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2015 (3) TMI 533 - AT - Income TaxDisallowance u/s. 14A r.w. Rule -8D - argument of assessee that no disallowance on account of interest is called for as the own funds of the assessee which include share capital and reserves and surplus is much more than the investment made by the assessee from where the assessee has earned tax free income - Held that:- The factual position regarding own funds of the assessee has not been disputed by the Revenue. Similarly, the factual position regarding investment made by the assessee in tax free securities is also not disputed. If it is so, then the investment of the assessee in the tax fee securities would be a meager sum of ₹ 9.60 crores, against own funds available with the assessee of ₹ 513.25 crores. Respectfully following the decision of Hon’ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd. ( 2014 (8) TMI 119 - BOMBAY HIGH COURT), we hold that according to the facts of the present case no disallowance on account of interest factor is called for. - Decided in favour of assessee. Addition to closing stock - under valuation of closing stock - whether CIT(A) erred in computing the value of closing stock by taking into consideration excise duly on that portion of closing stock where no excise duty is actually payable in law (goods procured under advance license, exempted, etc.)? - Held that:- As relying on assessee's own case [ 2014 (7) TMI 426 - ITAT MUMBAI] assessee is following ‘inclusive method of accounting’ and the only actuals are entered in the books of accounts. There is no need for adjustment of inventories as they were already adjusted basing on the actuals in accordance with the provisions of section 145A of the Act. On hearing both the parties and on perusal of the material on record, we are of the opinion that this issue needs to revisit the file of the AC and the closing stock valuations have to be redone in the light of the provisions of section 145A of the Act. Accordingly, we remand the issue to the file of the AO for adjudicating the issue afresh - Decided in favour of assessee for statistical purposes. Expenditure in respect of guest houses and residential flats disallowed - appellants have failed to produce documentary evidence in respect of use of guest house and residential flats - Held that:- As relying on assessee's own case confirmation given by Shri Sharma is supported by the ‘guest house register’, also that the expenditure incurred on employees may be fully allowed as it is incurred for the business purposes. As such, it is not dear from the record that why the assessee has to incur on the residential flats allotted to the employees of the company. Considering the no objection from the Ld DR, we remand the matter to the file of the AO with a direction to decide the issue afresh after examining the details and contents made in the said affidavit and pass a speaking order after granting a reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Disallowance of exemption claimed in respect of dividend income earned from subsidiary based in Sri Lanka - Held that:- It will serve the interest of justice if the matter is restored back to the file of AO for the purpose of verification of claim of the assessee that dividend income received from subsidiary based at Sri Lanka has already been offered to tax, if after verification the AO found that the version of the assessee is correct, then disallowance to that extent is not called for. - Decided in favour of assessee for statistical purposes. Not giving effect to brought forward losses while recomputing total income - the issue being a subject matter of rectification requires action u/s. 154 of the I.T. Act, the AO is directed to take necessary action accordingly by CIT(A) - Held that:- We consider it just and proper to direct the AO to give effect to the directions given by Ld. CIT(A) to him, as the assessee is entitled to get benefit of the brought forward losses which are determined in the earlier years subject to fulfillment of other conditions laid down for valid claim for set off of brought forward losses. The AO will pass appropriate order after giving the assessee a reasonable opportunity of hearing.- Decided in favour of assessee for statistical purposes. Disallowance of club expenses - expenditure on account of payments made to clubs which includes annual subscription as well as cost of club services - CIT(A) deleted addition - Held that:- n the earlier years, the similar issue has been consistently decided by the Revenue in favour of the assessee by relying on the judgment of the Hon’ble High Court in the case of Otis Elevator vs. CT (1991 (4) TMI 53 - BOMBAY High Court). Considering the same, we are of the opinion that the CIT (A) has rightly adjudicated the issue. - Decided in favour of assessee.
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