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2015 (7) TMI 248 - ITAT BANGALOREDisallowance of bad debts and advances written off - Held that:- Since the facts before us are also similar to the facts in the assessment year 2006-07 wherein held that the submissions and evidences placed by the assessee before the authorities below, viz., both the Assessing Officer and learned CIT (Appeals) have not been considered properly in the light of the principles laid down in the decisions of the Hon'ble Apex Court in the case of TRF Ltd. (2010 (2) TMI 211 - SUPREME COURT ) and Rallis India Ltd. (2010 (3) TMI 164 - BOMBAY HIGH COURT). We are of the view that it was essential for the Assessing Officer to consider the submissions and evidences placed on record by the assessee both in respect of write off of bad debts and write off of advances and find that he has not done so. In this factual matrix, we are of the opinion that it would be in the interest of equity and justice that it is absolutely necessary for the Assessing Officer to re-examine all the facts of the matter regarding the assessee's claims for write off of bad debts and write off of advances so that there is clarity while deciding the issue, we remand this issue also to the file of the AO with similar directions for de novo consideration of the issue after giving the assessee a fair opportunity of hearing. - Decided in favour of assessee. Disallowance of interest u/s 14A read with rule 8D - Held that:- In cases where there has been substantial investment for strategic purposes wherein the intention has been the expansion and support of the assessee's business, and not for the purpose of earning dividend, the provisions of section 14A of the Act ought not to have been invoked even if such expansion has occurred out of interest bearing borrowed funds. Ruling to this effect has been rendered by the Hon'ble Karnataka High Court in the case of CCI Ltd. (2012 (4) TMI 282 - KARNATAKA HIGH COURT ) relied on by the assessee. This is the proposition put forth in this case by the assessee, apart from its averments that its own funds are more than the investment in equities. We also find that the Assessing Officer has not considered the above arguments of the assessee and his finding that the assessee's net worth is negative suffers from lack of factual clarity, as the assessee's averments to the contrary are that its net worth is positive at ₹ 896 Crores. In view of the fact that the orders of the authorities below suffer from nonconsideration of arguments, details and evidences put forth by the assessee, we, in the interest of equity and justice, set aside the disallowance under section 14A of the Act and restore the matter to the file of the Assessing Officer with the direction to consider the matter afresh in detail - Decided in favour of assessee for statistical purposes. Disallowance of set off of brought forward business loss - Held that:- This issue is consequential to the findings of the AO on the first two issues i.e. bad debts and advances written off and disallowance u/s 14A of the Act read with rule 8D of the Rules. Further, the grounds relating to interest u/s 234C and 234D are also consequential in nature. Therefore, these grounds also set aside to the file of the AO for de novo consideration and for giving consequential effect, if any, to the assessee.- Decided in favour of assessee for statistical purposes. Disallowance of foreign exchange loss - CIT(A) deleted the addition - Held that:- As decided in the assessee's own case for Assessment Year 2005-06 the assessee has been able to establish its working capital requirements as was not related as otherwise noted by the Assessing Officer claimed as interest on forward contracts for investment in shares of companies which investment increased from ₹ 102 crores to ₹ 380 crores. Justifiably the learned counsel pointed out the issue in accordance with the provisions of section 43A distinguishing the capital / revenue nature imbibed therein to result in consideration thereof as were claimed by the assessee before the authorities below. The assessee himself rendered income on gain from exchange fluctuation on identical nature of revenue from loans remaining unpaid. The same is to be allowed on the facts and circumstances of the case. Thus we uphold the action of the learned CIT(A) in deleting the disallowance of foreign exchange loss - Decided against revenue.
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