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TMI Blog2022 (1) TMI 1369X X X X Extracts X X X X X X X X Extracts X X X X ..... s are presented for our consideration:- "1. Whether in the facts and in circumstances of case, the ITAT was justified in law and has not acted perversely in restricting the adjustment on account of interest free loans advanced to Aes to prevailing LIBOR +2% with addressing the evidences and facts brought on record by the TPO. 2. Whether in the facts and in circumstances of case, the ITAT was justified in law and has not acted perversely in deleting the adjustment of Rs. 42847925/- made by the Assessing officer on account of adjustment of Corporate Guarantee without appreciating the fact that as per amendment by Finance Act 2012, insertion of explanation (i) (c) to section 92B, clarifies that corporate guarantee comes within the scope an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat loan and advance are not revenue expenses and the details/ information provided by the assessee has already been considered during the assessment proceedings. 6.Whether in the facts and in circumstances of case, the ITAT was justified in law in remitting back the issue of disallowance out of bad debts provision claimed in MAT to the file of the Assessing Officer for verification without assigning any reasons and inspite of the fact that the details/ information provided by the assessee has already been considered during the assessment proceedings." At one stage this appeal was dismissed by an order dated 20.11.2017. However on an appeal filed by the revenue, the Supreme Court by an order dated 08.01.2020 has remanded the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court and High Courts noted that under similar circumstances the expenditure incurred by the company were allowed. This was on the basis that the assessee company in order to expand its business world wide had setup subsidiaries in other countries. The investment made in such companies was seen as revenue expenditure since the purpose behind making the investment was only for expansion of the business. Applying this logic to the assessee in the present case, the Tribunal was of the opinion that such investment being in the nature of revenue expenditure was to be allowed under Section 37 of the Act. Having perused the order passed by the assessing officer and by the tribunal and having heard learned counsel for the revenue, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions and then written off the same. Therefore, for the year under consideration, this amount should not have been added back for working out the income under the provisions of Section 115JB of the Act. This will be the double disallowance of the same amount. Such action is not as per law. Therefore, we direct not to include this amount while working out income for MAT purpose. Therefore, the ground no. 3 and 4 of the assessee are allowed." Learned counsel for the respondent assessee brought to our notice a decision of the Full Bench of the Gujarat High Court in the case of CIT Vs. Vodafone Essar Gujarat Ltd.-[2017] 397 ITR 55 in which similar issues on a reference was examined. It was said and observed as under:- "20. Above decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it the P&L A/c but simultaneously also reduce the loans and advances or the debtors from the assets side of the balance sheet to the extent of the corresponding amount so that, at the end of the year, the amount of loans and advances/debtors is shown as net of the provisions for the impugned bad debt. Therefore, in the first place if the bad debt or doubtful debt is reduced from the loans and advances or the debtors from the assets side of the balance sheet the Explanation to s. 115JA or JB is not at all attracted." 22. In case of Kirloskar Systems Ltd., the Karnataka High Court adopted the same principle. 23. By way of culmination of above judicial pronouncements and statutory provisions, the situation that arises is that prior to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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