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2011 (12) TMI 585 - AT - Income TaxReopening of assessment - Held that:- Originally the return was processed u/s. 143(1). Later on, the AO has recorded the reasons which clearly show that income has escaped assessment and the case is clearly covered by Explanation 2(c) of sec. 147. Further, the Hon’ble Supreme Court has held in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd. (2007 (5) TMI 197 - SUPREME Court ) that if a return has been only processed u/s. 143(1), then re-opening is justified. Disallowing the loss due to Exchange rate fluctuation to the extent of loan which was not paid during the year - Held that:- Total loss was ₹ 12.45 crore out of which loss of ₹ 8.22 crore was of capital expenditure and ₹ 4.23 crore was on revenue side. Part of this has been disallowed mainly on the basis that the payment has not been made and it was only a notional loss. The Hon’ble Supreme Court has clearly held in the case of CIT vs. Woodward Governer (I) Pvt. Ltd. [ 2009 (4) TMI 4 - SUPREME COURT ] that loss incurred on revenue side on account of foreign exchange fluctuation is allowable. Since the disallowance of loss amounting to ₹ 47,01,720/- is admittedly on revenue side, therefore, we set aside the order of ld. CIT(A) and direct the AO to allow this loss. Exemption u/s.10B - Held that:- We find that as far as the issue regarding premium on transfer of import licences, insurance claim, sundry credit balance written back and staff agreement deposit forfeiture is concerned, the same has been decided against the assessee by the order of Tribunal for earlier year, particularly in asstt. year 1998-99 Compensation for amount received on surplus of assets can also be not related to the business of export and, therefore, the same is also decided against the assessee. Refund of sales-tax - We agree with the contention of the ld. Sr. Advocate, Shri Y.P. Trivedi, that when sales-tax is initially paid, that will go on to increase the purchases which means profit is reduced and when sales-tax is refunded the profit would increase and therefore payment and reimbursement would nullify each other. Therefore, we hold that refund of sales-tax cannot be reduced from profits. Ddisallowing the interest u/s.36(i)(iii) being the amount capitalized in the Books - Held that:- The assessee was entitled to deduction under section 36(1)(iii) prior to its amendment by the finance Act, 2003, in relation to money borrowed for purchase of machinery even though the assessee had not used the machinery in the year of borrowing. Disallowing Commission paid to M/s. L.K. Corporation by relying on order for the earlier Assessment Years - Held that:- Even in earlier year a sum of ₹ 1,50,000/- paid to M/s. L.K. Corporation as commission was disallowed and the Tribunal has in earlier year restored this matter to the file of AO for reconsideration. Consistent with the earlier order, we restore this issue to the file of AO with a direction to reconsider the same and the decide the same as per decision of earlier year. Disallowing the Forfeiture of employees security deposit - Held that:- Similar disallowance was made even in earlier year and the matter travelled to Tribunal. After considering the submissions, the Tribunal decided the issue against the assessee, which is also an admitted position in the chart. Therefore, following the earlier year order, we decide this issue against the assessee.
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