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2018 (4) TMI 387 - AT - Income TaxDisallowance of u/s 14A - Held that:- The said order is in connection with the A.Y. 2007-08 in which there was no application of the provision u/s 14A r.w. Rule 8D of the Act. In the said order the disallowance was made on the reasonable basis. In the instant case, the disallowance was to the tune of ₹ 605122/- u/s 14A of the Act. The interest disallowance was to the tune of ₹ 381674/- Therefore, in the said circumstances, after the deducting the interest expenditure to the tune of ₹ 381674/-,we upheld the expenditure to incur the exempt income to the tune of ₹ 223448/- i.e., 605122/- -381674/-. Accordingly, we allowed the claim of the assessee partly. Addition of unutilized MODVAT credit - Held that:- The unutilized MODVAT credit is not the income in view of the provision u/s 145A. However, the assessee took the relevant plea that if the said amount has been treated as the income then the same be adjusted in the opening stock of subsequent year. Delhi high court in case of CIT v/s Mahavir aluminum Ltd [2007 (11) TMI 41 - HIGH COURT OF DELHI] interpreted the Law in this regard. CBDT circular N.772 Dt 23.12.1998 also clarify the object of insertion of section 145A. Anyhow, both the plea seems to justifiable but the unutilized MODVAT credit of ₹ 5,37,826/- is not the income of the assessee, therefore, the same is not liable to be added as income of the assessee. Accordingly, we delete the said addition and decide this issue in favour of the assessee against the revenue. Disallowance of Professional Fees - Held that:- No other document has been placed on record in support of this contention. Since, the company is related company and no working of any kind was given to the assessee company for the investment in 7 companies nor produced before us. The assessee entered into F&O transactions by making purchase only on 18.06.2007 and making sale on 20.10.2007, 23.10.2007 & 25.10.2007.The transaction was carried out only on 10-11 different dates which are few transactions. The assessee paid of ₹ 22,94,400/- which was considered as unreasonable. The assessee nowhere submitted about the reasonableness of the fees and comparable fees with other chart by unrelated parties hence, the Professional Fees seems to be rightly disallowed by the AO and confirmed by the CIT(A). - Decided in favour of revenue.
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