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2013 (1) TMI 288 - AT - Income TaxExemption under Section 10B - Receipt on account of sale of vegetables, fruits, grass etc. - Held that:- It is seen that these items have no connection with the industrial undertaking and are not derived from “profits and gains” of the undertaking, therefore, the finding given by the CIT(A) that it is to be excluded from the computation of income under Section 10B is confirmed - against the assessee. Stores Miscellaneous Sale in Century Denim Unit - Held that:- This issue has been decided by the CIT(A) that the sale of miscellaneous stores cannot be held to be derived from export oriented undertaking and in absence of any detail to controvert the same, the finding of the CIT(A) is accordingly affirmed. The assessee could not explain as to how the sale of miscellaneous store items is derived from the activities carried on by the EOU undertaking. Thus, this issue is decided against the assessee. Receipts on account of cotton waste expenses - Held that:- Assessee is engaged in manufacturing of Denim cloth in the said EOU, which results in cotton waste also - the cost of packing material for such packing of cotton waste is debited to the waste expenses and the amount received from the customers is credited to this account and net excess is shown in the profit and loss account. This sale is directly related to the activities carried out by the assessee and, is, therefore, derived from the undertaking of EOU. Thus, this income is directed to be included in the computation for exemption under Section 10B being derived from the said unit - issue allowed in favour of the assessee. Bonus on spare purchase from W.Schlafhorst A.G. & Co., Germany From 1.11.99 to 30.10.00 - Held that:- From the perusal of the order of the AO as well as CIT(A), it is not clear whether the purchase for stores was on revenue account or not. If it is on the revenue account, then it is derived from the profit and gain from the EOU. Therefore this issue is restored back to the file of the AO to consider it afresh after giving due opportunity to the assessee - in favour of assessee for statistical purposes. Project expenses - revenue v/s capital - Held that:- This issue has been decided in favour of the assessee in assessee's own case for the assessment year 2001-02 & also travelled upto the stage of Hon'ble High Court wherein the departmental appeal on this question has been dismissed stating that the said expenditure was incurred by the assessee related to the same line of business carried on by the assessee and therefore allowable as revenue expenditure. The expenditure incurred related to salary, conveyance, legal and professional charges, printing and stationery, which are revenue in nature - in favour of assessee. Disallowance of written off on leasehold land in various division - Held that:- The issue be set aside to the file of the AO following the preceding yea 2000-01 orders for re-examination of the issue in the light decision in the case of Mukund Ltd.(2007 (2) TMI 358 - ITAT MUMBAI) for finding the nature of the premium part - in favour of assessee for statistical purposes. Disallowance of provision for doubtful debts and advances while computing the book profits under Section 115JB - Held that:- This issue now stands covered against the assessee by insertion of clause 1 in Explanation 1 to Section 115JB, which has been inserted by Finance (No.2) Act, 2009 w.r.e.f. 1-4-2001. Thus, in view of the amendment in the said provision the ground taken by the assessee cannot be allowed. Disallowance of interest u/s 14A r.w.s. 36(1)(iii) on the notional basis - assessee contested against non establishing of direct nexus between tax free income and interest expenses - Held that:- The issue is to be restored to the AO to be decided on the basis of the decision of Godrej & Boyce Mfg. Co. Ltd. vs DCIT [2010 (8) TMI 77 - BOMBAY HIGH COURT]. Disallowance of deduction u/s 80HHC - the income as per normal computation is Nil and accordingly no deduction is allowed u/s 80HHC while computing book profit u/s 115JB - Held that:- This issue now stands covered in the case of DCIT Vs. Syncome Formulations (I) Ltd., [2007 (3) TMI 288 - ITAT BOMBAY-H] wherein it has been held that deduction under Section 80HHC in the case of MAT assessment, is to be worked out on the basis of adjusted book profit and not on the basis of profit computed under the regular provisions of law applicable to the computation of 'profit and gains of business or profession'. This judgment of the Special Bench has been affirmed by the Hon'ble Supreme Court in the case of Al- Kabeer Exports Limited Vs. CIT [2012 (2) TMI 119 - SUPREME COURT OF INDIA]. Disallowance u/s Sec.37(1) - damages or penalty or interest - Held that:- Similar issue was there in the earlier year also for the assessment year 2001-02, wherein the Tribunal set aside this issue to the file of the Assessing Officer to re-examine the exact nature of payments whether these are compensatory or penal in nature - as decided in Prakash Cotton Mills Pvt. Limited Versus Commissioner of Income-Tax [1993 (4) TMI 3 - SUPREME COURT] and Standard Batteries Ltd. vs. CIT [1994 (4) TMI 2 - SUPREME COURT] whatever is paid to the Govt. authorities, though known as penalty, but if the same is of compensatory nature, then the same, strictly speaking, is not penalty and has to be allowed as business expenditure - remit the matter back to the file of AO for re-examination.
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