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2015 (10) TMI 2779 - ITAT MUMBAIDisallowance u/s 14A r.w.r. 8D - HELD THAT:- We find that the assessee had received dividend of ₹ 1.06 lakhs during the year hat the AO and FAA had applied the provisions of section 14A of the Act r.w. Rule 8D hat the arguments of strategic investment and availability of funds were not dealt with. If the shares were not purchased from the borrowed funds then there was no justification in making disallowance of interest expenditure. The provisions of section 14A were brought in to Act to prevent the mischief of claiming expenses against the exempt income. But that does not mean that whenever an assessee claims exempt income automatic disallowance has to be made. The AO and the FAA have without considering the relevant facts made the disallowance. - Decided in favour of assessee. TDS u/s 194J or 192 - TDS on fee paid to the directors - disallowance made u/s. 40(a)(ia) - HELD THAT:- sitting fees paid to the directors does not amount to fees paid for any professional services as has been mentioned in the explanation to section 194J(1). We further find from the memorandum explaining to provisions of the Finance Bill 2012 that as per clause No.71 it was specifically mentioned that there was no specific provision for deduction of tax on the remuneration paid to a director which is not in the nature of salary. We find the provisions of section 194J(1)(ba) speaks of any remuneration or fees or commission by whatever name called other than those on which tax is deductible u/s.192 to a director of a company on which tax has to be deducted at the applicable rate and the above provision has been inserted by the Finance Act, 2012 w.e.f., 01-07-2012. We, therefore, find force in the submission of the learned counsel for the assessee that no tax is required to be deducted u/s.194J out of such director's sitting fees for the A.Y. 2007-08. In this view of the matter, the order of the CIT(A) is set-aside and the ground raised by the assessee on the issue of TDS on sitting fees paid to Directors is allowed. Disallowance of bad debts written off u/s 36(2) - HELD THAT:- We find that the assessee had claimed bad debts of ₹ 57.73 lacs only in the books of accounts and the AO and the FAA had not considered the amounts added back by it that it had written off only net amount receivable from BEST Undertaking. In our opinion he assessee is the right person to decide as to whether a particular amount has become bad or not. The AO/FAA cannot decide the issue referring to the entity from whom money is to be received. If the assessee had in its books of accounts written off an amount he revenue authorities cannot disallow in light of the judgment of the Hon’ble Apex Court delivered in the case of TFR Ltd.[2010 (2) TMI 211 - SUPREME COURT] - There is no doubt about the writing off the amount in question in the books of accounts. So, reversing the order of the FAA, we decide ground in favour of the assessee. Provision for doubtful debts written back - HELD THAT:- We find that the assessee and added back the two sums i.e. ₹ 7.17 lacs and ₹ 5.91 lacs under the head provisions for doubtful debts and service tax payable respectively. Therefore, we are of the opinion that the action of the AO/FAA has resulted in taxing the same sum twice. Reversing the order of the FAA ground decided in favour of the assessee . Disallowance of interest on interest free loan granted - HELD THAT:- We find that assessee had advanced money to Ferrari on account of purchase of shares of Radio Midday, that in the date wise summary a credit entry is appearing on 30th June 2008, that from the said entry it is clear that the shares of Radio (West) were bought by the assessee from Ferrari. Considering these facts we are of the opinion that money advanced by the assessee to M/s. Ferrari was solely for the purpose of buying the shares and that the transactions could not be termed as advance of interest free loan. Therefore, reversing the order of the FAA, we decide the last ground of appeal in favour of the assessee.
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