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2019 (11) TMI 144 - AT - Income TaxComputation of deduction u/s 10A(4) - Not assessing the bank interest on short term export surplus deposits as ‘Business income’ - HELD THAT:- We are of the considered view that the interest earned on short term export surplus deposit has to be treated as ‘Business income” for the purposes of computation of deduction u/s 10A(4) of the Act. Ground No. 1 is accordingly allowed. Disallowance of legal and professional fee and foreign taxes - Allowable revenue expenses - HELD THAT:- Expenses towards registration of stamp duty and legal expenses incurred in connection therewith have to be considered in the light of the provisions of section 37(1) of the Act. The Hon'ble Bombay High Court in the case of Cinecita Pvt Ltd [1982 (2) TMI 58 - BOMBAY HIGH COURT] has held “The impugned expenditure did not involve any element of premium in the amount claimed as expenditure. It was incurred only to draw up and get registered an effective and proper lease deed and would have remained the same irrespective of the period of lease as long as it was more than one year. Further, the period of lease itself could not be decisive of the question whether the asset was of enduring nature. On these facts, the impugned expenditure was revenue in nature. A similar view was taken in the case of Hoechst Pharmaceuticals Ltd [1977 (11) TMI 55 - BOMBAY HIGH COURT] and in the case of Octavious Steel and Co. Ltd [1995 (4) TMI 11 - CALCUTTA HIGH COURT] . Considering the nature of expenditure in the light of the judicial decisions, legal expenses have to be allowed u/s 37(1) of the Act. We order accordingly. In so far as the claim of expenditure of legal and professional fees the facts on record show that this amount was deducted by overseas customer while releasing payment against invoices raised by the assessee. The deduction was on account of turnover taxes. In our considered opinion, this deduction by overseas customer is not a tax on profit of business as such but on the applicable laws of those countries. The assessee is very much entitled to deduction in respect of such expenditure u/s 37(1) - assessee has recorded the sales on gross basis, i.e. invoiced amount has been taken as sales, therefore, any deduction from invoiced amount has to be allowed as deduction from business income of the assessee. Ground No. 2 is allowed.
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