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2013 (5) TMI 123 - HC - Income TaxDeduction U/s 36(1)(viii) - long term finance - penal interest and pre-closure charges - amount transferred to special reserve - Income U/s 115JA of the Act - Held that:- All these amounts, which are paid by the debtor to the assessee, have a direct nexus with the business, which he is carrying on. All these incomes are derived from the business, which he is carrying on. It is also on record except this long term finance business, the assessee is not carrying on any other business much less any short term finance business - Therefore, all these categories of incomes which the assessee is receiving as a direct nexus with the long term finance and therefore Section 36(1)(viii) of the Act is attracted - Decided in favor of assessee. Addition of Provision for doubtful debts/advance to the book profit U/s 115JA of the Act - Held that:- By Finance Act No.2 of 2009 w.e.f. 1.4.1998, the present Clause (g) has been substituted by including the amount or amounts set aside as provision for diminution in the value of any asset - In the instant case, Rs.12,30,220/- has been set apart to meet the contingencies. The said amount has not been included in the book profit - It was unascertained liability. Even this amount is earmarked as provision for diminution in the value of any asset for the purpose of arriving at the book profit for the purpose of Section 115JA which ought to have been included - The Assessing Authority was justified in adding the said amount to the book profit. Both the Appellate Authorities committed a serious error in deleting the said amount - Decided against the assessee.
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