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2011 (3) TMI 716 - AT - Income TaxDenial of claim of exclusion of road transport subsidy as capital receipt - In the course of assessment proceedings, the Assessing Officer noticed that the assessee had received a sum of Rs.18,94,31,601 towards transport subsidy and claimed the same as a capital receipt being exempt from tax - ITAT in assessee's own case, wherein, identical claim for the assessment years 1991-92 to 1996-97 has been decided in favour of the assessee - Decided in favor of the assessee Regarding payment to Rajasthan State Forest Department - Capital or revenue expenditure - It was submitted by the assessee that the assessee company had one factory in Lakheri, Rajasthan and as the mining for raw material was done on the forest land, as per the instruction of the Government of Rajasthan, the amount was paid for the Forest Department to compensate them for loss of forest and towards afforestation costs to make good the said loss - It is statutory obligation of the assessee to provide for compensatory afforestation of land, and unless he does so, the assessee is not allowed to carry out its business activity of extracting from the mines - The object and purpose of the said expenditure, therefore, seen from the businessman's point of view, must be held to be to obtain the approval of the Government to the continuance of the technical collaboration arrangement - Held that: expenditure is to be revenue in nature - decided in favor of assessee. Allowance of profit from power generating unit u/s. 80 IA while computing book profit u/s.115JA. - Held that:- the profit of the industrial undertaking eligible for exemption under section 80-IA must be computed as per the books of account and the provisions of the Act cannot be applied and no adjustment can be made which is not permissible under the section. - Decided in favor of assessee. Allowance of deduction under section 80 HHC while computing book profit under section 115JA. - held that:- what is to be excluded must start with book profits of export business as base. One cannot have computation of book profit with tax profits as the base. In this view of the matter, and in view of the broad principles clearly discernable from Hon'ble Supreme Court's judgment in Ajanta Pharma's case (2010 -TMI - 77381 - SUPREME COURT ), we uphold the grievance of the assessee and direct the Assessing Officer to giver resultant relief, if any. Admission of additional grounds - held that:- As additional grounds of appeal are on legal issues and there is nothing on record to suggest any malafides in additional grounds being raised at this stage, we admit these additional grounds of appeal and proceed to take up the ground of appeal on merits. Book profit u/s 115JA - withdrawals from the 'share premium account' to meet 'Prorata premium on redemption of debentures' equity shares issue expenses and debenture issue expenses - Held that:- The vertical profit and loss account is based on the entries made in the profit and loss account as traditionally prepared in the books of accounts and is not a copy of the same. Therefore, merely because separate credit entry, as an income, is not shown in the profit and loss account, it can not be said that there has been no credit to the profit and loss account. It is not shown separately as an income head on the credit side, bit that does not mean that the amount has not been credited to the profit and loss account. In substance, on the facts of this case, there was a credit to the profit and loss account on account of the transfer from reserves and this has been offset against the expenses incurred by the assessee. - Adjustment allowed - Decided in favor of assessee.
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