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2013 (5) TMI 760 - HC - Income TaxInterest relatable to diversion of interest bearing funds to interest free advances - ITAT deleted the disallowance - Held that:- When no interest bearing funds have been diverted to the sister concern by way of interest free advances, the question of going into the commercial expediency of such loans would not arise. In fact, in the light of the findings recorded by the Tribunal, the question as formulated while admitting the appeals would not arise as on facts there is no diversion of interest bearing funds to interest free advances. In the circumstances, the Tribunal was justified in deleting disallowance made under section 36(1)(iii). Once the revenue has accepted the decision of the Tribunal on the issue in relation to assessment year 1995-96, on the same facts and issue it would not be appropriate to allow the position to be changed in relation to other assessment years. Receipt by way of gain on cancellation of foreign exchange contracts - revenue v/s capital - Held that:- As decided in DCIT(Assessment) vs. Garden Silk Mills Ltd. ( 2009 (2) TMI 95 - GUJARAT HIGH COURT) the surplus received on cancellation of forward foreign exchange contract was a capital receipt not liable to tax and that it did not fall under section 28(iv). Thus ITAT was right in holding that the receipt by way of gain on cancellation of foreign exchange contracts is a capital receipt not liable to tax and was accordingly justified in directing the Assessing Officer to make necessary adjustment to the cost of the acquisition/WDV of the plant and machinery to which the receipt pertains and to make consequential adjustment to the depreciation granted. Depreciation in respect of Butachlor Plant - Held that:- The question as formulated partly does not appear to arise out of the impugned order of the Tribunal, inasmuch as the order of assessment itself indicates that the assessee had claimed depreciation at the assessment stage. Insofar as the merits of the controversy is concerned, it is an accepted position that identical controversy between the same parties has been concluded in favour of assessee by an order passed in [2013 (5) TMI 759 - GUJARAT HIGH COURT].
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