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2012 (9) TMI 660 - HC - Income TaxWeighted deduction u/s 35B in respect of bank interest and bank charges - export packing credit facility from the State Bank of India - Held that:- As decided in M/s. KEC International Ltd. Versus CIT [2009 (1) TMI 5 - BOMBAY HIGH COURT] the very definition of the expression “packing credit” as advanced in the Export Credit (Interest Subsidy) Scheme, 1968, indicates that it is a loan or advance for the purpose of purchase processing and packing of goods. The Reserve Bank requires the lending bank to furnish it a declaration in writing that the loan was granted for pre-shipment activities. - That necessarily means that the activities for which the loan has been granted have to be carried out within India - Section 35B(1)(b)(viii) operates only when there is a performance of services outside India. Mere obtaining of a packing credit loan or payment of interest thereon in India cannot be said to entail the performance of any service outside India. The said expenditure would, therefore, not be deductible - against assessee. Professional fees paid in respect of its cement project - Capital expenditure or Revenue expenditure - Held that:- As decided in CIT Versus J. K. Chemicals Limited [1992 (10) TMI 18 - BOMBAY HIGH COURT] & Trade Wings Limited v. Commissioner of Income-tax [1989 (9) TMI 21 - BOMBAY HIGH COURT] order to decide whether to acquire some profit-making assets for the purposes of its business which would be of an enduring nature. The expenses incurred for the project report have, therefore, to be viewed as being capital in nature. Simply because the assessee had a running business of manufacturing it cannot be said that the expense for obtaining such a project report was a part of the expenses incurred by the assessee for running its business. It was clearly an expenditure incurred for ascertaining whether to acquire new assets of some durability for the purpose of earning profits - against assessee. Receipt from B.B.C. Limited, Switzerland under Memorandum of Settlement - Revenue receipt OR Capital receipt - Held that:- The termination of distributorship agreement and the compensation allegedly paid in respect thereof was only a part of the normal running of the business of the assessee - conclusion is based on the fact that the assessee has not established that the termination of the distributorship agreement has resulted in a loss of source of income or has affected its trading contract. This was not even the assessee's case before the authorities before whom it was contended that the receipt was in the nature of a gift or akin to a gift. The material on record, in fact, establishes that the distributorship agreement was but one of the many contracts that the assessee had entered into. - It was one of the many activities that the assessee had engaged in and that the assessee is not prevented in any manner whatsoever from continuing a similar line of business with other enterprises - Tribunal didn't erred in treating it as Revenue receipt - against assessee.
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