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2016 (10) TMI 319 - AT - Income TaxChange in system of accounting - bonafide change - Held that - As decided in assessee s own case for AY 2002-03 wherein the Tribunal following the decision in the case of Kishan Discretionary Family Trust vs. ACIT 2007 (11) TMI 622 - ITAT AHMEDABAD held that the assessee has right to adopt the changed system of accounting and by changing the system of accounting from mercantile to cash was a bona fide change. Respectfully following ITAT judgment in assessee s own case 2013 (2) TMI 787 - ITAT AHMEDABAD we uphold the order of the ld. CIT(A) in this regard. Addition made u/s 14A out of interest expenses and administrative expenses - Held that - We have heard the rival contentions perused the material available on record and gone through the orders of the authorities below. It emerges from the record that the assessee has placed on record a revised working of the interest expenses of Nirman Soaps & Detergents Pvt Ltd and Navin Detergent Pvt Ltd which requires to be verified at the Assessing Officer s level alongwith other relevant facts and circumstances of the case alongwith the case law relied by the assessee in the case of UTI Bank Ltd (2013 (8) TMI 238 - GUJARAT HIGH COURT). Therefore in the interest of substantial justice we set aside this issue to the file of the ld. Assessing Officer with a direction to decide the same afresh in accordance with law after providing due opportunity of being heard to the assessee. Thus these grounds are allowed for statistical purposes.
Issues:
1. Cross appeals for AY 2004-05 involving deletion of addition and accrued interest on deep discount bonds. 2. Disallowance of expenses u/s 14A of IT Act in assessee's appeal for AY 2004-05. Cross appeals for AY 2004-05: - The appeals involve common issues and were heard together for convenience. - The assessee withdrew appeal ITA No.2273/Ahd/2011 for AY 2002-03. - Revenue raised grounds related to deletion of addition of accrued interest on deep discount bonds and debentures, citing legal and factual errors by CIT(A). - Assessee challenged disallowance of expenses under IT Act, pointing out errors by CIT(A). - Revenue's appeal focused on the deletion of a significant addition, while the assessee's appeal contested various disallowances. Deletion of Addition for Accrued Interest: - Revenue challenged the deletion of addition of accrued interest on deep discount bonds by CIT(A). - CIT(A) relied on ITAT's decision in a similar case, directing deletion of the addition. - Tribunal upheld CIT(A)'s decision based on precedent and dismissed Revenue's appeal. Disallowance of Expenses u/s 14A in Assessee's Appeal: - Assessee contested disallowance of expenses under Section 14A of IT Act in its appeal. - Assessing Officer made disallowances related to interest and administrative expenses. - CIT(A) upheld the additions but directed verification of exempted income claim. - Tribunal set aside the issue for fresh assessment by AO, considering revised working of interest expenses and relevant case law. - Grounds related to disallowance of expenses were allowed for statistical purposes. Other Grounds and Conclusion: - Various other issues like disallowance of interest expenses and charging of interest u/s 234B & 234D were addressed. - Additional ground on Power Project Expenses was dismissed as not pressed by the assessee. - Ultimately, Revenue's appeal and one of the assessee's appeals were dismissed, while another appeal was partly allowed for statistical purposes. Conclusion: The judgment addressed cross appeals for AY 2004-05 involving deletion of additions and disallowance of expenses under IT Act. The Tribunal upheld the CIT(A)'s decision to delete the addition of accrued interest based on precedent, while setting aside the disallowance of expenses for fresh assessment. Various other issues were also addressed, resulting in the dismissal of some appeals and partial allowance of others for statistical purposes.
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