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2018 (11) TMI 869 - AT - Income TaxEligibility for deduction u/ 80G - treatment of donation as bogus - allegation of donations to unscrupulous trusts - Held that:- Just because the trust was engaged in some unauthorized activity does not mean that the assessee is not entitled to claim the benefit u/s 80G of the Act. Besides, the Income Tax Department has failed to prove that the consideration has been received in form of cash or otherwise. Also no opportunity was afforded to the assessee to cross-examine the departmental witness, that is, the statements of whom were relied upon by the officer of investigation wing of the Income Tax Department. Further, no any copies of documents were provided to the assessee which were relied upon by the income tax authority. AO nowhere stated in his impugned assessment order that the any part of income of Trust (institution) has become taxable for any technical reason and also the Ld. AO did not mention that the certificate issued under section 80G(5)(v) has been cancelled by the Income Tax Department. Under these circumstances the deduction under section 80G cannot be denied to the assessee company.We also note that subsequent to the donation, the withdrawal of benefit or cancellation of certificate of section 80G in the hands of the payee would not affect the interest of the assessee. In we direct the AO to grant the deduction u/s 80G of the Act in respect of donation given by the assessee in accordance with law. - Decided in favour of assessee Upward transfer pricing adjustment - addition of interest charged to the assessee’s subsidiary - applicability of LIBOR rate - Held that:- It has been consistently held in several decisions by the tribunal that wherever the transaction of loan between the associated enterprises is in foreign currency then the transaction would have to be looked upon by applying the commercial principles in regard to international transaction. Therefore the domestic prime lending rate would have no applicability and the international rate LIBOR would come into play. It has therefore been held that LIBOR rate has to be considered while determining the arms length rate of interest in respect of transactions of loan in foreign currency between the associated enterprises. This view has also been accepted by the Hon'ble Delhi High Court in the case of CIT vs Cotton Naturals (I) Ltd. [2015 (3) TMI 1031 - DELHI HIGH COURT]. Disallowance being 40% of employees contribution towards EPF which was paid beyond the due date - HELD THAT:- in the assessee’s case under consideration, the employee’s contribution towards the PF was made by the assessee before the due date of filing the return of income and thereforeemployee’s contribution towards the PF shall be allowed as deduction u/s 43(b) of the Act, therefore, respectfully following the judgment of Hon’ble Supreme Court in the case of CIT vs Alom Extrusions Ltd. (2009 (11) TMI 27 - SUPREME COURT) we find no infirmity in the order passed by the Ld. CIT(A) in deleting the addition. Addition u/s 14A read with Rule 8D of the IT Rules - assessee has suo moto disallowed u/s 14A read with Rule 8D - Held that:- Assessing Officer has not mentioned the cogent reasons for rejecting the claim of the assessee in the assessment order.If the Assessing Officer proposes to invoke section 14A then he has to record a satisfaction on this issue. This satisfaction is to be done with regard to the accounts of the assessee. In the present case wenote that there is no satisfaction recorded by the Assessing Officer and therefore, in view of case of Ashish Jhunjhunwala (2013 (6) TMI 545 - ITAT KOLKATA) no disallowance u/s 14A can be made. Therefore, the order passed by the Assessing Officer is a non-speaking order and Ld. CIT(A) has rightly restricted the disallowance u/s 14A to the tune of ₹ 44,338/- suo moto disallowed by assessee. MAT computation - addition of sum disallowed u/s 14A to the book profit of the assessee company u/s 115JB of the Act - Held that:- The provisions of section 115JB relating to computation of book profit are amply clear and unambiguous. These provisions do not leave any room for adjustment by the assessing officer other than those mentioned in Explanation 1 to section 115JB to the net profit reflected in the accounts of any assessee and adjustment by way of disallowance u/s 14A is not included in the said explanation. Therefore, such upward revision in the sum of ₹ 1,48,506/-to the book-profit by making disallowance section 14A r.w.r. 8D is not permitted as per tribunal’s Special Bench’s decision in Vireet Investments (2017 (6) TMI 1124 - ITAT DELHI). That being so, we decline to interfere with the order of Id. CIT (A) deleting the aforesaid addition. His order on this issue is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
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