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2020 (6) TMI 533 - AT - Income TaxAddition being provision for bad debts and doubtful debts written back - computation of income on account of 'reversal of provision for bad & doubtful debts of earlier years' - HELD THAT:- We note ld DRP is higher authority, therefore AO ought to follow the direction of ld DRP. We note that AO had neither follow the directions of ld DRP nor he had examined the submissions, documents and details filed by the assessee in right perspective, as noted above. Therefore, we direct the AO to examine the assessee`s claim in respect of provisions for bad and doubtful debts and adjudicate the issue in accordance to law. Disallowance under section 14A read with Rule 8D(2)(iii) - HELD THAT:- Assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld DRP/AO and other materials brought on record. We note that issue raised by the assessee is no linger res integra. The Coordinate Bench of Kolkata ITAT in the case of REI Agro Ltd. vs. DCIT [2013 (9) TMI 156 - ITAT KOLKATA] has held that only dividend bearing securities should be considered for the purpose of disallowance under rule 8D(2) (iii) of the Income Tax Rules. Only dividend bearing securities should be considered for disallowance under rule 8D(2)(iii) of the I.T. Rules. Therefore, we direct the assessing officer to compute the disallowance under Rule 8D(2)(iii) of the Rules by taking into account dividend bearing securities only. For statistical purposes, the grounds raised by the assessee are allowed. Ad hoc additions on account of entertainment expenses and on account of Seminars/conferences made by ld DRP/AO are directed to be deleted - HELD THAT:- There is no material on record to show that any part of these expenses were incurred for non-business purposes.We note that assessee`s books of accounts are audited by Chartered Accountant. The reports of the auditors could be said to be "material" on which reliance could be placed by the IT authorities. The IT authorities not only to accept the auditors' report, but also to draw the proper inference from the same. Here in assessee`s case, the DRP/ AO has not passed any order u/s 144 of the Act. The DRP/ AO thus without rejecting the books of account of the assessee has gone for estimation on suspicion and conjectures that the assessee may be inflating its expenses. It may be pertinent to mention here that there was no material on record to show that any part of the these expenditures were not for the purpose of business. Therefore, the ad hoc additions on account of entertainment expenses and on account of Seminars/conferences made by ld DRP/AO are directed to be deleted. Disallowance incurred towards purchase of software by wrongfully holding that the said expense related to preceding assessment year - HELD THAT:- We direct the AO to examine the submission of the assessee and documents /invoices involved in these submissions, as noted above, and adjudicate the issue in accordance to law. For statistical purposes, the ground raised by the assessee is allowed. Foreign tax credit (FTC) - foreign tax credit for the taxes paid in United states of America (USA) on the doubly taxed income in accordance with the provisions of section 90/91 - said claim could not be made at the time of filing of the Return of income as the payment of taxes in USA was not made till that time - HELD THAT:- Revenue also fairly agreed that foreign tax credit (FTC) may be allowed to the assessee in accordance to law. Therefore, we direct the assessing officer to examine the correctness of the assessee`s claim for foreign tax credit (FTC), as per India USA-Treaty, and allow the claim of the assessee in accordance to law. For statistical purposes, the ground raised by the assessee is allowed. Credit of TDS - HELD THAT:- We direct the assessing officer to give TDS credit as claimed in the revised return of income filed by the assessee on 31st March 2016 in accordance to law.
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