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2012 (10) TMI 288 - DELHI HIGH COURTEntertainment expenditure incurred on employees - ITAT allowed the claim - Held that:- Order of the Tribunal shows that it has considered the claim of the assessee that 35% of the expenditure incurred on entertainment is attributable to the entertainment of the employees while they were entertaining the assessee's customers to be reasonable and therefore such portion of the expenditure has to be excluded at the threshold and the limits prescribed by Section 37(2) have to be applied only on the balance of expenditure. This is not an unreasonable view of the section. The question as to how much is to be attributed to the entertainment of the employees is a matter of esteem, therefore, answer the question in the affirmative - in favour of the assessee. Depreciation on increase in cost of fixed assets due to fluctuation in the foreign exchange rate - ITAT allowed the claim - Held that:- As decided in CIT Versus M/s Woodward Governor India P. Ltd. & M/s Honda Siel Power Products Ltd. [2009 (4) TMI 4 - SUPREME COURT] that the increase on account of fluctuations in the rate of foreign exchange prevailing on the last day of the financial year is not notional or contingent and has to be adjusted in the actual cost of assets in terms of Section 43A, in the year in which there is variation in the exchange rate, irrespective of the date on which it is paid - in favour of the assessee. Payment to the UP State Electricity Board for laying electric transmission lines in the premises - Revenue v/s Capital - Held that:- As decided in CIT Vs. Saw Pipes Ltd.[2007 (1) TMI 101 - DELHI HIGH COURT] that expenditure was incurred by the assessee for laying of electricity transmission lines, which did not become the property of the assessee. It was held that the expenditure did not bring in any enduring benefit and was deductible as revenue expenditure - in favour of the assessee. Addition towards value of the closing stock - CIT (Appeals) deleting the addition - Held that:- The revenue has accepted similar claims in the assessment made for the assessment years 1996-97 and 1997-98. A consistent method of valuing the stock has been adopted by the assessee. It was also accepted by the revenue. It would, therefore, be improper to allow the revenue to change its position only for one year, which would upset the method of valuation of the stock for a particular year thereby resulting in a distorted version of the profits. The method of valuation of closing stock can be disturbed only if it is found that the method followed is such that true profits and gains cannot be deduced therefrom - in favour of assessee. Disallowance of the brand building and dealer loyalty expenditure - ITAT confirming the decision of the CIT(A) in deleting the addition - Held that:- The finding of the Tribunal that a part of the advertisement expenditure is reimbursed by the parent company is not under challenge. This itself should settle the issue in favour of the assessee because even if it is assumed that a part of the expenditure inured for the benefit of the parent company, the assessee is getting compensated for it. The view that in any case, expenditure, the benefit of which inures partly to the assessee and partly to another person, cannot be allowed as a deduction, is not the correct view to take in law since it has been settled by a long line of cases that expenditure incurred by the assessee in the running of his business cannot be disallowed merely on the ground that a part of the expenditure results in some benefit to a third party - in favour of the assessee
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