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2018 (6) TMI 360 - AT - Income TaxDisallowance u/s 14A r.w.r 8D - assessee contends that the satisfaction was not recorded by the AO giving cogent reasons for rejecting the suo-moto computation of disallowance u/s 14A - Held that:- AO cogent reason as to why he is not satisfied with the suo moto disallowance made by the assessee. The Assessing Officer’s comment that the assessee did not to maintain separate books of accounts, for the expenses incurred in relation to earning of income not includible in the ‘total income’ would tantamount to AO being of the opinion that the assessee should maintain separate books for this purpose. This is not required as per law. AO has committed an error in assuming so. - Decided in favour of assessee. Provision for leave encashment - Held that:- We set aside this issue to the file of the AO to fresh adjudication in accordance with law. The assessing officer may either wait for the judgment of Hon'ble Supreme Court in the case of Exide Industries Ltd. after HC decision [2007 (6) TMI 175 - CALCUTTA HIGH COURT] or may consider the alternative plea of the assessee that the claim be allowed on actual payment basis and if it is so done, the assessee would withdraw all the pending litigation, for all the years, wherein he sought deduction of the provision made for the leave encashment. Hence, this ground is allowed for statistical purposes. Disallowance of bad debts written off - Held that:- The term ‘Full and Final Settlement’ shown that the balance amount is not recoverable. From the above letter dated 14.02.2011 it is clear that the assessee had written off bad debts in its accounts based on cogent material. Once the bad debt is written off, it should be allowed as a deduction as held in the case of TRF Ltd.[2010 (2) TMI 211 - SUPREME COURT]. The assessee has made a provision for doubtful debts in the profit and loss account of the assessee in the earlier assessment years and hence it is clear that these amounts were taken into account by the assessee in the earlier assessment years hence the conditions specified u/s 36(1)(vii) of the Act are satisfied.- Decided in favour of assessee.
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