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2016 (9) TMI 638 - AT - Income TaxForex Derivatives treating the same as unascertained liability and notional loss - Held that:- There is an underlying liability ( Loan) to hedge the risk and hence the derivative contract under consideration is for the purpose of business and not for the purpose to speculate the transaction without and underlying assets and liabilities. In the instant case there is an underlying liability and purpose of this derivative contract is to minimise the business risk by way of hedging therefore it is not a speculative transaction as Ld. DR has pointed out, hence we direct the Ld. CIT (A) to delete the addition. - Decided in favour of assessee. Replacement cost of combers and ring frames - Held that:- Each machine including the ring frame was an independent and separate machine capable of independent and specific function and therefore, the expenditure incurred for replacement of the new machine would not come within the meaning of the works `current repairs`. See M/s Saravana Spinning Mills Pvt. Ltd. [2007 (8) TMI 16 - SUPREME COURT OF INDIA ] and M/s Sri mangayarkarasi Mills (P) Ltd [2009 (7) TMI 17 - SUPREME COURT ]. Also on the similar set of facts, the Hon`ble ITAT has upheld the action of the assessing officer in treating the expenditure incurred by the assessee as a capital in the assessment year 2005-06 in the assessee`s own case, and the CIT (A) has also upheld the action of the Assessing Officer in treating the expenditure incurred by the assessee as a capital expenditure in the assessment year 2006-07 in the assessee`s own case. - Decided in favour of assessee. Disallowance under section 14A read with Rule 8D - Held that:- Working of Ld CIT(A) as per section 14A , read with Rule 8D seems to be correct. He has rightly excluded the investment made by assessee on 26/03/2008 at ₹ 1,44,804,322 to compute the average amount because the investment was done by the assessee at the end of the accounting year. The Ld.CIT (A) worked out the disallowance as per Rule 8D (2) (ii) by taking opening balance of investment at ₹ 25,57,753/- therefore the total disallowance worked out by him was [ 25,57,753 x6,38,29029/1815274370] at ₹ 89,936/- whereas as per AO the disallowance was at ₹ 26,26,964/- And as per Rule 8D (2) (iii) the disallowance worked out by him was [ ₹ 25,57,753 x 0.5] at ₹ 12788/- whereas as per AO the disallowance was at ₹ 3,73,550/-. Thus, out of ₹ 30,00,514/- the CIT(A) has deleted ₹ 28,97,790 (3000514-102724) and retained the addition of ₹ 102724/-. The said working has been done by the Ld.CIT(A) as per the procedure laid down in section 14A read with Rule 8D, therefore we did not find any mistake in the disallowance made by Ld. CIT (A), hence we confirm the order of the Ld. CIT (A).
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