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2019 (12) TMI 1036 - AT - Income TaxDisallowance u/s 14A read with Rule 8D - HELD THAT:- A comprehensive details of investment starting from 31.3.2005 upto 31.5.2015, has been placed by the assessee before the AO. Identical issue arose in the Asstt.Year 2008-09, wherein addition of ₹ 73.30 lakhs were deleted by the Tribunal, and order of the Tribunal was upheld by the Hon’ble High Court [2017 (9) TMI 531 - GUJARAT HIGH COURT] . In the Asstt.Year 2011-12 also ITAT has deleted the disallowance, and one of us (JM) is author of the order. Therefore, considering past history and the availability of funds with the assessee, we are of the view that the amounts which have been calculated by the assessee itself for taking care of the tax free income is sufficient, and no further disallowance is required to be made, because only two persons have been kept for tracking of these investments, and part salary payable to them have already been disallowed. Disallowance u/s 14A is required to be added back in the book profit for the purpose of section 115JB - HELD THAT:- Disallowance worked out by the AO, and nothing left for making adjustment except the amounts the assessee itself added back, but apart from that we find that this issue is squarely covered in favour of the assessee by the decision of Special Bench of the Tribunal in the case of Vireet Investment, [2017 (6) TMI 1124 - ITAT DELHI] . From the Asstt.Year 2008-09 to 2010-11, the issue has been decided in favour of the assessee by the ITAT. It is also covered by the decision of Hon’ble Bombay high Court rendered in the case of Reliance Industries Ltd., [2019 (1) TMI 887 - BOMBAY HIGH COURT] . In brief, the outcome of this order is that the disallowance under section 14A is not required to be added back in the book profit under section 115JB of the Act. Interest income from its subsidiary - HELD THAT:- CIT(A) has rightly held that no notional interest income is to be assumed because the assessee has not charged interest on ICDs. from subsidiary. The assessee has offered such interest income as business income in earlier years, and therefore, advancement of loan was considered for the purpose of business. To our mind, the ld.CIT(A) has appreciated the controversy in right perspective. It was in the interest of the assessee to revive its subsidiary, otherwise, its share capital as well as advances of ₹ 2278 crores would be in jeopardy. Therefore, we do not find any merit in these grounds of appeal. Disallowance of 75% of foreign travel expenses - HELD THAT:- Foreign visit was at least partly for business purposes and, therefore, just because this visit resulted in, assuming it is correct, personal benefit to the director, the expenses incurred on the visit cannot be disallowed as personal expenses. This is at best expense of the assessee company which resulted in benefit to the director. In any event, there is no material whatsoever to come to the conclusion that 75% time on this trip was used for personal purposes of the director. The case relied upon by the CIT(A) was a case in which a detailed analysis of the activities of the director was carried out and then this conclusion was drawn. There is no such material on record in this case. Once the CIT(A) came to the conclusion that the trip was for some business purposes, it was not open to him to deny any part of deduction for these expenses- particularly when there is no material to hold that the visit was for personal purposes. In view of these discussions, as also bearing in mind entirety of the case, we uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned disallowance. Disallowance of bad debts - HELD THAT:- The moment debts have been written off in the books, it is to be allowed without expecting the assessee to demonstrate whether debts have actually become bad or not. A reliance can be made to the decision of Hon’ble Supreme Court in the case of TRF Ltd. [2010 (2) TMI 211 - SUPREME COURT] . It is altogether irrelevant, whether QFL actually paid tax or not. If a liability has ceased, then it will be added back in the taxable income of the QFL. Now, if that concern was suffering huge loss, then that cannot be the reason to disallow claim of the assessee. If this type of logic is being accepted, then every business organization was required to show profit only. This is a misplaced notion at the end of the ld.CIT(A) for rejecting the claim of the assessee. We allow this ground of appeal, and delete disallowance of bad debts. In the other words, claim of bad debt at ₹ 170.91 lakhs is allowed. Non granting set off brought forward business loss against income from house property - HELD THAT:- A decided in own case income from warehouse has been shown under the head “income from house property” which cannot be equated by any cannon of law as “profit and gains from business or profession”.Both the lower authorities made no mistake in not allowing set off of brought forward business losses against the “Income from house property”. Loss suffered by the assessee on sale of preferential shares - whether actual sale consideration of the shares supported by the valuation report can be replaced with fair market value of the shares? - HELD THAT:- Full value of consideration would be replaced by way of deeming provision provided in section 50C which is relatable to transfer of capital asset in the shape of land or building or both. No such provision has been provided with regard to the sale of shares. With effect from Asstt.Year 2018-19, a provision has been made for sale of shares also. It is section 50CA. Prior to insertion of this section, there is no power with the Revenue authorities to replace the full sale consideration with fair market value of the shares. Since the ld.CIT(A) was not having jurisdiction to replace the full sale consideration disclosed by the assessee with FMV, therefore, there is no need to examine the justification of valuation report in support of sale consideration shown by the assessee vis-à-vis FMV determined by the ld.CIT(A). We do not deem it necessary to go into this issue, and make any discussion. In view of the above, we are of the view that the assessee is entitled for claim of capital loss suffered by it on sale of shares
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