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2013 (7) TMI 764 - HC - Income TaxExpenditure allowable under Section 37 of the IT Act - Assessee-respondent-Company was incorporated as a Company, which is a nodal agency for development of Information Technology in the State of Gujarat - When certain indents remains incomplete and money is unspent, the same is used by the respondent for the purpose of investment including parking such funds with the Gujarat State Financial Services Ltd - Two Government Resolutions, being dated 21/03/2004 and 14/03/2006 , were issued by the Department of Science and Technology, which required the respondent to pay the interest at the rate of 6% on the unspent amount – Held that:- Section 36(1)(iii) do not apply on these facts as the amount lying with the Assessee is not the borrowed fund. Held that:- On one hand the assessee has earned interest income on investment of the surplus fund and on the other hand made the provisions of interest, hence such a claim does fall under the provisions of Section 37(1) of the IT Act - Provisions made by the assessee is, meant for the purpose of the business, hence qualify for claim under Section 37(1) of the IT Act – Decided against the Revenue. Uncertain or Contingent liability – Held that:- The liability was necessarily ascertained for having come in a package, given to the assessee while disbursing the amount/grant as also by way of both Government Resolutions, therefore, by no stretch of imagination it can be said that there was uncertain or undetermined liability - Government Resolutions as mentioned hereinabove specify that the unspent amount of the grant shall bear the interest at the rate of 6% per annum and when appropriate provision had been made by the assessee making a request thereafter to treat the said amount as expenditure under Section 37(1) of the Income Tax Act – Decided against the Revenue.
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