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2013 (2) TMI 767 - AT - Income TaxDisallowance of water expenses to 10% - Reason for disallowance of water expenses by the AO is that the assessee is having well and there is no need for purchase of water from outside - AO had not given any opportunity to the assessee to show that the water expenses incurred by the assessee are excessive - Hence the disallowance is restricted to 5% of the claim - Decided partly in favor of assessee Disallowance of fire wood expenses to 10% - Held that:- wood was purchased from local labourers and farmers - It is very difficult to obtain third party vouchers - AO has disallowed 100% of the cash purchase and 25% of the total expenses on purchases from regular registered dealers - As regard to registered dealers The AO has not verified any details and disallowance disallow was not based on any adverse evidences - thus AO is directed to delete the addition - in respect of cash purchases, the disallowance of 5% would meet the ends of justice - Decided partly in favor of assessee Whether to consider the claim of interest free suppliers’ credit as capital receipt or revenue receipt - Held that:- An agreement with windmill supplier states that in case wind mill fails to generate electricity of the units mentioned in the agreement, the supplier of the wind mill shall compensate the assessee for such failure of generation - As per Ao the said amount received is only a compensation for loss of profit and hence a revenue receipt - The performance guarantee clause of agreement clearly suggests that compensation would be paid for generation loss which is loss of earnings only - Thus is is revenue receipt exigible to tax - Decided against the assessee
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