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2018 (10) TMI 1036 - AT - Income TaxAddition being undervaluation of closing stock - assessee had followed exclusive method of accounting - applicability of Section 145A - it is a case of the Revenue that the element of excise duty/CENVAT etc. would represent part of the closing stock of the assessee in terms of Section 145A but it is the case of the assessee on the other hand that Section 145A has no application to the facts of the case - Held that:- Referring to case of the assessee that assessee follows exclusive method of accounting for valuation of inventory and therefore, entire exercise would be tax neutral CIT(A) has examined the issue on facts and binding judicial precedents and concluded the issue in favour of the assessee. In the absence of any impact on the profitability of the assessee per se due to method of accounting followed, we do not see any error in the conclusion drawn by the CIT(A). - decided against revenue. Addition u/s 40(a)(ia) on account of non deduction of TDS - reimbursement of expenditure - Held that:- In the absence of any income element in the payment made, the obligation to deduct tax at source on such payment do not arise and consequently, provisions of Section 40(a)(ia) of the Act do not come into play in view of the decision in the case of CIT vs. Gujarat Narmada Valley Fertilizers Co. Ltd. [2014 (4) TMI 235 - GUJARAT HIGH COURT]. The law that a mere reimbursement does not require to deduction [2014 (4) TMI 235 - GUJARAT HIGH COURT] - decided against revenue Addition towards amortization of lease hold land - claim of the assessee was not accepted by the AO on the ground that there is no provision of claim of the amount written off/amortized against the lease hold land in the Income Tax Act - Held that:- Amortization is an accounting term that refers to the process of allocating the cost of an asset over a period of time and hence it is nothing else than depreciation. The allowability of costs towards amortization of lease hold land is in question. Having heard the rival submissions on the issue, we find that the CIT(A) has rightly appreciated the facts in perspective and concluding the issue in favour of the assessee in the light of decision of Hon’ble Gujarat High Court in the case of DCIT vs. Sun Pharmaceuticals Industries Ltd. [2009 (3) TMI 587 - GUJARAT HIGH COURT]. Denial of deduction u/s 80G - Revenue has denied the deduction on the ground that only one of the division of Adani Engery Ltd. got merged with the assessee company - Held that:- The Adani Energy Ltd. continued to exist as a separate entity. We do not see any rational in such line of reasoning. Where donation has been paid by a division which was demerged from the other company and merged with assessee’s company, there is no warrant to deny the deduction in the hands of the resulting company (assessee). It shall however be open to the AO to verify as to whether the demerged company (Adani Energy Ltd.) has already claimed deduction or not. Where the assessee proves to the satisfaction of the AO that no deduction has been claimed under s.80G of the Act by the demerged company towards the amount in question, the AO shall allow the deduction in the hands of the assessee company after verifying the receipts etc. in accordance with law. Disallowances of preliminary expenses claimed under s.35D - Held that:- In view of the issue being covered in favour of the assessee by the order of the co-ordinate bench for earlier year [2016 (1) TMI 940 - ITAT AHMEDABAD], we find merit in the claim of the aforesaid amount under s.35D of the Act. The assessment order is thus directed to be modified in respect of the aforesaid issue. Eligibility of depreciation of goodwill arising on demerger - Held that:- Where the AO has readjusted the quantum of depreciation in the subsequent assessment year, the assessee is within its legitimate rights to be granted depreciation in AY 2009-10 as per the figures worked by the AO himself. We do not see any perceptible reason for not admitting such claim of the assessee. We also find bonafides in the plea of the assessee for raising new claim on account of depreciation by way of additional ground at this belated stage. The order for the AY 2012-13 was passed on 29.03.2015. By virtue of this order, the assessee came to know about the revision in the claim of depreciation concerning AY 2012-13. By that time, the order of the CIT(A) dated 13.12.2013 was already passed. Therefore, the assessee was incapacitated to put forward such new claim towards depreciation on goodwill amounting to ₹ 5,57,63,315/- for which relevant facts are duly available on record in the light of the decision of Hon’ble Supreme court in the case of Goetze (India) Ltd. vs. CIT [2006 (3) TMI 75 - SUPREME COURT] & NTPC vs. CIT [1996 (12) TMI 7 - SUPREME COURT]. - Decided in favour of assessee. Disallowance in respect of employees’ contribution to Provident Fund - Held that:- In view of the decision of in the case of CIT vs. GSRTC [2014 (1) TMI 502 - GUJARAT HIGH COURT], the issue is decided against the assessee. Addition u/s 14A - Held that:- We find that the CIT(A) has deleted the disallowance of interest expenditure after taking account the interest free capital available at the disposal of the assessee by way of own funds as well as set off available on account of interest income available at the disposal of the assessee. We find that the action of the CIT(A) is on sound footing in tune with binding judicial precedents including the decision in Nirma Credit Capital Pvt. Ltd. (2017 (9) TMI 485 - GUJARAT HIGH COURT). Thus, the action of the CIT(A) cannot be assailed on this score. The CIT(A) on the other hand upheld the disallowance of administrative expenditure as quantified in terms of rule 8D(2)(iii) of the Rules. The assessee has failed to provide any justification for interference with the order of the CIT(A).
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