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2010 (2) TMI 916 - AT - Income TaxCapital or revenue receipt - Subsidy towards sales tax exemption - Notification No.1179 dated 31.03.1995 issued by the State Government of Uttar Pradesh - The exemption of sales tax was available from the date of first sale or the date within the period of six months from the date of production, whichever is earlier - assessee has been exempted from collecting the sales tax from customers on the sales made with effect from 27th March, 1998 - Held that:- It is a undisputed fact that none of the clause of the Notification issued under section 4-A of Trade Tax Act, 1948 had authorised the assessee to collect sales tax/trade tax - Nowhere in the Notification has it been stated that exemption from sales tax/trade tax was provided for the setting up of the eligible unit - Since the assessee has collected the sales tax as part of dealer's price, the sales tax element will be trading receipt in the hands of the assessee Regarding loss on account of exchange fluctuation - Revenue or capital expenditure - Held that:- Delhi High Court in the case of CIT vs. Woodward Governor India Pvt. Ltd. [2007 (4) TMI 118 - HIGH COURT , DELHI] has held that the liability arising out of contracts had already stood accrued the minute the contract was entered into and the mere postponement of the payment of such liability to a future date would not extinguish the same so as to render it notional or contingent - It was also held that any increase in such liability as a result of fluctuation in the value of foreign currency in relation to Indian currency thus was a fate-accompli and such increase in liability as per the exchange rate prevailing on the last date of the financial year was allowable as deduction being not notional or contingent. Addition to total turnover of excise duty and sales tax for the purposes of computation of deduction under section 80-HHC - Held that:- Respectfully following the case of CIT vs. Lakshmi Machine Works 2007 (4) TMI 202 - SUPREME Court] it is held that the excise duty and sales tax will not form part of total turnover for the purpose of deduction under section 880-HHC of the Act - accordingly set aside the order of the CIT (Appeals) and direct the assessing officer not to include excise duty and sales tax in total turnover - appeal filed by the assessee is partly allowed.
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