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2018 (1) TMI 1077 - AT - Income TaxDisallowance of bad debts u/s 36(2) - Held that:- It appears that disallowance has been upheld considering this claim as for bad debts and not fulfilling the conditions of section 36(2) of the Act. However, since this was an advance given in the course of business and neither services rendered nor advance returned back, the claim is required to be allowed as a business loss. In the interest of justice, we restore the matter back to AO and we direct the AO to verify the facts and decide afresh. We direct accordingly. Non granting deduction for provision for leave encashment - Held that:- We have considered rival contentions and found that issue is squarely covered by the decision of the Supreme Court in case of Bharat Earth Movers [2000 (8) TMI 4 - SUPREME Court] . Respectfully following the same, we direct the AO to delete the disallowances as claimed by assessee on account of provision for leave encashment. Disallowance of depreciation on plant and machinery - assessee was unable to prove that the machinery was used in production - Held that:- Respectfully following the order of Tribunal in assessee’s own case for the A.Y.1996-97, we do not find any infirmity in the order of CIT(A) for deleting the addition made on account of disallowance of depreciation on plant and machinery wherein held that the machine in question is used for cutting and wrapping confectionary toffees and were delivered at ready to use condition. Thus, it is evident that the machine has no role to play in the production activity. Therefore, when the learned Commissioner (Appeals) has accepted the fact that the machine was purchased and commissioned and formed part of the fixed asset in the relevant financial year, there is no reason to disallow assessee's claim of depreciation. Disallowance on account of foreign travel expenses - Held that:- As during the year under consideration, assessee has incurred foreign travel expenses for visit of Directors as well as Executives to Switzerland. As per the noting on passport, the travel was for the purpose of business. The correspondence with the foreign parties also indicate that travel was for business purpose. Thus restore the matter back to the file of the AO for deciding afresh Disallowance u/s.14A r.w.R. 8D - Held that:- Keeping in view the decision of Bombay High Court in the case of HDFC Bank Ltd. [2016 (3) TMI 755 - BOMBAY HIGH COURT] we do not find any merit for the disallowance of interest in so far as share capital reserves and surplus of the company was much more than the investment. With regard to the disallowance of administrative expenses under Rule 8D(2)(iii), following the reasoning given in the A.Y.2008-09, we restore the mater back to the file of AO for deciding afresh. We also direct AO to consider only those investments wherein exempt income is received during the year. Furthermore, strategic investments are not to be considered while computing disallowance under Rule 8D (2)(iii).
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