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2012 (9) TMI 826 - ITAT, MUMBAIDeduction u/s 43B Whether deduction u/s 43B can be claimed for pre-paid expenses AO reject the said claim on ground that only expenses incurred during the year can be allowed u/s 43B Held that:- As these amounts in respect of which deduction has been claimed are covered u/s 43B and have actually been paid during the year. Thus, the sum which is actually paid irrespective of the year in which the liability to pay such sum had incurred even according to the method of accounting regularly employed by the assessee, has to be allowed in view of the provisions of Sec 43B. Assessee also contended that these amounts which have been debited in the profit and loss account has not been claimed in the subsequent year and has been accepted by the department as well as by the assessee. Therefore deduction allowed. Issue decides in favour of assessee Taxability of Advance licence benefit receivable - The benefit of concession in custom duty during import goods - Imports were not done during the accounting year and, therefore, no benefits is derived - The entries made in the P&L are notional in nature as the same represents the notional value of benefits under EXIM Held that:- Following the in assessee own case for another assessment years, the issue is decided against the department. Disallowance u/s 43B - PF and employees contribution to the Provident Fund and EPF paid beyond the due date but before the end of the previous year Held that:- Following the decision of the Tribunal in the earlier years, that no disallowance is called for as the same is covered by the decision of the Alom Extrusions Ltd (2009 (11) TMI 27 - SUPREME COURT), wherein it has been held that the amendment in second proviso is with retrospective effect. Therefore, the amendment takes retrospective effect and accordingly any contribution to approved PF paid before the filing of the return has to be allowed as a deduction. Decision in favour of assessee Whether Excise Duty and Sales Tax is part of total turnover while computing deduction u/s 80HHC Held that:- Following the decision in case of Lakshmi Machine Works(2007 (4) TMI 202 - SUPREME COURT) wherein it was held that excise duty and sales tax would not have an element of turnover and they ought not to be included in the total turnover or export turnover. Appeal decides in favour of assessee Whether other income is a part of total turnover while computing deduction u/s 80HHC - AO has included the items of other income like dividend, interest, royalty and technical fees, rent, sales-tax refund etc as part of turnover - Since, the Honble Supreme Court also has confirmed in the case of Laxmi Machine Works that even excise duty and sales tax which do not have any element of profit cannot be included in the total turnover, similar logic also applies to the other incomes which does not have any bearing on the export turnover and total turnover, while working out the deduction under section 80HHC. Appeal decides in favour of revenue Exclusion of export proceeds not realized within Six months from the total turnover for the purpose of deduction u/s 80HHC Held that:- Following the decision in case of Abad Fisheries (2002 (8) TMI 95 - KERALA HIGH COURT) wherein the Honble High Court held that if the exports sales proceeds which could not be brought into India in convertible foreign exchange and could not be included in the profits, the same cannot also be included in the total turnover for the purpose of computation u/s 80HHC. Decision in favour of assessee Whether Profits of foreign branch is part of the turnover while calculating deduction u/s 80HHC AO while computing the deduction u/s 80HHC has not reduced the profit of foreign while computing the profits of the business as per Clause (baa) of Explanation Section 80HHC(4B) Held that:- From the reading of the said clause, it is abundantly clear that the profit of the foreign branch has to be reduced and if there is any loss, that should be added back. Issue decided in favour of assessee Deduction u/s 80IB - Profit of the unit calculated without deducting the losses incurred by the other units Following the decision in case of Canara Workshops Ltd. (1986 (7) TMI 5 - SUPREME COURT) and ITAT in earlier years in assessee own case and decided in favour of assessee. Appeal decides in favour of assessee Deduction of penalty under Sales Tax Act Assessee contended that nature of fines and penalties, were compensatory in nature Held that:- Following the decision in case of Lachmandas Mathuradas (1997 (12) TMI 16 - SUPREME COURT) which was a penalty levied u/s 45(6) of Gujarat Sales Tax Act, is compensatory in nature and not in the nature of penal violation. Decision in favour of assessee Deduction in respect of advances written off Assessee invest in a project turned out to be non-viable and was thus abandoned before any installation took place Said expenditure incurred for development of the project was written off during the current assessment year - AO treated the said expenditure as capital expenditure and disallowed the same Assessee contended that the said expenses incurred were mostly revenue in nature relating to travelling, salary and other administrative expenses Held that:- Following the decision in the case of Indo Rama Synthetics (I) Ltd (2009 (9) TMI 635 - DELHI HIGH COURT) if the advances are completely in the nature of salary, wages and other administrative expenses as contended by assessee, then the same is to be treated as revenue expenditure. However, this finding is purely subject to verification by the AO. Appeal decided in favour of assessee subject to verification by AO Deduction of demerger expense u/s 35DD - AO did not grant deduction u/s 35DD in respect of 1/5th pertaining to the relevant AY on the ground that the said expenses were not debited in accounts for the AY Held that:- Assessee incurs an expenditure on or after 1st day of April, 1999, wholly and exclusively for the purpose of amalgamation or demerger of an undertaking, the assessee shall be allowed the deduction of an amount equal to one-fifth of such expenditure for each of five successive previous years beginning with the previous year in which the amalgamation or de-merger takes place. Hence, 1/5th of the expenditure has to be allowed in this year which is beginning of the previous year in which de-merger has taken place. Appeal decides in favour of assessee
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