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2019 (4) TMI 618 - AT - Income TaxDisallowance of prior period expenses - netting off of prior period expenses & income - allowable revenue expenditure u/s 37 - HELD THAT:- CIT(A) has rightly observed that prior period expenses claimed by the assessee are of revenue in nature, and they have been crystallized during the accounting period relevant to this assessment year. Considering this aspect, the ld.CIT(A) has rightly deleted the disallowance. A reference to the decision in the case of Adani Enterprises [2016 (7) TMI 1250 - GUJARAT HIGH COURT]has also been made for the proposition that once an income pertaining to prior period is being recognized in the current year, and offered for taxation, then equal treatment be given to prior period expenditure which are revenue in nature and crystallized in this year. - Decided against revenue Disallowance u/s 14A r.w. Rule 8D - HELD THAT:- There is no dispute with regard to the fact that the assessee has earned ₹ 4.29 crores as dividend income. The assessee has made investment of ₹ 9.14 crores. It has interest free funds of ₹ 433.13 crores. The ld.CIT(A) by putting reliance upon the judgment of CIT Vs. Suzlon Energy Ltd.[2013 (7) TMI 697 - GUJARAT HIGH COURT] and CIT Vs. Torrent Power Ltd. [2014 (6) TMI 185 - GUJARAT HIGH COURT] has held that when the assessee has more interest free funds, then it is to be construed that investment was made out of interest free funds and no disallowance is to be made on account of interest expenditure. Administrative expenses are required to be calculated for disallowance under section 14A of the Act. However, the ld.AO shall take into consideration the average of investment, which has yielded tax free income during the year. This exercise be carried out after providing due opportunity of hearing to the assessee. In view of the above, ground no.2 raised by the Revenue is rejected MAT computation u/s 115JB including disallowance under section 14A - HELD THAT:- As relying on VIREET INVESTMENT (P.) LTD. [2017 (6) TMI 1124 - ITAT DELHI] question answered in favour of the assessee and held that computation for the purpose of clause (f) of Explanation 1 to Section 115JB(2) is to be made without resorting to the computation as contemplated under section 14A r.w. rule 8D. Respectfully following the above allow this ground of appeal and direct the AO not to make adjustments in book profit for the purpose of MAT liability on the basis of calculations made with Rule 8D of the Income Tax Rules.
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