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2016 (9) TMI 1664 - AT - Income TaxAddition on account of investment in shares made u/s 14A read with rule 8D - as DR contended that the assessee had diverted interest bearing fund for non-business purposes, therefore, the Assessing Officer was justified in invoking the provisions of Section 14A - HELD THAT:- We find that in the assessee’s own case for the assessment year 2008-09 the matter travelled to the Tribunal and the Tribunal after elaborately discussing the issue [2013 (9) TMI 1300 - ITAT INDORE] as held assessee has made investment in shares of group companies as a matter of commercial expediency. We also found that the assessee was having huge reserve as well as surplus funds available out of its profit. However, to show that investment in shares of Associate concerns have been made out of non interest bearing funds, is on the assessee and burden lies on him to demonstrate before the Departmental Authorities that no interest bearing fund has been used. It is also a matter of record that since investment has been made under commercial necessities, the proposition laid down in the case of S. A. Builders Limited [2006 (12) TMI 82 - SUPREME COURT] is required to be considered before disallowing interest expenditure having been incurred on the funds borrowed for the purpose of business - investment in group companies were having taxable income and assessee has offered substantial long term and short term capital gains in the returns of subsequent years. Thus we direct the AO to decide the matter afresh in terms of the above observations of the Tribunal. We direct accordingly. Addition of prior period expenses - assessee company has claimed prior period expenses related to reversal of monthly toll charges under settlement with SPV Company Path Oriental Highways Ltd and income has been offered in respective year whereas there is no income received to the assessee - HELD THAT:- Tribunal in its order in the assessee’s own case for the assessment year 2008-09 [2013 (9) TMI 1300 - ITAT INDORE] has restored this issue to the file of the Assessing Officer as held As per the accounting standard, in case of construction contractor, the contract revenue would accrue or arise only in respect of initial amount of revenue agreed in the contract. However, in respect of variations of claim and incentive, the revenue would accrue and arise only in the situation, when there is not only probability of acceptance of claim but also when variations, claim or inventive are reliably measurable. Both the conditions enjoyed in respect of variations, claim or incentive payment are cumulative and unless both the conditions are met out together, no revenue claim or incentive can be recognized in the books of account. In the instant case, the claim of the assessee company has been rejected by POHL at thrash hold only and even the process of negotiations have not got commenced during the year under consideration. As the alleged amount of proforma invoice has neither been received nor accrued to the assessee during the relevant assessment year under consideration. Therefore, there is no justification in the action of CIT(A) for bringing to tax net such amount during the year under consideration. However, the Department is at liberty to tax such income in the year of actual receipt, in any subsequent year. Accordingly, we restore the matter back to the file of Assessing Officer to verify and tax this income in the year of actual receipt. Thus Assessing Officer is directed to verify the claim of prior period expenses and decide the same as per the above judgment of the Tribunal. Therefore, we restore this issue as per the above direction.
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