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2010 (8) TMI 472 - AT - Income TaxAddition of income – On account of unutilized Modvat Credit pertaining to the closing stock as per the provisions of section 145A - Assessee company has followed the exclusive method whereby only the net amount of purchases is debited to the purchase account and the balance amount representing excise duty is debited separately to modvat account - guidance note issued by the ICAI wherein hypothetical working is given to show that in the case of an assessee following “exclusive method”, adjustments made by including the excise duty in the value of purchases, sales and inventory will not have any effect on the profit - Ground No. 1 of the assessee’s appeal is accordingly treated as allowed for statistical purposes DEPB credit - Deduction u/s 80HHC - Hon’ble Bombay High Court in the case of CIT v. Kalpataru Colours & Chemicals (2010 -TMI - 76895 - BOMBAY HIGH COURT) wherein it has been held that the entire amount received on the sale of DEPB would fall within the purview of section 28(iiid) – Accordingly assessee appeal is dismissed Depreciation - Tribunal in the case of Daleep S. Chandnani v. ACIT wherein it was held that the nomenclature of commercial vehicles should not be so construed as to deprive the assessee of higher depreciation when all the conditions specified in the Act and the Rules had been met by the assessee – Decided in the favour of the assessee Capital expenditure claimed by assessee on research and development - ld. Counsel for the assessee has not been able to produce the said bills and in the absence of the same, we find no justifiable reason to interfere with the impugned order of the ld. CIT(A) sustaining the disallowance made by the A.O. on this issue to the extent of Rs. 39,76,739/- for want of supporting bills As regards the balance disallowance of Rs. 7,70,190/- made by the A.O. on account of work-in-progress - A perusal of the order of the A.O., however, shows that the disallowance was not made by him on this ground and the same was made on the ground that capital work-in-progress was not used by the assessee for its business purpose during the year under consideration - In this regard, it is observed that as per clause (iv) of sub-section (1) of section 35, deduction is allowed in respect of any expenditure incurred by the assessee of a capital nature on scientific research related to the business carried on by him and there is no condition stipulated therein that the relevant capital asset should have been used by the assessee for the purpose of his business during the relevant year - Ground No. 4 is thus partly allowed
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