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2013 (3) TMI 532 - AT - Income TaxDisallowance of advances written off of Rs 100,000/-. - Held that :- we are of the view that the assessee’s claim of loss of Rs 1,00,000/- arising on account of write-off of the advances given to M/s Vitara Chemicals Ltd. is allowable as a business loss under section 28 of the Act. - Decided in favor of assessee. Repairs of factory building - Revenue or capital in nature - Held that:- the assessee is right in contending that under the above circumstances, no enduring benefit results on account of such expenditure inasmuch as an existing shed has been merely strengthened and therefore, the expenses are only for regular repairs. - the expense is liable to be treated as revenue expenditure - Decided in favor of assessee. Deduction u/s 80HHC of the I.T. Act - Held that:- On the aspect of application of clause (1) of the Explanation (baa) of section 80-HHC to ‘Service Charges’ and also other receipts in question, we set aside the order of the Commissioner of Income-tax (Appeals) and remit the matter back to his file to be adjudicated afresh in line with the directions of our co-ordinate Bench and the judgments of the Hon’ble Bombay High Court in the case of Pfizer Ltd. [2010 (6) TMI 433 - Bombay High Court] and Dresser Rand India P Ltd. [2010 (4) TMI 153 - BOMBAY HIGH COURT]. - Decided in favor of assessee. Deleting the addition of commission - Held that:- the practice of paying commission to dealers/agents, stand established - the appellants have been able to substantiate their claim of commission payment. The appellants had submitted detailed justification for the payments. A majority of the payees selected randomly by the AO had confirmed the receipt of commission payment. The AO has not raised any serious questions regarding the veracity of the information received from these parties. - Decided against the revenue. Depreciation on software expenses U/s 32(1)(ii) or deduction u/s 37 as revenue expenditure - Held that:- We do not find any infirmity in the findings of the Commissioner of Income-tax (Appeals) on this aspect. The instant issue stands squarely covered in favour of the assessee and against the Revenue by the judgements in (i) CIT v Varinder Agro Chemicals Ltd. [2008 (10) TMI 100 - PUNJAB AND HARYANA HIGH COURT]; (ii) CIT v Sundaram Clayton Ltd. [2008 (6) TMI 327 - MADRAS HIGH COURT] - Decided against the revenue. Deleting the disallowance U/s 36(1)(va) and 43B of the I.T. Act, 1961 - Held that:- We have carefully considered the submissions of the parties. We find that the assessee has made the payment within the grace period under the Provident Fund Act and therefore, the payment could be regarded as having made within due date as per provisions of section 36(1)(va) of the Act. - Decided in favor of assessee. Not treating the provision for Warranty as contingent liability (Not on any scientific basis) - Held that:- In the instant assessment year, it emerges from the assessee’s submissions before the Commissioner of Income-tax (Appeals) and which have not been controverted that the warranty provision in this year comes to 0.37% of the net sales. In this background, the claim of the assessee during the year can be accepted as reasonable in view of the precedent and the same deserves to be allowed. - Decided against the revenue. Allowing the expenses on account of CST liability - Held that:- In our considered opinion, the Commissioner of Income-tax (Appeals) made no mistake in deleting the impugned disallowance. The assessee has established that the liability on account of CST even though pertained to earlier period, has in-fact crystallized during the previous year relevant to the assessment year under consideration and is thus allowable as a deduction in this year. Deleting the addition of on account of stock written off - Held that:- It is further pointed out that such policy of identifying and making a provision for diminution of value of obsolete stock was accepted by the department in the past and no disallowance was made till the instant assessment year. - Decided against the revenue. Not excluding foreign exchange gain, miscellaneous receipts from eligible business profits for the purpose of calculating deduction u/s 80HHC - Held that:- We set aside the order of the Commissioner of Income-tax (Appeals) and remit the matter back to his file to be adjudicated afresh in line with the judgment of the Hon’ble Bombay High Court in the case of Pfizer Ltd. [2010 (6) TMI 433 - Bombay High Court] and Dresser Rand India P Ltd. [2010 (4) TMI 153 - BOMBAY HIGH COURT]. - Partly decided in favor of revenue by remanding the matter back.
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