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2012 (9) TMI 515 - HC - Income TaxContingent liability - Disallowance claim of deduction for wage revision - ITAT allowed it - Held that:- Relying on the decision of Bharat Earth Movers Versus Commissioner of Income-Tax [2000 (8) TMI 4 - SUPREME COURT ] in this case, the Tribunal had noticed that there was no dispute as regards the terms of employment of the workers and officers & that provision for wage revision was based on past experience, interim Pay Commission of government employees, previous Pay Commission’s reports of public sector employees, union demands and other relevant factors. The Tribunal also held that with the expiry of one wage settlement or agreement, invariably, there is a time lag when another fresh wage revision agreement is negotiated and entered. The deduction claimed for that period cannot be termed as contingent because the wage and the probable revision or rates of revision would be within the fair estimation of the employer, thus liability could not be characterized as contingent but was in fact ascertained the quantification, however, had not happened - in favour of assessee Denial of benefit claimed u/s 10 (15) (iv) (h) - interest earned on tax free bonds between the date of their application by the assessee and the date of their allotment - Held that:- Interest payable on “bonds or deposits” [referred to Section 10(15)(1)(iv)(fa)] would mean interest earned by such amount or deposit. On the other hand, interest paid in respect of such bonds, as is the case with tax free interest bonds under sub-section 15(1)(iv)(h), connotes an entirely different intention. The expression “in respect of,” unlike the term “on,” has a wider connotation and would embrace a larger subject matter. On the other hand, “interest … on the bond or deposit” would mean what is actually yielded by the bonds and nothing else. The Tribunal noticed correctly that interest would include hedging transaction charges payable on account of currency fluctuation. Such being the amplitude of the provision, the fact that interest was paid for a brief period of about six days in the present case would not make it any less an amount of interest payable “in respect of the bonds” in question - the conclusion by the AO might have been justified but this case, the time lag is extremely small less than a week - in favour of assessee. Disallowance of donations claimed as business expenses u/s 37 (1) - assessee had claimed expenditure on account of donations under section 80G of the Act in its returns - Held that:- Parliament having chosen one method of dealing with donations i.e. as in the case of section 80G, the adoption of another route as business expenditure would not be permissible - against assessee. Disallowance of set of loss of one project eligible for deduction u/s 80 HHB against the profits of other projects - Held that:- the deduction is allowable to the assessee in regard to each project. - the deduction u/s 80HHB is to be computed in regard to each project separately - loss from another unit cannot be reduced from the profit of eligible unit - following the decision in Commissioner of Income-Tax, (Central) Madras Versus Canara Workshops Pvt. Limited [1986 (7) TMI 5 - SUPREME COURT] decided in favour of assessee.
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