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2017 (2) TMI 444 - AT - Income TaxDisallowance made u/s.14A - Held that:- We find that the assessee had an exempt income to the tune of ₹ 7.97 lakhs,that the AO made disallowance of ₹ 2.84 lakhs, invoking the provisions of section 14 A r.w.r. 8D of the Rules, that the FAA enhanced disallowance to ₹ 21.80 lakhs,that both the authorities held that there was no proof that the assessee had sufficient own funds to make investments in shares during the year under consideration. We have gone through the balance sheet of the assessee as on 31.3.2010.We find that the reserve and surplus along with the capital of the assessee for the year (Rs.286 crores approx.) is far more than the investments made(Rs.2.99 crores). Nothing has been brought on record to prove that the shares purchased by the assessee for the year under appeal was not a strategic investment.We find that the AO/FAA has not mentioned anything about the expenditure incurred by the assessee for earning exempt income.In our opinion if the assessee does not claim any expenditure for earning exempt income no dis - allowance can be made invoking the provisions of section 14A r.w.r.8D of the Rules. - Decided in favour of assessee Addition under the head sundry balances written off - Held that:- There is no bar on making a claim about the sums written off in a slump sale transaction. The assessee had taken over the assets as well as the liabilities of VI. In the remand report proceedings,the assessee had submitted the evidences proving that the erstwhile entity had offered the income under the head other income. It is found that grant receivable from ASIB of ₹ 71.78 lakhs was credited in the P&L A/c. for the period ended 22.5.2009. Thus, the amount written off during the year under consideration was already offered for taxation. FAA was not justified in rejecting the claim made by the assessee. VAT on service charges portion on natural gas is concerned it is found that the clients had disputed levy of services and finally did not pay such tax. The loss claimed by the assessee was directly linked with business activity and, therefore,was a business loss. The writing off of the amount is not in dispute. So, even if it could not be allowed u/s.36 the same is allowable u/s.28 of the Act. Therefore, we allow Ground No.2. Addition under the head insurance claim written off - Held that:- We find that the claim had arisen after the slump sale took place,that the erstwhile company had claimed loss with the insurance company, that the claim was rejected, that the assessee discarded the assets for the year ended on 31.03.2008 and 31.03.2009. In the light of these developments the assessee wrote off the insurance claim of ₹ 9.37 crores. We have gone through the insurance claim lodged by the assessee and we find that all the conditions for allowing bad debts stand fulfilled i.e. offering the income in earlier year and writing off the amount in the books of account. Therefore, reversing the order of the FAA, we decide Ground No.3 in favour of the assessee. FAA was not justified in enhancing the book profit u/s. 115JB of the Act with regard to 14A disallowance. Addition on account of bogus expenditure - Held that:- If we go through the above statement of BG and the letter of the assessee dt.3.12.2012, it becomes clear that the BG had made the disclosure of ₹ 5 crores in the capacity of MD of the company and that the assessee had promised to pay outstanding taxes.The land develop - ment A/c. clearly proves that accommodation entries were obtained for assessee company. Therefore, in our opinion the FAA was not justified in reversing the order of the AO.In our opinion, the AO had rightly made the disallowance of the impugned sum in the hands of the assessee
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