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2013 (9) TMI 673 - AT - Income TaxDisallowance of deduction under section 80HHC - The assessee for the relevant year had earned profit of Rs. 11.12 crores from trading export and there was loss of Rs. 68.80 crores from manufacturing export. The assessee had claimed deduction under section 80HHC ignoring loss from manufacturing export – Held that:- deduction has to be allowed only from net profit from both activities and since there was net loss, therefore, no deduction u/s 80HHC has been allowed – Reliance has been placed upon the judgment of the Hon'ble Supreme Court in the case of IPCA Laboratory Ltd. v. Deputy CIT [2004 (3) TMI 9 - SUPREME Court] – Decided against the Assessee. Adjustment in book profit on account of any expenditure relatable to income which does not form part of total income - Under the provisions of clause (f) of the Explanation to section 115JA adjustment to book profit is required – Held that:- Quantum of adjustment will depend upon the actual interest disallowed – Restored to the file of A.O. for computation of quantum of adjustment. Adjustment to book profit on account of profit eligible for deduction under section 80HHC in terms of provision (viii) of the Explanation to section 115JA – Held that:- The Special Bench of the Tribunal in case of Deputy CIT v. Syncome Formulations (I) Ltd. [2007 (3) TMI 288 - ITAT BOMBAY-H] has held that the profit eligible for deduction under section 80HHC for the purpose of adjustment under section 115JA has to be computed on the basis of adjusted book profit under section 115JA and not on the basis of profit computed under regular provisions of the Act. The said decision of the Special Bench of the Tribunal has been upheld by the Hon'ble Supreme Court in the case of CIT v. Bhari Information Tech. Sys. P. Ltd. [2011 (10) TMI 19 - Supreme Court of India] - In view of this position, the Assessing Officer is directed to compute profit eligible for deduction under section 80HHC on the basis of adjusted book profit and not on the basis of profit computed under normal provisions of the Act. Disallowance of interest in relation to interest free advance to 100 per cent. subsidiary, i.e., Bespoke Finvest Ltd - Internal accrual were sufficient to advance the amount to the subsidiary – Held that:- In this year, the disallowance is mostly on account of opening balance which has already been deleted by the Tribunal in the assessment year 1998-99. In the current year, the advance given is only Rs. 8 lakhs which are easily explained from the current profit of Rs. 25.92 crores – Disallowance is deleted – Decided in favor of Assessee. Disallowance of professional fee paid to Mckinsey and Co - Assessee had made payment of Rs. 315.26 lakhs to Mckinsey and Co - Professional fees for upgradation of management information system (MIS) and project management system – Held that:- Company had been appointed consultant for upgradation of the MIS in connection with the existing business of supply and erection of transmission towers - Expenditure is obviously of the nature of revenue expenditure as assessee derived no advantage in the capital field. Expenditure neither resulted into creation of new asset or new source of income. The expenditure is thus allowable as revenue expenditure. The expenditure cannot be disallowed only on the ground that there was no formal agreement – Claim is allowed - From perusal of invoices, total of the amount claimed as per invoices does not match with the total claim of expenditure - Assessing Officer has been directed to allow the claim after necessary verification of bills and quantum expenditure – Decided in favor of Assessee. Allowability of voluntary retirement scheme expenditure - The assessee had claimed a sum of Rs. 2.62 crores on account of voluntary retirement scheme (VRS) – Held that:- Following the judgment in the case of CIT v. Bhor Industries Ltd. [2003 (2) TMI 20 - BOMBAY High Court] , the claim of assessee is allowed – The VRS expenditure is treated as Revenue expenditure – Decided in favor of Assessee.
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