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2016 (4) TMI 960 - AT - Income TaxDisallowance u/s 14A - Held that:- assessee had sufficient funds available with it to finance its investments and therefore it can be presumed that it had invested its own funds and not borrowed funds which we have seen that were taken for specific purposes and used accordingly. Thus the additions of ₹ 5,50,586/- made rule 8D(2)(ii) as confirmed by CIT(A) is ordered to be deleted by following the ratio laid down in the case of CIT V/s Reliance Utilities and Power Ltd (2009 (1) TMI 4 - BOMBAY HIGH COURT ). n respect of ₹ 14,61,622/-, the disallowance under rule 8D(2)(iii) we find that the investments were made in the mutual funds by the portfolio management companies. Further in the schedule M pertaining to Administrative and Selling Expenses the total of ₹ 14,91,12,604/- were charged whereas personnel cost in schedule no L ₹ 12,47,94,407/-were debited. In the schedule no M we find that Rent, rates and taxes ₹ 4,54,46,772/-, Legal and professional charges ₹ 1,94,25,756/- and Amount written off ₹ 1,76,70,049/- totaling to ₹ 8,25,42,577/- were charged and were not having indirect nexus with dividend income. We therefore find merit in the submissions of the ld counsel that disallowance as made by the AO and upheld by CIT(A) is excessive and unreasonable on the ground that there hardly any expenses incurred for the propose of investments. We are in agreement with the CIT(A) that rule 8D is applicable from AY 2008-09 but not blindly when the assessee had hardly incurred any expenses in relation to the dividend earned and the substantial investments were made temporarily in order to park the idle funds ideally. We therefore allow relief to the assessee to the extent of ₹ 8,00,000/- out of ₹ 14,61,622/-. Thus the assessee gets relief of ₹ 13,50,586 in all out of Rs, 20,12,208/- thereby sustaining the addition of ₹ 6,61,622/-. - Decided partly in favour of assessee. Addition in respect of late payment of PF - Held that:- We find from the records and arguments of the counsels that the assessee had paid the PF beyond the grace period after the due date under the relevant Act but well before the due date for filing the return of income u/s 139(1) of the Act. We find merit in the submission of the ld AR that the issue is covered in its favor by the decision of the jurisdictional High Court in the case of CIT Vs Ghatge Patil Transport Ltd (2014 (10) TMI 402 - BOMBAY HIGH COURT) in which it has been held that the employers as well as the employees contribution were subject to the provisions of section 43B and the assessee was entitled to the deduction in respect thereof. We therefore respectfully following the ratio laid down in the said decision, delete the addition - Decided in favour of assessee. Addition on account of balance written off during the year following selling of general cargo division - Held that:- The assessee had terminated the lease and license in respect of two warehouses taken from M/S Paras Commercial Centre Pvt Ltd who deducted as compensation for pre-mature termination a sum of ₹ 45,16,000/- whereas the remaining five wharehouses were transferred as part of sump sale. We find merit in the arguments of the assessee that the amount deducted by the licensor on pre-mature termination is admissible u/s 37(1) of the Act as wholly and exclusively for the purpose of business. We also find that the project cargo division of the assessee continued and thus the business of the assessee was carrying on with one division. Even on the ground to commercial expediency the assessee is entitled to deduction of ₹ 45,16,000/- as the continuance of the lease and license would entail additional expenses. We therefore direct the AO to allow deduction of ₹ 45,16,000/- out of total claim of ₹ 56,94,748 thus sustaining the addition to the extent of ₹ 11,78,748/- . - Decided partly in favour of assessee. Addition being loss on account of write off of receivables upon re-assignment in the slump sale of the general cargo division - Held that:- From the records before us we find that the purchaser M/S Excel re-assigned some debts which were part of the net current assets in the slump sale and reduced the purchase price accordingly by ₹ 2,44,22,159.91. The assessee wrote off ₹ 1,76,70,049/- out of this amount claiming the same to be admissible under section 36(1)(vi) of the Act however the same was added to the income of the assessee on the ground that the debts were transferred to the purchaser as part of the net current assets under slump sale and the assessee could not be allowed double benefit. Even the CIT(A) upheld the additions on the same analogy. We find that the both AO and CIT(A) had completely ignored the fact that under "Adjustment to Purchase Price" the purchaser reassigned some debts amounting to ₹ 2,44,221,60/- to the assessee and assessee reduced the same from the purchase price which is clearly mentioned in para 7.1 of the assessment order. In our view the finding of AO and the CIT(A) that the debts were transferred as part of net current assets in the slump sale and the assessee would get double benefit if allowed deduction in respect of write off of the book debts were wrong and against the facts of the case. The assessee had rightly written off the debts and the same were admissible under section 36(1)(vi) of the Act - Decided in favour of assessee.
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