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2022 (3) TMI 1311 - AT - Income TaxDisallowance u/s. 14A - Sufficiency of own funds - HELD THAT:- We notice that the own funds available with the assessee in both the years are in far excess of the value of investments. Accordingly, as per the decision rendered in the case of Micro Labs Ltd. [2016 (4) TMI 219 - KARNATAKA HIGH COURT] no disallowance out of interest expenditure is called for. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue in both the years under consideration and direct the A.O. to delete disallowance made u/s 14A of the Act in both the years under consideration. Disallowance of Cost of Club Services - HELD THAT:- As decided in own case [2021 (7) TMI 1019 - ITAT BANGALORE] when membership of a club is taken in the name of director, it is for the assessee-company to prove that membership was obtained solely for the purpose of business. [New India Extrusions (P) Limited [2011 (2) TMI 529 - ITAT, MUMBAI]]. Further Entrance fees paid towards corporate membership of the club is an expenditure incurred wholly and exclusively for the purpose of business and not towards capital account as it only facilitates smooth and efficient running of a business enterprise and does not add to the profit earning apparatus of a business enterprises and accordingly CIT (A) was justified in deleting the disallowances of entrances fee made by the Assessing Officer. Expenses on the basis of purchase of packing material, loose tools etc., in the year of purchase - HELD THAT:- As decided in own case [2021 (7) TMI 1019 - ITAT BANGALORE] Assessee submitted before Assessing Officer that; (i) packing material shown as purchases as on 31-3-2005 was actually purchased in earlier months and such packing material was consumed during process; (ii) on account of some computer problem, bills were posted on 31-3-2005, and (iii) entire packing material left after end of year became obsolete and, therefore, it was not shown in closing stock. The Assessing Officer rejected account books of assessee and made certain addition to his income. The Tribunal held that:- (i) it was not case of revenue that purchases as debited as on 31-3-2005 were not genuine, and (ii) assessee was following a consistent method of valuing closing stock by including packing material as consumed at time of purchase. Rejection of account books of assessee and addition to his income was held to be not justified. Deduction u/s. 10A - Telecommunication expenses being excluded from export turnover - HELD THAT:- As decide in TATA ELXSI LTD. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] the grievance of the assessee projected in the additional ground would get redressed, if the AO is directed to reduce the telecommunication expenses from the export turnover as well as the total turnover, while computing deduction under section 10 A of the act. We hold and direct accordingly. Respectfully following the above view, we direct the Ld.AO to exclude the telecommunication expenses from the total turnover for the purpose of computing deduction under section 10 A.
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