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Issues involved: The judgment addresses three grounds raised by the revenue, involving the deletion of additions made by the Assessing Officer (AO) u/s 40(a)(i), u/s 40(a)(ia), and u/s 14A of the Income Tax Act, 1961.
Ground No. 1 - u/s 40(a)(i): The revenue challenged the deletion of an addition of Rs. 7,39,50,478 towards interest liability relating to M/s. Alimenta, Geneva, contending that the liability was contingent and fell under the provisions of Section 40(a)(i). The Tribunal upheld the CIT(A)'s decision based on previous orders favoring the assessee for other assessment years, emphasizing that the issue had been decided in favor of the assessee by the Tribunal and the operation of these orders had not been stayed by the High Court. Therefore, the Tribunal dismissed ground No. 1 in favor of the assessee. Ground No. 2 - u/s 40(a)(ia): The revenue disputed the deletion of an addition of Rs. 35,29,04,787 made by the AO u/s 40(a)(ia) concerning service charges, society charges, and commission paid to cooperative societies. The Tribunal referred to a decision by the Jaipur Tribunal, which clarified that the charges mentioned in the sale bills were not payments of commission as per Section 194H, thus no tax deduction was required. Relying on this decision, the Tribunal dismissed ground No. 2 in favor of the assessee. Ground No. 3 - u/s 14A: The AO disallowed Rs. 84,84,500 u/s 14A, alleging that the assessee deliberately did not claim deduction u/s 80P(2)(d) to avoid the applicability of section 14A. The Tribunal noted that the dividend income received was not excluded from the total income due to a loss in the gross total income, rendering the deduction u/s 80P(2)(d) unavailable. It interpreted the provision to require a positive exclusion of income from the total income, which was not the case here. Therefore, the Tribunal upheld the CIT(A)'s decision and dismissed ground No. 3 in favor of the assessee. In conclusion, the Tribunal dismissed all three grounds raised by the revenue, upholding the decisions of the CIT(A) in favor of the assessee.
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