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2012 (8) TMI 776 - HC - Income TaxDisallowance of deduction u/s. 80M - addition of gross dividend without deducting estimated expenses there from - Held that:- Section 20 refers to deduction from interest on securities in the case of banking company whereas Section 80M comes under Chapter VI-A of the Income Tax Act referring to special deduction in respect of inter corporate dividends - deductions contemplated by section 80M referred to actual expenditure whereas, deductions contemplated by section 20(1) are estimated proportionate expenses and interest, therefore, one cannot import deductions from interest on securities in the case of a banking company under section 20(1) into the deductions contemplated by section 80M - as decided CIT Vs. United Collieries ltd. [1992 (4) TMI 18 - CALCUTTA HIGH COURT ] the special deduction u/s 80M is allowable on the net dividend which is arrived at after taking into account actual expenditure incurred by the assessee in earning the dividend income and that there was no scope for any estimate of expenditure being made and there was no scope for allocation of notional expenditure unless the facts of a particular case so warranted - in favour of assessee. Unaccounted expenses under the head making up charges - Held that:- As payments were made by account payee cheque on bills raised by the contractor/job workers and tax at source had also been deducted in respect of the aforesaid payments made for making up charges to the contractor/job workers, it is not necessary that in every case expenses are to be allowed only upon confirmation letters being filed from the recipients of the amounts - as the expenditure is backed by considerable evidence, including the registers maintained as per the requirement of the Central Excise Authorities the claim is to allowed - in favour of assessee. Change in the method of valuing closing stock - Held that:- Any change in the method of valuing closing stock was not done to undervalue profit and there was no mala-fide intention on the part of the respondent-assessee and the Accounting standard issued by the Institution of Chartered Accountants of India made it mandatory that the inventories should be valued at the lower of costs or the net realizable value - there is no need to change the valuation of the opening stock for the year when there is change in value of the closing stock due to a change in the method - the valuation of closing stock on the basis of cost or net realizable value which is lower, done by the assessee which is mandatory requirement of law cannot be faulted - in favour of assessee.
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