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2011 (8) TMI 1147 - AT - Income TaxDeductions only on Actual Payments u/s 43B - AO disallowed the amount of excise duty paid on purchased inputs on the ground that the same did not amount to payment of duty - HELD THAT:- Following the view in the case of DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 4 (1). VERSUS GLAXO SMITHKLINE CONSUMER HEALTHCARE LIMITED. [2007 (7) TMI 334 - ITAT CHANDIGARH], where it was held that the unutilized MODVAT credit is not an allowable deduction since such credit does not amount to payment of duty, the claim of the assessee is declined.- Decision against Assessee. Expenditure incurred for Earning Exempt Income - Deduction u/s 14A - The department applied the provisions of Rule 8D to determine the disallowance - HELD THAT:- Since the matter is already before the Delhi High Court in the case of INCOME-TAX OFFICER, WARD 6 (2) (2), MUMBAI VERSUS DAGA CAPITAL MANAGEMENT (P.) LTD. [2008 (10) TMI 383 - ITAT MUMBAI], involving the same identical issue, we think it fit to restore the matter back to the file of the AO with the direction to decide the issue afresh in the light of the binding decision of the Jurisdictional High Court - Matter restored back. Disallowance comprising of PLA balances of R&D Cess on vehicles - Deduction u/s 43B- As per AO, PLA balances are advance payments made towards goods which are yet to be manufactured or cleared from the factory, thus disallowed. HELD THAT:- We may point out that the decision of the ITAT Special Bench of Chandigarh in the case of DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 4 (1). VERSUS GLAXO SMITHKLINE CONSUMER HEALTHCARE LIMITED. [2007 (7) TMI 334 - ITAT CHANDIGARH], is directly on the issue of balances in PLA and is allowable deduction u/s 43B of the Act and, therefore, in the light of these, we decline to interfere - Decision in favour of Assessee. Customs duty on import of components for Export Purposes - The AO disallowed the claim holding that the same is revenue neutral since this amount should be reflected in the closing stock and purchase as provided in section 145, thus not allowable deduction - HELD THAT:- In our view, this issue is concluded in favour of the assessee by the decision of the Hon’ble Supreme Court in the case of BERGER PAINTS INDIA LTD. VERSUS COMMISSIONER OF INCOME-TAX [2004 (2) TMI 4 - SUPREME COURT], wherein it was observed by the Hon’ble Supreme court that by merely debiting the duties to the P&L account as part of the value of the closing stock, it could not be said that the same have been allowed as deduction and would be separately allowable u/s 43B - Decision in favour of Assessee. Customs duty on Inventory held in Closing Stock - As per AO, the assessee has already debited the said sum to the Profit & Loss account and correspondingly included in closing stock and the assessee is not entitled for any further deduction - HELD THAT:- CIT (A) accepted the contentions of assessee that although the amount stood debited to the Profit and loss account and was included in the closing stock, the said amount would still be separately deductible under section 43B in the light of the decision of Hon’ble Supreme Court in the case of BERGER PAINTS INDIA LTD. VERSUS COMMISSIONER OF INCOME-TAX [2004 (2) TMI 4 - SUPREME COURT]. We confirm the decision of CIT(A) - Decision in favour of Assessee. Excise duty paid under protest - The AO disallowed the claim on the ground that the assessee was contesting these liabilities and there was no finality regarding the liability -HELD THAT:- CIT(A) accepted the claim of assessee that these payments were statutory dues in the year under consideration as declared by the excise department. The liability has crystallized and paid in the same year. If the company gets relief from the Excise Authorities, the refunds received will be accrued as income and the same are offered for taxation - Decision in favour of Assessee. Excess Consumption of Raw material - Tolerance Limit - AO made an addition on the basis of excess consumption -HELD THAT:- CIT(A) after going through this historical perspective on the issue, finds the alleged consumption of raw material is 0.06% only whereas CESTAT has accepted such tolerance limit at 0.24% in assessee's own case. CIT(A) decision, thus, upheld - Decision in favour of Assessee. Disallowance u/s 35DDA - Amortization of expenditure incurred under Voluntary Retirement Scheme - Assessee claimed deduction for VRS payments which was disallowed by AO on basis of his stand in earlier asseement year -HELD THAT:- we follow our own earlier order according to which payments made by the assessee are clearly covered u/s 35DDA, the same payments cannot be considered and allowed u/s 37(1). Expenditure incurred for Business Purposes - Assessee claimed expenditure on club membership fee was for employees and directors. CIT(A) allowed said expenditure - HELD THAT:- ld. CIT(A) following its own case, confirmed that expenditure was incurred for business purposes and warranted by business necessities and exigencies. We therefore, confirm the decision of CIT - Decision in favour of Assessee. Sales Tax Subsidy - Wrongly included in Return of Income - Sales Tax subsidy recieved was included in the return of income by the assessee. Also, such income was considered as capital receipt - HELD THAT:- The CIT(A) was right in having come to the conclusion that when the assessee signed a letter before the AO during the course of assessment proceedings wherein it was claimed that the disputed receipt be excluded from the total income, was required to be adjudicated by the AO. Merely because the assessee wrongly included the income in the return of income, it cannot by itself tax that income in that year, even though legally such income did not pertain to that year - Decision in favour of Assessee. Sales Tax Subsidy u/s 25A of The Haryana General Sales Tax Act, 1973 - Capital Receipt or Revenue Receipt? - HELD THAT:- Applying the test laid down in the COMMISSIONER OF INCOME TAX, MADRAS VERSUS PONNI SUGARS & CHEMICALS LTD. [2008 (9) TMI 14 - SUPREME COURT], CIT(A), correctly came to the conclusion that the subsidy receipt in question are part of capital receipt given by the Haryana State Government for the purpose of meeting the objectives of Industrial Policy 1999 i.e. to attract new investment and to ensure growth of existing industries -Decision in favour of Assessee.
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