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2016 (7) TMI 613 - AT - Income TaxDisallowance made u/s 14A - Held that:- No disallowance u/s 14 A of the Act need to be made by invoking the provisions of Rule 8D(2) of the Rules as the investments admittedly are business expediency investments and strategic investments. Since the investments were held to be business expediency investments, there is no case for making any disallowance by adopting Rule 8D(2)(iii) of the Rules also - Decided against revenue Disallowance on account of depreciation - Held that:- We find that the action of the ld AO in trying to disturb the opening Written Down Value (WDV) attributable to the cost of land and thereby trying the disallow the depreciation component thereon is not appreciated , as, if at all, the ld AO has got any grievance on the impugned issue, then he should have reopened the assessment for the Asst Year 2007-08 ( i.e. the year in which land on which windmill was installed was purchased) and disallowed the depreciation thereon in that year. He cannot unilaterally disallow the depreciation based on the opening written down value. Assessee is entitled to entire amount claimed as depreciation on windmill. - Decided against revenue Disallowance made on account of advertisement expenses - assessee produced the copy of the bill of M/s Adsun Advertising Agency and CIT(A) deleted the addition - DR argued that the bill of M/s Adsun Advertising Agency was never subjected to verification by the ld AO and accordingly prayed for setting aside of this issue to the file of the ld AO - Held that:- In the facts and circumstances, we deem it fit and appropriate, to set aside this issue to the file of the ld AO , to decide the same in the light of evidences submitted by the assessee in this regard. - Decided in favour of revenue for statistical purposes. TDS u/s 194C - non deduction of tds on advertisement material expenses - Held that:- We find from the details and the bills submitted the assessee had only made payments for purchase of materials and had admittedly not supplied the materials to the job worker and hence the same would not fall under the definition of ‘work’ as per section 194C of the Act.Hence there is no violation of section 194C warranting any disallowance u/s 40(a)(ia) of the Act. - Decided in favour of assessee Addition being notional interest @ 13.5% on trade advance - Held that:- As already held while dealing with the issue of disallowance u/s 14A that the assessee is having sufficient own funds at its disposal which would easily cover the advance given to the wife Smt Kala Devi Jain in the sum of ₹ 7,00,000/- also. Hence there is no question of charging any notional interest thereon on the said advance presumed to have been given out of own funds. Hence the addition made is directed to be deleted. - Decided in favour of assessee Disallowance towards staff welfare expenses - Held that:- The assessee has made gifts of ₹ 5,100/- each to two of its employees on the occasion of the marriage in their families in order to maintain harmonious relation with the staff members. We hold that there is no personal element involved therein and has been incurred in the ordinary course of his business. We hold that the said expenditure is only in the nature of staff welfare and is squarely allowable as a deduction. Accordingly, we have no hesitation in directing the ld AO to delete this addition - Decided in favour of assessee
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