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2016 (4) TMI 215 - AT - Income TaxDisallowance of interest on timeshare deposits - Held that:- We find that as per the orders of the Hon’ble Bombay High Court, Himco had amalgamated with the assessee, that it had taken over all the liabilities and assets of amalgamated company, that both the companies were following different system of accounting, that following the directions of the Hon’ble High Court and the mandate of the Act and the Companies Act the assessee had made provision for liability towards interest accrued on 25% of refundable deposits of 30/06/2005, that the assessee had given proper treatment to the amount in question in its books of accounts. In our opinion, if a liability can be ascertained on a scientific basis then it cannot be termed a contingent liability. We have also taken cognizance of the fact that the amalgamation scheme was approved by the Hon’ble Bombay High Court and assessee had Acted in pursuance of the order of the court. The payment of interest payable to the sole selling agents, for, the parties must be assumed to be in full knowledge of the affairs of the erstwhile firm. Therefore, the liability to pay the sum was a trading liability and was allowable as a deduction. - Decided in favour of assessee Disallowance u/s 14A - quantification of disallowance - Held that:- We find that in the case of Godrej Agrovet (2014 (8) TMI 457 - BOMBAY HIGH COURT ), the Hon’ble Court had held that percent of exempt income would constitute a reasonable estimate for making disallowance in the years earlier to 2008- 09. Following the same, we direct the AO to restrict the disallowance to 2% of the exempt income.- Decided in favour of assessee in part Determination of income as per the provisions of section 115 JB - Held that:- We find that the AO not given any reasons for adding certain items while determining the income u/s. 115JB of the Act, that the FAA has rejected the claim of the assesse. He had not adjudicated the issue of accrued interest calculated on the interest bearing deposits to time sharing-members for the purposes of calculating the book profit. The assessee had made submissions in that regard. Even if it was a new claim, the FAA was supposed to decide the issue for computing book profit for the year under consideration. Though the AO cannot accept a new claim without a revised return of income. But, the appellate authorities are not bound by such restrictions. The FAA should have decided the issue on merits. Therefore, we are of the opinion that, in the interest of justice, matter should be restored back to the file of the FAA for adjudication of the issue raised by the assessee. Here, we would like to mention that allowability of expenditure u/s. 37 has been dealt by us , while deliberating upon the ground no. 1. As far as FBT is concerned we want to mention that the CBDT, vide its circular no. 8/2005 (F. No. 142/21/2005TPL, dtd. 29. 08. 2005) has dealt the issue in answer to question no. 103. It has been clarified by the Board that FBT was an allow able deduction in the computation of books profit u/s. 115JB of the Act. Considering the above facts, we are reversing the order of the FAA. - Decided in favour of assessee in part
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