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2018 (4) TMI 554 - AT - Income TaxAddition to interest income - computation of differential interest income - Held that:- The tax authorities are justified in computing interest income by adopting higher rate of interest. Since, the assessee has borrowed loans at interest rate of 9% & 10%, we are of the view that the differential interest rate should be computed by adopting “cost of funds” to the assessee, which in our view may be taken as 9.5% - perusal of the balance-sheet would show that the assessee has also made investments in other assets and further the assessee has also failed to prove the nexus between the own funds and amount advanced. Accordingly, we are unable to agree with this contention of the assessee. We modify the order passed by the learned CIT(A) and direct the Assessing Officer to compute differential interest income by adopting interest rate at 9.5%. Disallowance of expenses relating to IPR - Held that:- We agree with the contentions of the assessee that concept of prior period expenses cannot be applied in the instant case, since the assessee has acquired the rights over the IPR over a period. Under revenue cost matching principle, all the expenditure incurred in acquiring IPR have to be treated as revenue expenditure irrespective of the year in which it was incurred and has to be allowed against sales revenue of IPR. With regard to the remaining disallowance, the learned AR submitted that the assessee would be in a position to satisfy the Assessing Officer with relevant evidences, if opportunity is given. We find merit in the said plea of learned AR. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer with the direction to examine various evidences furnished by the assessee
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