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2019 (2) TMI 794 - AT - Income TaxPenalty u/s 271(1)(c) - disallowance of corporate Social Responsibility (CSR) - Held that:- It is nowhere specifically stated that it will not be effective retrospectively neither is there any judgement specifically on this issue holding it "not retrospective". Therefore, AO is directed to disallow the said expenditure. The AO is directed to give effect to the above mentioned order and issue demand notice. He is also required to initiate penalty u/s 271(1)(c) / for furnishing inaccurate particulars of income by the assessee. Upon hearing both the counsel and perusing the record, we find that it has been held by the ITAT in Jindal Power Ltd. [2016 (7) TMI 203 - ITAT RAIPUR] that explanation 2 to section 37(1) comes into effect from 01.04.2015. DR has referred to the decision of ITAT Hyderabad Bench said to be a contrary decision. We find that it is settled law that if two views are possible, one in favour of the assessee should be adopted. In these circumstances, the ld. CIT(A)’s directions to disallow the same is not sustainable. Even otherwise it can be held that there could be two views on this issue and if the A.O. has adopted one view, which admittedly is a plausible one, the ld. CIT(A) is not vested with jurisdiction u/s. 263 qua this issue. This proposition gets support from the Hon'ble Apex Court decision in the case of Malabar Industrial Co. Ltd. vs. CIT [2000 (2) TMI 10 - SUPREME COURT]. Hence, we quash the direction given by the ld. CIT(A) in this issue. Loss/damages and other write off - Held that:- We find that there is no cogent basis for the accounting done by the assessee. The assessee has received the sum of ₹ 3 crores towards insurance claim. The loss on account of fire loss has already been booked by the assessee. There is no case that further loss is to be booked. Hence, this treatment of part of the insurance claim as advance is not at all correct. Thus, the A.O. is totally wrong in accepting this postponement of income. As a matter of fact before parting, we may add that the entire insurance claim receivable needed to be accounted for on accrual basis. In the result, we uphold the order of the ld. CIT on this issue. - Appeal by the assessee is partly allowed.
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