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2010 (10) TMI 862 - HC - Income TaxDeduction of exchange rate fluctuation on the outstanding loan - AO found that the loan remained outstanding and the exchange rate fluctuation is not actual liability but is only a provision which cannot be allowed - assessee contended that loan account maintained in the Balance Sheet is in Indian rupee and at the end of the previous year, foreign exchange fluctuation is added to the rupee liability which is claimed as deduction by the assessee – Held that:- Even though there is force in the contention of assessee, there is nothing to indicate in the orders of any of the authorities below as to when the assessee availed the loan and for every year whether the assessee was claiming deduction whenever exchange rate fluctuation was adverse to them. If the practice adopted by the assessee is correct, then whenever exchange rate fluctuation goes to reduce the rupee liability of the loan, the same should be taken as income of the relevant year - Matter requires reconsideration by the AO. Depreciation disallowed by AO for the reason that machinery itself is installed on 31.3.2002 - Held that:- The assessee obviously procured the machinery from manufacturer and machinery of this value will certainly involve installation with all integrated facilities, trial run and commissioning. Even assuming that keeping the machinery ready for use itself is sufficient for claiming depreciation, assessee has to establish that the machinery was brought to it's site and installation and commissioning were done which is possible only after trial run. Since none of the authorities has considered these matters, remand the matter to the assessing officer to reconsider the same with documentary evidence about the transport, installation, trial run and commissioning of the machinery. Entitlement for deduction of amounts paid to two consultants - Held that:- No merit in this ground because assessee was carrying on business and the advice given by them was for the purpose of business and so much so, the Tribunal rightly held that expenditure is revenue in nature entitling the assessee for deduction. We therefore dismiss the appeal on this issue Disallowance of expenses incurred by the assessee on behalf of Hindustan Lever Ltd. - Held that:- assessee's counsel contended that expenditure is a business expenditure and is allowable and there is nothing to indicate the Hindustan Lever Ltd. has reimbursed though assessee may have a claim of reimbursement. We do not find any justification for the departmental appeal on this issue because if amount incurred by the assessee is reimbursed the same is assessable under Section 41(2). Consequently we dismiss the appeal on this issue. Payment to foreign technicians - Non deduction of TDS - Tribunal reversed the disallowance - Held that:- Tribunal's order that payment was made outside India for services rendered outside India and so much so, no TDS was called for required no interference.
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