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2015 (12) TMI 1830 - ITAT MUMBAIExemption u/s 10(23G) on the interest income - assessee is a non-banking financial company engaged in advancing loans and making investments - AO denied the exemption on the ground that the assessee has not earned the interest income out of investment activities, but out of business activities and the Ld CIT(A) also confirmed the same - HELD THAT:- Issue decided in favour of assessee as relying on own case [2012 (4) TMI 772 - BOMBAY HIGH COURT] Loss arising on sale of investment as a business loss - HELD THAT:- We notice that the Ld CIT(A) has allowed the claim in AY 2002-03 [2014 (10) TMI 1018 - ITAT MUMBAI] by considering the business activities of the assessee. Since the AO has accepted the claim of the assessee in a number of years, we are of the view that the AO was not justified in taking different view in this year. Accordingly, we uphold the order of Ld CIT(A) on this issue. Treatment of leasehold improvements expenditure - revenue or capital expenditure - HELD THAT:- As assessee has incurred the expenditure on lease hold premises and no asset has come into existence. Accordingly he directed the AO to allow the same as revenue expenditure. The Ld A.R submitted that an identical issue was considered by the Tribunal in the assessee’s own case relating to AY 2004-05 [2012 (4) TMI 772 - BOMBAY HIGH COURT] and was decided in favour of the assessee. Consistent with the view taken therein, we uphold the order of Ld CIT(A) on this issue. Assessment of interest arising on “Non Performing assets” on accrual basis - HELD THAT:- As this issue is covered by the decision rendered by the Tribunal in the assessee’s own case for AY 2004-05 [2012 (4) TMI 772 - BOMBAY HIGH COURT] wherein the Tribunal has decided this issue in favour of the assessee. He further submitted that the decision taken by the Tribunal was in accordance with the decision rendered by the Hon’ble Bombay High Court in the case of CIT Vs. KEC Holdings Limited [2014 (7) TMI 139 - BOMBAY HIGH COURT] Hence, consistent with the view taken by the Tribunal in the assessee’s own case, se set aside the order of Ld CIT(A) on this issue and direct the AO to delete this addition. Rejection of claim of Bad debts written off relating to the TDS certificate not received by the assessee - HELD THAT:- As decided in INDIAN PRODUCTS TRADING CO. PVT. LTD. VERSUS ITO RG 3 (2) (1) , MUMBAI [2010 (9) TMI 1263 - ITAT MUMBAI] it is stated that the assessee did not receive TDS certificates from the debtor and hence it could not claim credit for the tax deducted at source amount. Accordingly the assessee has written off the TDS amount as irrecoverable, herefore the amount withheld by the debtor has TDS is certainly due to the assessee and when the assessee writes off this debt as irrecoverable, the same is allowable as deduction u/s 36(1)9vii), applying the ratio of the Apex Court in the case of TRF Ltd [2010 (2) TMI 211 - SUPREME COURT] Disallowance of various expenses - HELD THAT:- we notice that the assessing officer has, in addition to the element of personal expenses, also taken the view that they have been incurred for non-business purposes. Before us also, the assessee has failed to establish the business connection in incurring all these expenses. Accordingly we are of the view that some portion of expenses needs to be disallowed to take care of deficiencies, if any, but the disallowance of 30% appears to be on the higher side. Accordingly, in the case of Business development and entertainment expenses, we sustain an addition of 10% of expenses and modify the order of Ld CIT(A) accordingly. In the case of advertisement and publicity expenses, we sustain the addition of ₹ 1.00 lakh pertaining to the donation made to Doon School and Dutch National daily and 10% of the remaining portion of the expenses listed out in the table given in page 32 of the assessment order. The order of Ld CIT(A) stands modified accordingly. Disallowance of write off of deposit as irrecoverable - CIT(A) allowed the same by holding that the same is related to the business of the assessee - HELD THAT:- Assessee did not furnish the relevant details to support the said contention. In our view, the decision rendered by the Co-ordinate Bench of the Tribunal in the case of Reliance Engineering Associates Pvt.Ltd [2010 (11) TMI 507 - ITAT, MUMBAI] can be applied only if the assessee proves that the rent deposit was paid in respect of accommodation hired for the staff members. Hence, in the interest of natural justice, we are of the view that the assessee should be provided one more opportunity to prove the same. We shall make it clear that the addition made by the AO shall be sustained, if the assessee fails to prove to the satisfaction of the AO that the concerned accommodation was taken for the residential purposes of staff members of the assessee. The order of ld. CIT(A) on this issue stands modified accordingly. Disallowance of “out of pocket expenses” incurred in relation to Yes Bank - HELD THAT:- we notice that the assessee failed to file details of expenditures, purpose for which it was incurred, how it was incurred and how it was not recoverable from “Yes Bank” and steps taken for recovery of the same etc., either before the AO or before Ld CIT(A). In our view, the relevant details are necessary in order to decide about the allowability of this expenditure. Accordingly, we modify the order of ld. CIT(A) and restore the same to the file of the AO in order to provide an opportunity to the assessee to furnish relevant details. We shall make it clear that the addition made by the AO shall be sustained, if the assessee fails to furnish the details to the satisfaction of the AO.
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