarat which was integral to the demerger - decision of Hon'ble Bombay High Court pronounced in the case of Godrej & Boyce Mfg. Co. Ltd. Muimbai vs. Dy.CIT [2010 (8) TMI 77 - BOMBAY HIGH COURT] - AO is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income - AO should provide a reasonable opportunity to the assessee of producing its accounts - Remanded back for statistical purpose. Disallowance under the head assets written off on the ground that the same is not a revenue expenditure - HELD THAT:- Items in question are drills, tools and equipments which do not have life of more than a year has to be verified from the account books and documents of the assessee as they are not available on record. Therefore, we set aside the order of the Commissioner of Income Tax (Appeals) and restore the matter back to the file of the Assessing Officer for adjudication of the issue afresh in the line of the decision of ADI Artech Transducers (P) Limited [2013 (8) TMI 1105 - GUJARAT HIGH COURT] after allowing reasonable opportunity of hearing to the assessee. Thus, this ground of appeal is allowed for statistical purpose. Disallowance of prior paid expenses - HELD THAT:- Various claims in respect of transmission charges, tariff, additional capacity charges, building charges etc raised by National Thermal Power Corporation Limited, Power Grid Corporation of India Limited, Gandhar Power Station, Maharashtra State Electricity Board etc. were settled during the year and the liability to pay got crystallized only during the accounting year. The Departmental Representative has relied on the order of the Assessing Officer. He could not bring any material on record to show that the finding of the Commissioner of Income Tax (Appeals) that various expenses claimed by the assessee under the head prior paid expenses got crystallized during the year and therefore were claimed as deduction during the year under consideration was incorrect. Neither has it been shown by the Revenue that the expenses claimed by the assessee are not genuine. It is the claim of the Revenue that since the assessee is following mercantile system of accounting, therefore expenses relating to the year under consideration are only allowable to the assessee. Even in the case where assessee is following mercantile system of accounting, expenses which are disputed and are finally settled and crystallized in a later year, they are allowable as deduction to the assessee in the year of crystallization of such expenses. Therefore, we do not find any good and justifiable reason to interfere with the order of the Commissioner of Income Tax (Appeals) which is confirmed and this ground of appeal of the Revenue is dismissed. Disallowance of miscellaneous expenses and write-off - HELD THAT:- Assessing Officer should also get an opportunity to verify the documents which were filed before the Commissioner of Income Tax (Appeals) for the first time by the assessee. In view of the above submissions of the Departmental Representative, we set aside the order of the Commissioner of Income Tax (Appeals) and restore this matter back to the file of the Assessing Officer for adjudication of the issue afresh as per law after allowing reasonable and proper opportunity of hearing to the assessee. The assessee is also directed to file all the details and documents before the Assessing Officer as and when called upon to do so. Thus, this ground of appeal of Revenue is allowed for statistical purpose. Addition u/s. 40(a)(ia) - legal and professional charges - failure to furnish the details with regard to payment and tax deducted thereon and credited the same to the Government - HELD THAT:- Assessing Officer should also get an opportunity to verify the evidences which were filed for the first time before the Commissioner of Income Tax (Appeals) by the assessee. Therefore, in view of the above submissions of the Departmental Representative, we set aside the order of the Commissioner of Income Tax (Appeals) and restore the matter back to the file of Assessing Officer for adjudication of the issue afresh after allowing reasonable and proper opportunity of hearing to the assessee. Thus, this ground of appeal is allowed for statistical purpose.
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