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2021 (1) TMI 958 - ITAT BANGALOREAddition u/s 40A(2)(a) - interest expenditure crystallized as an liability to the assessee during the previous - admission of additional evidence is a loan availed by the assessee from Kotak Mahindra Bank @ 13.5% without security which will have a bearing on a decision on grounds 4 to 8 and the invocation of provisions to section 40A(2)(b) - HELD THAT:- We are of the view that the issue sought to be raised in grounds 4 to 8 which is a disallowance under section 40A(2)(b) of the Actand the issue sought to be raised in grounds 9 to 12 with regard to the question whether interest expenditure of ₹ 1,90,06,180/- crystallized as an liability to the assessee during the previous year relevant to Assessment Year 2011-12 requires fresh consideration by the AO in the light of the additional evidence filed before us by the assessee - we remand the aforesaid two issues to the AO for fresh consideration, after affording opportunity of being heard to the assessee. Nature of expenditure - compensation paid on termination of the licence agreement - capital expenditure or revenue expenditure - HELD THAT:- We are of the view that the payment in question was owing to commercial expediency and enabled the assessee to avoid payment of future licence fee and thereby reduced the operating cost of the assessee. Such payment cannot be regarded as a capital expenditure. We, therefore, hold that the expenditure in question is revenue in nature and should be allowed as a deduction Eligibility for MAT credit u/s 115JAA arrived at after considering surcharge and cess - AO has not considered surcharge and cess applicable on such MAT credit and allowed MAT credit which has been set off against the tax liability arrived under normal provisions inclusive of surcharge and cess, which has resulted in an increased tax liability - HELD THAT:- In the case of Consolidated Securities Ltd. v. Asstt. CIT [2018 (7) TMI 1722 - ITAT DELHI]wherein, it was held that the amount of the MAT tax credit, inclusive of surcharge and education cess etc., if any, should be reduced from the amount of tax determined on the total income after adding surcharge and education cess, etc., and only the resultant amount payable will suffer interest under the relevant provisions of the Act.The aforesaid decision is applicable to the facts of the present case on all fours and by respectfully following the same, we set aside the impugned order and remit the matter to the file of the Ld. AO for ascertaining the correct amount of MAT tax credit available to the assessee including of surcharge/cess and then allow tax credit.
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