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2012 (2) TMI 535 - HC - Income TaxDeduction u/s 10A - Netting of Income and Expenditure - Income received by the assessee from liquidated damages recovered from suppliers, write back of retention moneys, sales tax recoveries, exchange fluctuation gain, write back of credit balance in customer accounts were disallowed - HELD THAT:- Assessee is in the course of export business. While calculating the profit of the eligible business the expenses and income of the same unit are required by netting the expenses and the income are eligible to the same nature. Therefore, when there is a direct nexus between the export business and the aforesaid income, that should be treated as profits and gains from exports and deduction u/s 10A of the Act is allowed. Decision in favour of the assesse. Discontinuation of Business - Assessee business was discontinued, therefore the assessee’s valuation was not accepted and the loss was disallowed by AO as the items were imported and they are presumably of high value. - HELD THAT:- Once the principal himself in carrying on the business and that the agent has discontinued the business the chances of anybody approaching the agent to get those product is remote and once the assessee closed his account discontinuing the business, the products which were in stock naturally would not have any value. Also, technological obsolence and cannibalization of equipment to spare parts due to non supply appears plausible in the realm of business and such occurrence is not rare. Therefore, the loss claimed by the assessee is allowable as deduction. Decision in favour of the Assesses. Payment of Gratuity and PF - Covered u/s 36(1)(va) & 2(24) or not? - Deduction u/s 43B - Payment of provident fund and gratuity was not considered as allowable deduction u/s 43B by Tribunal - HELD THAT:- Relying on the judgement of COMMISSIONER OF INCOME-TAX VERSUS SABARI ENTERPRISES [2007 (7) TMI 169 - KARNATAKA HIGH COURT], they are liable for deduction u/s 36(1)(va) read with section 2(24) (x), the same can be claimed deduction by the assessee only if the contribution is paid within the due date for claiming exemption. Decision in favour of Assessee.
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