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2018 (5) TMI 1010 - AT - Income TaxDisallowance u/s. 14A with the aid of Rule 8D(2)(ii) and 8D(2)(iii) - Held that:- In both the appeals preferred by the revenue, the assessee did not earn any exempt income during the AY 2009-10 and 2012-13, therefore, CIT(A) was justified in deleting the disallowance as made by the AO in the assessment order by invoking sec. 14A read with Rule 8D of the Rules. Hence, ground no. 1 raised by the revenue for AY 2009-10 stands dismissed and the sole ground raised by the revenue in AY 2012-13 also stands dismissed. Disallowance of interest made by the AO with reference to the interest free loans granted to subsidiaries and group associate companies - Held that:- There was business connection between assessee and the companies to whom advances were made for undertaking projects in the field of real estate and civil infrastructure. Since the assessee was an active participant in the projects undertaken by the SPVs and JVs and had deep economic interest in these entities, therefore, we hold that the advances granted by the assessee in the course of its business was due to commercial expediency, therefore, the funds advanced by assessee to SPVs and JVs were in fact used for the business purposes of the assessee and, therefore, the condition prescribed for allowing deduction u/s. 36(1)(iii) were fulfilled by the assessee. Disallowance of expenses on account of legal and professional fees relating to long term lease - Held that:- The specific instance of long term leases executed during the year and the corresponding legal and professional expenses incurred which aggregated to ₹ 6,03,500/- (the same which was already disallowed suo moto by the assessee in the computation of income). Having regard to these facts and considering the inability of the department to point out the specific items of legal expenses totaling ₹ 6,01,800/-, we are inclined to uphold the order of the Ld. CIT(A) and dismiss this ground of appeal of the revenue. Disallowance of prior period expenditure - Held that:- Since in the present case the decision to abandon the public issue of shares was taken during the year, the loss got crystallized in the relevant year and, therefore, rightly allowed by the Ld. CIT(A). Therefore, no infirmity in the order of the Ld. CIT(A) in deleting the disallowance made by the AO, therefore, we uphold the order of the Ld. CIT(A) on this ground and thus both the appeals of the revenue stand dismissed.
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