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2022 (5) TMI 1574 - AT - Income TaxDisallowance of administrative expenses u/s 14A r.w Rule 8D(2)(iii) - HELD THAT:- AO had failed to record his dissatisfaction as regards the claim of the assessee that no part of the expenditure claimed as deduction could be attributed towards earning of exempt dividend income, therefore, he had wrongly assumed jurisdiction u/s. 14A of the Act, as a result whereof the disallowance determined by him by triggering the mechanism contemplated in Rule 8D(2)(iii) cannot be sustained and is liable to be vacated. As we have vacated the disallowance made by the A.O u/s. 14A(2)(iii) for want of valid jurisdiction on his part, therefore, we refrain from adverting to the other contentions that have been advanced by the Ld. AR qua sustainability of the said disallowance on merits which are left open. Ground of appeal No.2 raised by the assessee is allowed in terms of our aforesaid observations. Disallowance of deduction of contributions to temple/panchayat - as contributions made by the assessee to the temple/panchayat were not eligible for deduction u/s. 80G, A.O disallowed the assessee’s claim for deduction of the aforesaid amount in question - HELD THAT:- Aforesaid contributions/expenditure which are neither in the nature of personal expenditure or capital expenditure and have been incurred by the assessee company in order to facilitate running of its business of mining smoothly, i.e., without any disturbance from the people in the surrounding villages thus, being in the nature of an expenditure incurred by the assessee wholly and exclusively for the purpose of its business was allowable as a deduction u/s. 37(1) of the Act - no infirmity in the view taken by the CIT(Appeals) who had vacated the aforesaid disallowance. Addition u/s 41(1) - cessation of liabilities - Assessee had failed to furnish confirmations in respect of four creditors - HELD THAT:- Now when it is the claim of the assessee that the impugned liabilities had ceased to exist in the aforementioned succeeding years, then, in case the A.O was to hold otherwise, he was obligated to substantiate on the basis of irrefutable material that the said outstanding liabilities had in fact ceased to exist during the year under consideration itself, i.e., A.Y.2009-10. - Decided against revenue. A.O could not have summarily concluded that the cessation of the aforementioned outstanding liability had occasioned during the year under consideration, i.e., AY 2009-10. We, thus, in terms of our aforesaid observations, finding no infirmity in the view taken by the CIT(Appeals) who had rightly vacated the addition of made by the A.O u/s. 41(1) uphold the same. - Decided against revenue. Addition u/s. 28(iv) - assessee had received advances/deposits in the preceding years from 6 parties, i.e., for providing handling services in connection with its business which stood reflected in its ‘balance sheet’ on 31.03.2009 - HELD THAT:- We find substantial force in the claim of the Ld. AR that the invoking of provisions of section 28(iv) of the Act pre-supposes any benefit or perquisite whether convertible into money or not, arising from business or the exercise of a profession. As observed in the case of Commissioner Vs. Mahindra & Mahindra Ltd. [2018 (5) TMI 358 - SUPREME COURT] for invoking the provisions of section 28(iv) of the Act, benefit received has to be in some form other than in shape of money. Observing, that as the waiver of loan for acquiring a capital asset in the case before them represented cash/money, the Hon’ble Apex Court in its aforesaid order had concluded that the provisions of section 28(iv) of the Act would not be applicable. As stated by the AR, and rightly so, as cessation of a capital receipt of an amount by the assessee, i.e., deposits/advances for providing handling services that were received by the assessee in the normal course of its business in the preceding years, would undisputedly represent cash/money and is not in the nature of benefit or perquisite other than any shape of money, therefore, the provisions of section 28(iv) of the Act would not get triggered.
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