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2018 (4) TMI 430 - AT - Income TaxDisallowance of interest under section 14A of the Act read with Rule 8D(2)(ii) in respect of interest - Held that:- The assessee has availability of sufficient own funds which was claimed by assessee before AO as well as before CIT(A). The company has own funds of ₹ 7945.94 crores as on 31-03-2012 as per financial accounts and out of which company has made temporary investments in mutual funds and earned dividend income. The assessee has made investment of ₹ 342.54 crores as on 31-03-2012 in subsidiaries and associate companies as on 31-03- 2012. We are of the view that subject to limited purpose of verification of facts whether the assessee’s investments in instruments giving interest free income is in commensurate with that the interest free funds available, the AO will not make any disallowance qua that. Secondly, the AO will not include the strategic investments while computing these disallowances. The AO will accordingly compute the disallowance if any. Accordingly, this issue of Revenue’s appeal is dismissed and that of the assessee is allowed subject to verification as suggested by us. Disallowance of bad debts under section 36(1)(viia) - Held that:- Hon’ble Supreme Court in the case of Catholic Syrian Bank Ltd. v. CIT (2012 (2) TMI 262 - SUPREME COURT OF INDIA) wherein it is held that the assessee is entitled for deduction under section 36(1)(vii) read with section 36(2)(v) of the Act and also this deduction is independent of provisions made in section 36(1)(viia) of the Act. Accordingly, we are of the view that the CIT(A) has rightly allowed the claim of the assessee and we confirm the same. This issue of Revenue’s appeal is also dismissed. Expenditure incurred by the assessee on Employees State Option Plan (ESOP) is to be allowed. See Biocon Ltd. Vs. DCIT [2013 (8) TMI 629 - ITAT BANGALORE]
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