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2011 (3) TMI 510 - AT - Income TaxDeemed income - Revenue or capital receipt - Applicability of section 41 - it is also clear that the provisions contained in section 41(1) do not make any distinction between any contractual trading liability or any statutory trading liability - even if any statutory liability is remitted or ceased of, or any amount, whether in cash or in any other manner, has been obtained in respect of the expenditure incurred by way of statutory liability, the same would be deemed to be the profit and gain of the business of the assessee and would, accordingly, be chargeable to income-tax as the income of that year in which such benefit or amount is obtained - what the assessee was required to repay after 12 years in six annual/equal instalments, the same was repaid by the assessee, in the public interest, as NPV is equivalent to the Future Value of the sum - in this situation, it could not be construed as remission of liability, because the State Government had not waived of any of the liability as given in the illustrations - It was a simple case of collecting the amount at net present value which was due later on and even the formula for collecting the net present value was also given by the SICOM and the amounts had been paid as per that formula - Therefore, such payment of net present value of a future liability could not be classified as remission or cessation of the liability so as to attract the provisions of section 41(1)(a) Assessing Officer noticed that the assessee has received dividend income of Rs 87,57,108 but has not offered any expenses for disallowance under section 14 A - The contention of the assessee was that no direct expenses have been incurred to earn this dividend income, but this contention was rejected - Held that: disallowance restricted to 2%, as has been done by the coordinate benches in group cases Regarding deduction u/s 80HHC - C.B.D.T. Circular No. 772 dated 23-12-1998 - To illustrate, if Rs. 100 is the profits of the business of the undertaking, Rs. 30 is the profits allowed as deduction under section 80-IA(1) and the deduction computed as per section 80HHC is Rs. 80, then, in view of section 80-IA(9), the deduction under section 80HHC would be restricted to Rs. 70, so that the aggregate deduction does not exceed the profits of the business - Appeal is allowed
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