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2018 (7) TMI 815 - AT - Income TaxAddition towards Bad and Doubtful Debts written back - deduction made by the assessee bank in the computation under the normal provisions of the Act as well as in the computation of book profits u/s 115JB - Held that:- CIT-A not bothered to examine the details with the relevant evidences and records and the relief was granted on the ground that the AO had not made proper verification of the same and non-application of mind on the part of the AO. Hence it is clear that both the authorities below had not given any finding on facts of the issue in their respective orders - we give one more chance to the ld AO, to examine the veracity of the claims made by the assessee. If it is found that in the year of making provisions, the assessee had duly disallowed the same in the computation of income both under normal provisions as well as u/s 115JB of the Act, then in the year of writing back of those provisions , i.e the years under consideration, the same should not be taxed again. This aspect requires factual verification by the ld AO. Disallowance of Prior Period Expenditure - Held that:- We find that the assessee had given proper explanation that the bills payable to Deloitte together with its quantum got settled and crystallized only during the year under appeal and accordingly the same becomes the expenditure of the year for the purpose of income tax. It is not the case of the revenue that the assessee had also made a claim of this expenditure in the earlier year. It is not in dispute that the said payment of ₹ 94.26 lakhs is wholly and exclusively incurred by the assessee for the purpose of its business. In these circumstances, the subject mentioned expenditure though categorized as prior period expenditure to be in consonance with Accounting Standard – 5 issued by ICAI, cannot be deprived of the deduction from its total income - CITA had rightly deleted the disallowance Disallowance u/s 14A of the Act read with Rule 8D of the Rules - Held that:- Hon’ble Supreme Court in the case of Maxopp Investment Ltd vs CIT (2018 (3) TMI 805 - SUPREME COURT OF INDIA) had held that provisions of section 14A of the Act are applicable even for investments held as stock in trade. Hence this issue is now settled and provisions of section 14A of the Act are to be applied in the instant case. We find that this tribunal in the case of REI Agro Ltd [2013 (9) TMI 156 - ITAT KOLKATA] had held that only those investments which had yielded dividend income need to be considered while working out the disallowance under third limb of Rule 8D(2) of the Rules. Hence we direct the ld AO to rework the disallowance accordingly for Asst Years 2010-11 and 2011-12 under normal provisions of the Act. With regard to disallowance u/s 14A of the Act while computing the book profits u/s 115JB of the Act , we find that the same is squarely covered by the decision of Hon’ble Calcutta High Court in the case of CIT vs Jayshree Tea & Industries Ltd [2014 (11) TMI 1169 - CALCUTTA HIGH COURT] held computation of the amount of expenditure relatable to exempted income of the assessee must be made since the assessee has not claimed such expenditure to be Nil. Such computation must be made by applying clause (f) of Explanation 1 u/s 115JB of the Act. We remand the matter for such computation to be made by the learned Tribunal.
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