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2013 (5) TMI 720 - AT - Income TaxDisallowance of expenditure incurred on telephones at guest house - Held that:- CIT(A) confirmed the addition following the decision of his predecessor for earlier assessment year i.e. 1994-95 following the decision of Mumbai Bench in the case of M/s. Hindustan Lever Ltd Vs IAC [1996 (3) TMI 161 - ITAT BOMBAY-A] - Against assessee. Disallowance of Community Welfare and Rural Development expenditure - Held that:- As decided in assessee's own case relating to A.Y. 1990-91 wherein the Tribunal on the basis of the judgement of S.A. Builders Ltd. Vs CIT [2006 (12) TMI 82 - SUPREME COURT] has allowed the expenditure incurred by the assessee towards Community Welfare and Rural Development Programme in computing the taxable income. Thus following the decision of the Tribunal, AO is directed to allow the expenditure. In favour of assessee. Addition made in respect of Modvat credit - CIT(A) confirmed addition - Held that:- As decided in assessee's own case followed the decision of the Hon'ble Supreme Court in the case of Indo Nippon Chemicals Co. Ltd (2003 (1) TMI 8 - SUPREME Court) wherein held that Modvat credit on account of excise duty was not includable in the valuation of closing stock, thus direct the AO to delete the additions. In favour of assessee. Disallowance of third party commission paid during the previous year - Held that:- Tribunal in assessee's own case has confirmed the disallowances made by the CIT(A) on the ground that if details of payment of commission are not coming from the assessee, such payments made in respect of contract awarded by Public Sector companies, to held as expenses incurred against public policy and therefore not entitle to be deducted in the light of the proviso to Sec. 37. Against assessee. Disallowance of pre-operative expenses - Held that:- It is found that as per the accounting practice of the assessee company, pre-operative expenditure incurred by the unit were accounted for in capital work-in-progress in the books of the unit and subsequently transferred to the head office for the capitalization. Thus it is not in dispute that the expenditure of Jharsuguda Cement works, amount works out to Rs. 24,94,727/- which should have been claimed in A.Y. 1994-95. Ground is partly allowed. Disallowance of claim for depreciation in respect of certain assets given on lease by the assessee - Held that:- As decided in I.C.D.S. Ltd. Vs CIT [2013 (1) TMI 344 - SUPREME COURT] wherein the Apex Court has allowed depreciation in the case of sale and leased back transaction. In favour of assessee. Disallowance made u/s. 40A(3) - CIT(A) deleted the addition - Held that:- A perusal of the explanation given by the assessee show that it is covered by the exception provided under Rule 6-DD(j) as it stood at that point of time. After considering the facts in the light of the exception provided under Rule 6-DD(j) prior to 1.12.1995,no reason to interfere with the findings of the CIT(A). Expenditure on construction of Jetty at Gujarat Cement Works Project - revenue v/s capital expenditure - Held that:- Tribunal in assessee's own case in A.Y. 1994-95 has followed the decision of National Organic Industries ltd.[1993 (2) TMI 48 - BOMBAY High Court] to allow the expenditure - against revenue. Unforeseeable losses in computation of value of work-in-progress amounting to Rs. 9.60 crores - Held that:- After considering the facts and the submissions of the assessee in the light of accounting standard issued by the ICAI and the fact that the practice followed by the assessee from year to year consistently recognized by the Accounting Standard should be accepted - against revenue. Interest on borrowed funds for Hirmi Cement unit - Held that:- The claim of the assessee that the Hirmi Cement plant formed a part of the existing cement business of the assessee company was accepted by the Ld. CIT(A) who rejected the view of the AO that these are pre-operative expenses need to accepted following the previous year assessments - against revenue. Disallowance of 25% of estate maintenance expenditure - Held that:- Relying on the certificate issued by the auditors of the company, the ld. CIT(A) directed the AO to consider such certificates wherein it has been stated to confirm that no capital expenditure was included in the estate maintenance expenses and take a fresh decision in the matter of such adhoc disallowance. A perusal of the Paper Book shows that for A.Y. 1990-91 to 1993-94 the adhoc disallowance has been reduced to 10%. A similar view has been taken by the Tribunal in A.Y. 1994-95 which need to be followed in this year also - Partly in favour of revenue. Claim of depreciation on foreign exchange loss - Held that:- The issue now stand covered in favour of the assessee by the decision of Woodward Governor India Pvt. Ltd [2009 (4) TMI 4 - SUPREME COURT] wherein held that loss suffered by the assessee on account of fluctuation in the rate of foreign exchange has on the date of the balance sheet is an item of expenditure u/s. 37(1). Disallowance of Rs. 15,00,000/- out of Conference expenses treating the same as in the nature of entertainment expenditure - Assessee submitted that Conference expenses represents expenditure incurred on holding seminars and conferences of stockists and distributors and therefore deserves to be allowed - Held that:- However, after the amendment to provisions of Sec. 37(2) such expense do have an element of entertainment, thus direct the AO to reduce the disallowance by 50%. The assessee will get a relief of Rs. 7,50,000/- accordingly.
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