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2016 (7) TMI 1374 - HC - Income TaxDeduction under section 80-I/80-IA on vatav, kasar and discount income and sales tax set off - Held that:- So far as issue with regard to Vatav, kasar, incidental charges and advances written off are concerned, the same is covered by the decision in the case of CIT v. Nirma Ltd. reported in [2014 (10) TMI 388 - GUJARAT HIGH COURT]. So far as issued with regard to vatav, kasar, discount and sales tax set-off under section 80-I is concerned, the same is covered by the decision in the case of CIT v. Meghalaya Steels Ltd. reported in [2016 (3) TMI 375 - SUPREME COURT] - Decided in favour of assessee. Netting of interest is concerned, the same will be now governed by the decision of the apex court in the case of ACG Associated Capsules Pvt. Ltd v. CIT reported in [2012 (2) TMI 101 - SUPREME COURT OF INDIA] as held that Ninety per cent of not the gross interest/rent but only the net interest/rent, which has been included in the profits of the business of the assessee as computed under the heads ‘PGBP’ is to be deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of the business. Matter remanded back to A.O. to work out the deductions – Decided in favor of assessee Allowance of job work charges confirmed. Refund of excise duty - Held that:- The same is covered in favour of the assessee in view of the decision of the apex court in the case of CIT v. Lakshmi Machine Works [2007 (4) TMI 202 - SUPREME Court]. Accordingly, the issue is answered in favour of the assessee and against the Revenue. Expenditure on effluent treatment plant - allowable business expenditure - Held that:- A similar issue has come up before the Gujarat High Court in the case of Alembic Glass Industries Ltd. [1975 (11) TMI 42 - GUJARAT High Court] wherein it was held that the assessee being member of federation of Gujarat Mills and Industries, contribute a sum of ₹ 5,000 for construction of a building and auditorium and the amount was held to be an allowable deduction. In addition to coming to the conclusion that there was commonality of business it was further held that the expenditure was in connection with the expansion of the existing business. In view of the aforesaid decision of the Gujarat High Court, we are of the opinion that the contribution made by the assessee is an allow able deduction and the Commissioner of Income-tax (Appeals) was justified in allowing the same Foreign exchange fluctuation under section 80-IA allowability - Held that:- This issue will be now governed by the decision of this court in the case of CIT v. Priyanka Gems reported in [2014 (3) TMI 938 - GUJARAT HIGH COURT] as held that Primarily, no distinction possible on the basis of different situations under which foreign exchange fluctuation may result. We are conscious that law permits hedging of foreign exchange fluctuation risk to an importer or an exporter. The exporter may, therefore, take steps as found commercially prudent to safeguard himself against drastic foreign exchange rate fluctuations and in the process may also limit the possibility of gain in case of favourable currency rate trends. Nevertheless, the resultant gain in foreign exchange rate would still be due to the export made by the assessee. In any case, no such facts are recorded by the Assessing Officer in any of these cases. We would, therefore, not entertain such speculative contention. Duty drawback - Held that:- This issue will be now governed by the decision of the apex court in the case of Liberty India v. CIT reported in [2009 (8) TMI 63 - SUPREME COURT] wherein held that duty drawback, rebate etc. should not be treated as adjustment (credited) to cost of purchase or manufacture of goods. - They should be treated as separate items of revenue or income and accounted for accordingly - Decided in favour of the Department and against the assessee. Disallowance in respect of amount paid to farmers on account of damage/penalty - Held that:- As decided in Swadeshi Cotton Mills Co. Ltd. v. CIT [1997 (5) TMI 5 - SUPREME Court] the authority has to allow deduction under section 37(1) of the Act, wherever such examination reveals the concerned impost to be purely, compensatory in nature. Wherever such impost is found to be of a composite nature, i.e., partly of compensatory nature and partly of penal nature, the authorities are obligated to bifurcate the two components of the impost and give deduction to that component which is compensatory in nature and refuse to give deduction to that component which is penal in nature.
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