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2019 (12) TMI 375 - HC - Income TaxAllowance of club membership fees - Both the counsel state that the assessee is entitled to claim deduction to the extent of subscription or membership fee if paid by the assessee but not incidental expenses incurred by the employees/member of the assessee. - Held that:- the decision of CIT(A) and ITAT to the extent of granting complete deduction to the amount spent towards club membership fee and incidental expenses is untenable. - Matter restored before AO for passing orders after examining the accounts on the actual extent of expenses incurred by the assessee in this behalf and grant deduction to the actual expenses incurred by the assessee by keeping in view the ratio laid down by this court in [2019 (4) TMI 82 - KERALA HIGH COURT] Deduction of interest on the investment made from pool of funds - nexus between borrowed funds and interest in units of mutual funds - assessee received dividend and reduced from the net profit under Explanation (ii) below the second proviso to sub-section (2) of section 115JB by treating the said income to which the provisions of section 10(33) of the Act would apply. - assessee for the previous assessment year in an appeal pending before the apex court has taken a different stand from the stand taken in the present assessment year. - Held that:- the remand to the Assessing Officer is justified and no interference is warranted in the appeal. MAT - computation of the book profit under section 115JB - disallowance of amount paid from reserve funds of GPEL (JV Partner) as guarantor of bank loans - Held that:- the assessee has established that the memorandum of association, authorised the assessee to expand its business into new areas, i.e., incorporating GPEL, etc. - GPEL on account of technical glitches in sharing know-how provided by the foreign collaborator could not take off on expected lines, resulting in cash loss etc. GPEL was referred to the BIFR as sick industry. The BIFR notified a scheme for operation or reviving GPEL. The BIFR, under the scheme had equally distributed the obligations both to Gujarat infrastructure Development company and the assessee. The assessee, as part of implementation of a scheme accepted by the BIFR had to clear the debt of GPEL as guarantor. The Tribunal held that the contention of the Assessing Officer if accepted literally amounts to deciding the priorities of the business exigencies of the assessee, as long as the truthfulness of the entries is not doubted and it is not a case of siphoning off of money through cheap fictitious entries, the Tribunal held that there was no need to interfere with the findings recorded by the Commissioner of Income-tax (Appeals). - Order of CIT(A) and ITAT sustained. Payment of bonus - deduction on actual payment basis u/s 43B - Held that:- The Tribunal further refers to consistent practice followed by the assessee, namely, that the assessee makes payment on account of "bonus" on the occasion of Onam, which is an important festival in the State of Kerala. It is finally held that a combined reading of section 36(2), sub-section (1) of section 36 read with section 43B allows accepting the expenditure on actual payment basis made by the assessee. - No interference required.
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