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2018 (7) TMI 1811 - AT - Income TaxDisallowance of expenses made on a/c of license fee/royalty paid to Sh. Ashok Chaturvedi, pertaining to Jammu Unit - Held that:- Since, the entire basis for adverse inference by the Assessing Officer as well as of ld. CIT (A) is upon the assessment order and first appellate order given in the Assessment Year 2006-07, which the Tribunal has reversed by holding that assessee has rightly shown the payment of licence fee/royalty under the corporate unit; therefore, respectfully, following the precedence of the earlier year, we also give the same direction that the licence fee, royalty payment of ₹ 6 crore has rightly been shown under the Corporate Division and accordingly, the finding of the ld. CIT(A) is reversed Disallowance u/s. 14A r.w.r. 8D - Held that:- In so far as disallowance of interest expenditure is concern, the same has rightly been deleted by the ld. CIT (A) after due verification of the records that none of the investments have been made out of borrowed funds and has been made by assessee’s own fund. In view of such a clear cut finding, no disallowance of interest can be made. With regard to other disallowance on account of administrative cost, we find that assessee has given a categorical explanation that no expenditure can be said to be attributable especially when all the investments were made in much earlier years and there is only one dividend cheque received during the year. In the absence of any recording of mandatory satisfaction as per Section 14A (2) r.w.s. Rule 8D (1) Assessing Officer cannot mechanically apply Rule 8D for the purpose of disallowance. Accordingly, disallowance made u/s.14 by Assessing Officer is hereby deleted. Addition as Excise duty refund (Self Cenvat Credit) treating it to be the Revenue receipt - holding this receipt as eligible for deduction u/s. 80IB - Held that:- We find that in the case of Balaji Alloys [2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT], on same Govt. Notification has held that excise refund receipt in pursuance of new Industrial policy of the government is a capital receipt. Once that is so, then the entire receipt itself cannot be treated as part of taxable receipt and the entire question of allowing and disallowing the deduction u/s.80IB becomes purely academic. This judgment of Hon'ble Jammu & Kashmir High Court has also been approved and affirmed by the Hon'ble Supreme Court in the case of CIT vs. Shree Balaji Alloys [2016 (4) TMI 1161 - SUPREME COURT] Decided in favor of assessee.
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