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2017 (11) TMI 1595 - AT - Income TaxDisallowance u/s 14A - Held that:- We direct the AO to disallow 2% of the dividend income u/s 14A of the Act Disallowance of the claim of the appellant u/s 80IA in respect of its power generation plant - as per AO claim of the assessee was wrong as being not as per the provisions of the Act - whether the assessee is entitled to captive consumption of power or not? - Held that:- In the case of Tamil Nadu Petro Products Ltd [2010 (11) TMI 645 - MADRAS HIGH COURT] it is held the said contention can have no application to the case on hand. Inasmuch as we dealt with the issue in the light of section 80-IA and in particular sub-clause (iv) of the said section which provides for the benefit even in respect of electricity generation plant established by the assessee and the income derived from such enterprise of the assessee, it will have to be held that the assessee fully complied with the requirements prescribed under section 80-IA in order to avail the benefits provided therein. Therefore, the contention based on the interpretation of the expression 'derived from' can have no application to the case where the provisions of section 80-IA get attracted.- Decided in favour of the assessee Disallowance u/s 14A - Held that:- In this case, we find that the ld.CIT(A) partly allowed the ground of the assessee by deleting the addition of ₹ 40,84,000/- on account of interest under rule 8D(2)(ii) by considering the facts that the assessee‟s own funds in the business of assessee were far more than the investments from which tax free dividend income was earned to the tune of ₹ 422.79 crores following the decision in the case of HDFC Bank Ltd. V. DCIT (2016 (3) TMI 755 - BOMBAY HIGH COURT) and also the decision in assessee's own case for the assessment years 2008-09 and 2009-10. In our considered view, the issue is squarely covered by the ratio in favour of the assessee Provision for slow and non moving stock disallowed - method of accounting or valuation of stock - unascertainable expenditure allowance - Held that:- The assessee itself has duly disclosed all the facts qua stock written off during the year in its audited accounts. Moreover, the stock register was prepared and maintained as per the Accounting Standard followed by the assessee regularly which also duly disclosed all stock in the accounts. Since the assessee is engaged in the manufacturing of chemical, pesticides and powder which are easily evaporable or are susceptible to damage and cannot be used in the finished goods. Besides, the ld. AR submitted that the assessee has been following the accounting method regularly which is also duly disclosed in the audited financial statements. Since, the assessee is engaged in the manufacturing of chemicals and pesticides using inputs in the form of chemical powder and liquid which are evaporative and damageable. After considering the submissions of the rival parties and considering the facts of case, we do not find any infirmity in the order of ld.CIT(A). The case laws relied by the revenue have been examined and found to be not applicable to the present facts. Accordingly, we affirm his order and reject the ground taken by the Revenue. Treatment to expenditure on account of implementing “Project Disha" - revenue or capital expenditure - Held that:- The expenditure incurred by the assessee to an external consultant Ernst and Young as legal and professional charges for “DISHA” cannot be treated as capital expenditure as the same was incurred to bring overall efficiency and improvement in the existing business of the assessee by undertaking special campaign in the phased manner during the year. In our opinion, the expenditure incurred by the assessee is of purely revenue in nature and cannot be treated as capital nature as has been done by the AO. - Decided against revenue
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