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2014 (4) TMI 1112 - AT - Income TaxGuest House Expenses - Held that:- Assuming the situation of non-existence of the guest house of the company in that place, then, such employees would have stayed in a hotel or guest house run by third parties and made payments to them for use of their facilities and accordingly payments made to outside parties would have been treated as travelling expenses incurred by the company for its business. Therefore, the user of guest house facilities provided by the company to the employees of the company in connection with discharge of their official duties does not alter the basic character of the expenditure.Ultimately such expenses are connected with the travelling by such employees and, therefore, should be treated accordingly, irrespective of the fact that such employees stayed in the guest house of the company.In view of the above facts and circumstances,we direct the AO to allow the deduction of amount received from parent departments as expenditure in the nature of travelling expenses ;and in accordance with Rule 6D of the IT Rules. Thus we direct that the addition to the extent of recoveries made by the assessee be allowed as a deduction - Decided in favour of assessee Disallowance of AGM Expenses of the shareholders under appeal u/s.37(2A) / 37 (2) - Held that:- We decide the issue of Disallowance of AGM Expenses of the shareholders against the assessee for all as the expenditure incurred on serving tea, coffee and soft drinks is covered by the Explanation 2 to section 37(2A)/(37(2). In the Explanation 2 it is stipulated that the expenditure on provision of hospitality of every kind by the assessee to any person whether by way of provision of food or beverages or in any other manner, whatsoever, would be entertainment expenditure.The sweep of the words entertainment expenditure found in the Explanation 2 to section 37(2A)is wide and broad to cover every expenditure on provision of hospitality of every kind to any person other than the employees at the place of their work. Decided against assessee Payments to TSRDC, contributions to TSRDS that was an independent entity registered under the Societies Act, in favour of the assessee Contributions to Tata Sports Board allowed in favour of the assessee Contributions to various Institutions at Jamshedpur in favour of the assessee for all the three AY.s. Fees paid to Consultants for Feasibility Studies - expenditure in question has to be allowed as a deduction being a revenue expenditure Disallowance on account of tea coffee served to the visitors’ restricted @25%. Foreign travel expenses disallowed - Held that:- As no evidence was produced to establish the fact of participation by the employee of the assessee,whereas in the subsequent year, FAA has held that the employee had participated in international tournament. Thus, there is difference in the submissions made by it and the finding given by the FAA.In our opinion, in absence of a valid claim by the assessee,FAA had rightly rejected the appeal of the assessee Loss on valuation of foreign currency convertible bonds - Held that:- Loss suffered by the assessee on account of fluctuation in the rate of foreign exchange as on the date of the balance-sheet is an item of expenditure under section 37(1) of the Income-tax Act, 1961.For valuing the closing stock at the end of a particular year, the value prevailing on the last date is relevant. This is because profit/loss is embedded in the closing stock. While anticipated loss is taken into account, anticipated profit in the shape of appreciated value of the closing stock is not brought into account, as no prudent trader would care to show increase in profits before actual realization. This is the theory underlying the rule that closing stock is to be valued at cost or market price whichever is lower.The expression "any expenditure" has been used in section 37 of the Income-tax Act, 1961, to cover both "expenses incurred" as well as an amount which is really a "loss" even though such amount has not gone out from the pocket of the assessee, See case of Woodward Governor India P. Ltd [2009 (4) TMI 4 - SUPREME COURT] - Decided in favour of assessee Contribution to approved superannuation fund(ASF) allowed in favour of assessee vide the judgment of Hon’ble Supreme Court in the case of CIT vs.Sirpur Paper Mills [1999 (3) TMI 8 - SUPREME Court ] Payment for holiday plan at hotels as guest house expenses - Held that:- This issue stands covered in favour of the assessee by the decision of the Tribunal in assessee’s own case or the A.Y. 1992-93.We find the Tribunal in the said order has given a finding that the assessee satisfies all the requisite conditions as provided in Explanation r.w. second proviso to subsection (4) of section 37 as existing at the relevant time and, therefore, the assessee is found to be entitled to deduction. Accordingly, the ground raised by the Revenue was dismissed. - Decided in favour of assessee Exclusion of sales tax, excise duty for 80HHC deduction - Held that:- While calculating the deduction under section 80HHC(3)(b) of the Income-tax Act, 1961, for computing the “total turnover” of exports out of India of trading goods, excise duty and sales tax are not to be included. The object of the Legislature in enacting section 80HHC was to confer a benefit on profits accruing with reference to export turnover. Just as commission received by an assessee is relatable to exports and yet it cannot form part of “turnover”, excise duty and sales tax also cannot form part of the “turnover” for the purposes of section 80HHC. Just as interest, commission, etc., do not emanate from the “turnover” so also excise duty and sales tax do not emanate from such turnover. Since excise duty and sales tax do not involve any such turnover, such taxes have to be excluded. Foreign Travel Expenses - Held that:- The employee had participated in chess tournament nt. Accordingly, he had allowed the expenditure incurred by the assessee
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