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TMI Blog2012 (11) TMI 1266X X X X Extracts X X X X X X X X Extracts X X X X ..... e and in law, the CIT(A) erred in deleting the disallowance of expenditure of ₹ 1,25,37,044/- incurred on improvement on lease hold properties which was held by the Assessing Officer to be of capital in nature. 4. On the facts and in the cir circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of ₹ 5 lakhs u/s.14A of the I.T.Act and consequently erred in directing the Assessing Officer not to increase the book profit by the same amount for computing the tax liability u/s 115JA. 5. On the facts and in the cir circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of bad debts to the extent of ₹ 10,97,891/- which had not been established to have become bad. 6. On the facts and in the cir circumstances of the case and in law, the CIT(A) erred in deleting the disallowance of the claim of liquidated damages to the extent of ₹ 13,17,110/- which had not been established to be irrecoverable. 7. On the facts and in the cir circumstances of the case and in law, the CIT(A) erred in directing the Assessing Officer to allow the deduction u/s 80HHC by - (a) reduci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artmental Representative that these expenses require further verification cannot be accepted as in the earlier years appeals the CIT(A) has remanded these issues to the file of the Assessing Officer and the Assessing Officer, after verifying the vouchers etc. produced by the appellant-company, submitted a detailed report on the nature of expenses incurred by it under the head staff welfare expenses. Based on such report for one year the CIT(A) fully deleted the said disallowance out of staff welfare expenses and similarly for similar reasons has deleted the disallowance out of other expenses. As no new facts have been brought on record, we do not find any reason to interfere with the findings of the CIT(A), which we confirm. Ground no.1 is accordingly dismissed. 6. Ground no.2 relates to the addition of ₹ 4,65,568 made by the A.O. by invoking the provisions of section 145A of the Act. Similar issue came up for hearing before the Tribunal in assessment year 1999-2000 in ITA No.7925/Mum/2004. We find that this issue was raised by ground no.2 at page 2 para 8 of the said Tribunal order. The Tribunal in para 12 page 3 has given a categorical finding that the adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.55 lakh as dividend income exempt u/s 10(33) of the Act. The A.O. sought explanation from the assessee regarding the source of investments made in securities, which was to ascertain interest and other expenditure incurred in earning dividend income for the purpose of section 14A of the Act. It was explained by the assessee that the investments were made during the year 1994 and all the investments were made out of the company s own funds. It was explained that the aggregate value of investments is ₹ 4.86 crore whereas non-interest bearing funds available with the assessee is ₹ 91.42 crore and therefore, no interest cost was incurred by the assessee on these investments. The A.O. rejected the submissions made by the assessee and went on to add ₹ 5 lakh on estimate basis towards expenditure incurred on establishment and administration for earning dividend income. Before the CIT(A), the assessee reiterated that the investments have not been made from the borrowed funds. After considering the facts and circumstances the CIT(A) deleted the entire addition of ₹ 5 lakh holding that the A.O. has given no basis for disallowing the amount of ₹ 5 lakh. Before u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in the financial years 1997-98 and 1998-99. Following the ratio laid down by the Hon ble Supreme Court in the case of TRF Limited vs. CIT [(2010) 323 ITR 397 (SC)], we have no hesitation to hold that both the bad debt and liquidated damages are to be allowed as write off for the year under consideration and on that basis we confirm the findings of the CIT(A). Grounds no.5 and 6 are accordingly dismissed. 10. Ground no.7 is in three parts. The sum and substance of the grievance of the Revenue is that for considering the provisions of section 80HHC, the CIT(A) erred in directing the A.O. to consider net receipts on account of hiring charges, discount receipt, discount of medi-claim policies, refund of superannuation contribution, octroi refund, sales tax set off and balance returned back from the profits of the business. The issue has been elaborately discussed by the A.O. at page 9 of the assessment order. At page 10 the A.O. has observed that in the questionnaire issued with notice u/s 142 dated 29.10.2002, the assessee was asked to explain why the following income credited to the profit and loss account has not been considered for exclusion to the extent of 90% under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal No.1914 of 2012, copy of which was given during the course of hearing and also relied upon the decision of the Hon ble jurisdictional High Court in the case of CIT v. United Riceland Ltd. in Income Tax Appeal No.6997 of 2010, copy of which is also placed on record. 12. We have carefully perused these orders. We find that the Hon ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. (supra) at page 18 para 2 of its order held that the assessee was entitled to deduct the expenses from the interest received and only 90% of the net amount of interest could be excluded under Explanation (baa) to section 80HHC. Similarly the Hon ble Bombay High Court in the case of United Riceland Ltd. (supra) while answering to question (B) whether on the facts and in the circumstances of the case and in law the Tribunal was justified in directing the Assessing Officer to allow the claim of the assesseecompany for a deduction u/s 80HHC inter alia on currency exchange gain and the answer finds place at page 2 para 3 and relying upon the decision of the Bombay High Court in the case of CIT v. Rachna Udyog [230 CTR (Bom.) 72]. We find that in the case of Rachna Udyog (supra), t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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