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2019 (4) TMI 690 - AT - Income TaxSimultaneous claim of depreciation and deduction of depreciation write back - amount redited in P& L Account due to change in the method of providing depreciation as per the Companies Act 1956 - WDV to straight line method - HELD THAT:- While preparing the computation of total income, assessee reduced above sum from the net profit as per profit and loss account as same was not chargeable to tax as it is merely a book adjustment on account of change in the method of depreciation. It is also supported by the guidelines issued by ICAI. The lower authorities have not understood the correct treatment of the same as the above item credited to the profit and loss account is merely book adjustment by which the profit in the books of account have gone up and as it does not have any tax impact, same is correctly reduced from the taxable income of the assessee. It has nothing to do with the claim of the depreciation on assets which is terms of the provision of section 32 of the Income tax Act. Hence we reverse the finding of the lower authorities and direct the AO to delete the disallowances - Decided in favour of assessee Addition u/s 14A r.w.r.8D - disallowance of interest and indirect expenses - HELD THAT:- Assessee has made investment in shares and mutual funds income of which is exempt from tax. It is also apparent that assessee has share capital and reserve which is far in excess of amount invested in mutual funds where from exempt income may be derived. Therefore, respectfully following the decision of HDFC Bank Ld. Vs. CIT [2014 (8) TMI 119 - BOMBAY HIGH COURT] it is a parent that disallowances on account of interest expenditure cannot be made under rule 8D of the Income Tax Rules 1962 u/s 14A. Further, the ld AO has disallowed indirect expenses equal to 0.5 % on an average investment to which assessee also agreed. It was also admitted by the assessee before the lower authorities. In view of this we direct the ld AO to restrict the disallowances u/s 14A of the Act to ₹ 270481/- only - Decided partly in favour of assessee.
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