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2019 (7) TMI 1149 - AT - Income TaxDisallowance of expenditure u/s. 14 r.w. Rule 8D - assessee made suo-moto disallowance - while computing disallowance under Rule 8D(2)(iii) only these investments on which the assessee has earned dividend income should be considered - HELD THAT:- We find merit in the submissions of assessee. The Special Bench of Tribunal in the case of ACIT & Anr. Vs. Vireet Investment Pvt. Ltd. & Anr. [2017 (6) TMI 1124 - ITAT DELHI] has held that only those investments are to be considered for computing average value of investment which have yielded exempt income during the year. The ground raised by the assessee is allowed in principle. The issue is restored back to the file of AO to determine disallowance under Rule 8D in line with the decision of Special Bench of Tribunal (supra). Addition on account of liquidated damages - whether liquidated damages claimed by the assessee are in the nature of penalty for late delivery of Gensets, therefore, the said expenditure is not allowable? - HELD THAT:- The issue is recurring in nature. Similar disallowance was made by the AO in the case of assessee in the past. The Tribunal in assessment years 2002-03, 2003-04, 2007-08 and 2008-09 has already considered this issue of liquidated damages/late delivery charges. The Co-ordinate Bench in assessment year 2008-09 [2019 (3) TMI 1612 - ITAT PUNE] has restored this issue back to the file of AO for fresh adjudication. Since, the nature of payment of liquated damages in assessment year under appeal is identical, we deem it appropriate to restore this issue to the file of AO to decide the issue on similar lines. Accordingly, ground No. 1 of the appeal by the Revenue is allowed for statistical purpose. Allowability of depreciation @ 60% on UPS and other allied items - HELD THAT:- The depreciation @ 60% was allowed to the assessee on UPS and other allied items in preceding assessment years. No material has been placed on record by the Revenue to controvert the findings of Co-ordinate Bench in assessment year 2008-09. We find no reason to take contrary view. Hence, we uphold the findings of CIT(A) in allowing depreciation @ 60% on UPS and other allied items. Accordingly, ground No. 2 of appeal by the Department is dismissed. Disallowance u/s. 40A(2) on commission paid to Directors - HELD THAT:- We observe that similar disallowance was made in assessee’s own case for assessment years 2007-08 and 2008-09. The Co-ordinate Bench of Tribunal in appeal by the Revenue in assessment year 2008-09 [2019 (3) TMI 1612 - ITAT PUNE] upheld the findings of CIT(A) in deleting such disallowance. Since, the disallowance u/s. 40A(2) on the commission paid to the Directors has been consistently decided against the Revenue, and in the assessment year under appeal there is no distinguishing feature, we find no merit in the said ground by the Department. The ground No. 3 of the appeal is rejected for the parity of reasons given in assessment year 2008-09 in assessee’s own case by the Tribunal. Accordingly, ground No. 3 of the appeal is dismissed. Set off of brought forward capital losses against Long Term Capital Gain of the current assessment year - HELD THAT:- In assessment year 2007-08 similar disallowance was made by the AO. The CIT(A) granted relief to the assessee. In appeal before the Tribunal, the Department was unsuccessful in contesting the issue. No material has been placed on record by the Revenue to show any change in facts or distinguishing the nature of transactions in the assessment year under appeal. Respectfully, following the order of Tribunal, ground No. 4 of the appeal by the Revenue is dismissed. Deduction u/s. 80IA(4) - assessee has installed windmill and claimed deduction u/s. 80IA(4) - AO disallowed assessee’s claim on the premise that the prior period losses of eligible business are required to be set off against the income from eligible business only - HELD THAT:- Hon’ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. Vs. ACIT [2010 (3) TMI 860 - MADRAS HIGH COURT] has held that loss or depreciation in the year earlier to initial assessment year already absorbed against the profit of other business cannot be notionally brought forward and set off against the profits of the eligible business for computing the deduction u/s. 80-IA. The Tribunal has been consistently following the law laid down by the Hon’ble Madras High Court and similar view has been taken in the case of Poonawala Estate Stud & Agro Farm Pvt. Ltd. Vs. ACIT [2010 (9) TMI 1080 - ITAT PUNE] - Decided against revenue. Subsidy received under Government of Maharashtra Package Scheme of Incentive, 2001 - characterization of receipt - revenue or capital receipt - HELD THAT:- After considering catena of judgments the Tribunal held that the incentive received by the assessee under Package Scheme of Incentive, 2007 is in the form of refund of Sales Tax and is a capital receipt not liable to tax. The Commissioner of Income Tax (Appeals) has granted relief to the assessee by following the aforesaid decision of Tribunal of INNOVENTIVE INDUSTRIES LIMITED VERSUS DCIT, [2017 (4) TMI 44 - ITAT PUNE] . We find no reason to interfere with the findings of CIT(A). Accordingly, the same is upheld and the ground of the appeal is dismissed.
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