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2012 (10) TMI 53 - AT - Income TaxDeduction u/s 80HHC in relation to Foreign exchange fluctuation – AO made reduction of entire fluctuation gain for the purpose of calculating deduction u/s 80HHC - AO considered such income as income from ‘Other Sources’ and not derived from export business – Held that:- Following the decision of ITAT in case of Sujata Grover (2001 (11) TMI 232) and in the case of Priyanka Gems (2004 (12) TMI 288) have held that gains due to fluctuation in the foreign exchange rate emanating from export is its integral part and cannot be differentiated from the export proceeds and it is the part of profits of business. Therefore, foreign exchange fluctuation/gains arose only from export invoice value and are directly relatable to export business of the assessee and the same cannot be excluded from the export turnover. Appeal decide in favour of assessee Deduction u/s 80HHC in relation to service rendered – AO made reduction of 90% amount was liable to be deducted from the profits of business in terms of explanation u/s 80HHC, as it was in the nature of ‘income from other sources’ - CIT (A) reducing 100% of ‘income from the services rendered’ – Held that:- There is no discussion by the Assessing Officer and the CIT(A) with regard to the nature of transaction and the same has not been elaborately discussed either in the orders of the Assessing Officer or of the CIT(A). Case remand back to AO. Addition on account of provision for warranty – Held that:- Estimation should be on a reasonable basis as well as on a scientific basis and on the basis of past history of assessee, so that on the basis of certain information gathered in due course of time, so as to arrive at the correct percentage of the claim. Case remand back to the AO. Addition on account of Voluntary retirement scheme – Assessee has taken over the another company - The attached liabilities have also been agreed to be taken over which resulted into absorption of 184 employees of the said erstwhile company – AO treat it as capital expenditure – CIT(A) delete the same – Held that:- It was held that when the payment is made for the purpose of retrenchment of workers, it was for the purpose of reducing the staff and bring about a reduction in wage bill as well. So, the expenditure incurred was for the purpose of business and also with a view to maintain good relationship with the labourer. Decision in favour of assessee. Depreciation on Plant and Machinery – Held that:- As the amount pertains to the difference of the gratuity fund transferred to the balance-sheet and the assessee wants to claim depreciation on this amount, then definitely, it is out of the purview of section 32 of I T Act, so no depreciation deserves to be allowed. AO has to examine the value of the asset in terms of the said agreement vis-ŕ-vis the value of the plant and machinery shown in the books of accounts for the year under consideration. Therefore case remand back to AO
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