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2017 (12) TMI 1410 - AT - Income TaxDeduction u/s. 80IA - Held that:- We find that in assessment years 2006-07 and 2007-08 similar disallowance was made by the Assessing Officer. The matter travelled up to the Tribunal. The Co-ordinate Bench of the Tribunal in assessment year 2006-07 granted relief to the assessee by holding that the assessee is eligible for claim of deduction u/s. 80IA in respect of profits derived from development of infrastructure facility for Sardar Sarovar Narmada Nigam Limited. In assessment year 2007-08 the Tribunal followed the order of Co-ordinate Bench and granted the benefit of deduction u/s. 80IA. Both sides in present appeal are unanimous in admitting that the facts in assessment year under appeal are identical. Therefore, we find no reason to take a different view. - Decided in favour of assessee Disallowance u/s. 14A r.w.r. 8D - Held that:- In the instant case we find that own funds of the assessee are much more than the investments made. Rule 8D(2)(ii) seeks to make disallowance, where the assessee has incurred expenditure by way of interest, since, own funds of the assessee are sufficient to cover the investments, no disallowance under Rule 8D(2)(ii) is warranted. As regards disallowance under Rule 8D(2)(iii) i.e. an amount equal to 1/2% of the average value of investment is concerned, we find that as against closing balance of investment of ₹ 347 crores the Assessing Officer has taken into consideration ₹ 151 crores after excluding the investments on which the assessee has not earned any tax free income. The ld. AR contended that while computing the figure of ₹ 151 crores, the Assessing Officer has included some investment on which the assessee has not earned any tax free income. After considering the submissions of assessee we are of considered view that the issue can be remitted to Assessing Officer for limited purpose of verification whether any investment on which tax free income has not been received has been included while computing the closing balance of investment at ₹ 1,51,66,97,307/-. Disallowance of repairs and maintenance expenditure - Held that:- Expenditure incurred by assessee for renovation of building is capital in nature, as it provides new advantage/benefit to the assessee for years to come. The ld. AR has not been able to controvert the findings of Commissioner of Income Tax (Appeals). The ld. AR has also failed to substantiate that the expenditure held to be capital is in fact revenue in nature. Disallowance of interest expenditure u/s. 36(1)(iii) - Held that:- The Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Reliance Utilities & Power Ltd. (2009 (1) TMI 4 - BOMBAY HIGH COURT) has held that where both interest free funds and interest bearing funds are available and the interest free funds are more than the investment made, the presumption is that the investments are made out of interest free funds available with the assessee. Thus, in view of undisputed fact that own funds of assessee are sufficient to cover the loan advanced to sister concern, no disallowance u/s. 36(1)(iii) is called for Disallowance of commission - Held that:- In the instant case not only that the assessee has placed copy of letter of appointment which is in the form of MOU for engaging the services of M/s. Rex Poly Extrusion Limited as Consultant but has also given the details of contracts secured through M/s. Rex Poly Extrusion Limited. The assessee has also filed confirmation from M/s. Rex Poly Extrusion Limited indicating that the commission has been received through banking channels after deduction of TDS. The Department has not disputed that the assessee has not received contracts of the companies/organizations which are purportedly secured through M/s. Rex Poly Extrusion Limited. It is also an undisputed fact that in the subsequent assessment year the Assessing Officer has allowed payment of commission to M/s. Rex Poly Extrusion Limited. Thus as t the assessee has been able to establish that the services were rendered by the M/s. Rex Poly Extrusion Limited and thus, the payment of commission is justified Reimbursement of medical expenses to the employees liable for Fringe Benefit Tax - Held that:- This issue has been considered by the Co-ordinate Bench of the Tribunal in assessee’s own case and has decided against the assessee. We find that the Coordinate Bench of the Tribunal in assessee’s own appeal for assessment year 2007-08 after considering CBDT Circular No. 8 of 2005 has decided the issue against the assessee
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