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2015 (7) TMI 1433 - AT - Income TaxAddition u/s 41 - Sales tax refund due to third parties which have also been paid to third parties but which has been treated as income in the hands of the Assessee - HELD THAT:- Admittedly, the Assessee has received Sales tax refund in respect of Texmaco Cement plant which had been taken over by the Assessee in 1995. The refund relates to Sales tax excessively paid by Texmaco for the years 1985-86 to 1992-93. CIT(A) failed to appreciate that the Assessee has credited the account of Texmaco with the Sales tax refund as is evidenced in the paper book on 26.2.1998 i.e. during the relevant assessment year. Consequently, even assuming that the said amount is taken as income of the Assessee during the relevant assessment year, in view of the fact that the Assessee has transferred the amount to Texmaco, as it relates to Texmaco for a period which was before the date of taking over by the Assessee-company, the same would have to be netted off and there would be no income on this count in the hands of the Assessee. Thus the said amount cannot be treated as income of the Assessee insofar as the conditions prescribed u/s 41(1) are not applicable in the case of the said refund i.e. the Assessee has not claimed deduction of the said Sales tax and consequently, the refund of the same in the hands of the Assessee cannot be taxed by invoking the provisions of Sec. 41(1) - the amount having been transferred by the Assessee to Texmaco, the same is in no way even real income of the Assessee. In the circumstances, the addition as made by the AO and as confirmed by the ld. CIT(A) stands deleted. In the result, the appeal of the Assessee is allowed. Levy of interest u/s 234D - HELD THAT:- Admittedly, in the present case the assessment year relates to 1998-99. The provisions of Sec. 234D was inserted w.e.f. 1.6.2003. The original assessment in the Assessee’s case was completed on 29.3.2001 i.e. before the introduction of Sec. 234D. Consequently, we are of the view that the decision of the Hon'ble Supreme Court in the case of Reliance Energy Ltd. [2013 (10) TMI 280 - SUPREME COURT] is squarely applicable and the ld. CIT(A) was right in deleting the levy of interest u/s 234D of the Act. Consequently, we find no reason to interfere with the finding of the ld. CIT(A) on this issue. In the result, the appeal of the Revenue is dismissed. Disallowance u/s 14A - HELD THAT:- Admittedly, the Assessee has provided a calculation of the disallowance liable to be made u/s 14A before the ld. CIT(A) and the ld. CIT(A) has directed the AO to verify the computation made by the Assessee. We find that even the computation as made by the Assessee is erroneous. Consequently, the issue of Sec. 14A is restored to the file of the AO for re-adjudication. All the aspects in respect of the disallowance u/s 14A are left open. The Assessee shall be at liberty to raise all such defences against the disallowance u/s 14A which shall be adjudicated by the AO. Consequently, ground no. 1 of the Assessee’s appeal stands allowed for statistical purpose. Nature of loss - loss on the sale of Fertilizer companies Government of India Special Bonds - action of the ld. CIT(A) directing the AO to allow real loss on the ground that the loss on sale of the bonds was a capital loss - HELD THAT:- Admittedly, these bonds are not shown as investments by the Assessee in its books of accounts. These are shown as current assets. These bonds have been received by the Assessee in the course of its business and consequently we are of the view that the finding of the ld. CIT(A) directing the AO to allow the real loss is on the right footing and does not call for any interference. In the result, the appeal of the Revenue stands dismissed.
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