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2013 (10) TMI 545 - AT - Income TaxDisallowance of Research and Development expenses - Deduction u/s 35(2AA) - Held that:- In AY 2000-01 R&D expenditure was disallowed u/s 35(1) and the year under consideration the claim is made u/s 35(2AA) of the Act, which is supported all the relevant documents and the contentions of the learned AR in this regard are found to be correct. It is seen from the appeal order for AY 2000-01that a finding was recorded to the fact that the above deduction has been claimed u/s 35(1). Therefore, it was examined whether the conditions laid down u/s 35(1) have been fulfilled or not and it was found that the conditions laid down in the said section have not been fulfilled, therefore, after recording detailed reasons, the claim of the assessee of Rs.67,23,582 /-in AY 2000-01 was disallowed by the AO was upheld. However, this year, it is seen that the claim of assessee of Rs. 51,00,000/- has been made u/s 35(2AA), which is Supported by relevant forms such as Form Nos. 3CG, 3CG and 3CI and, therefore, the CIT(A) allowed the claim of the assessee after detailed finding, hi the light of the findings of the CIT(A) that the assessee claimed R& D expenditure in AY 2000-01 u/s 35(1) whereas it the year under consideration the same expenditure was claimed u/s 35(2AA) of the Act - Therefore, matter is remmitted back to A.O. - Decided against Revenue. Disallowance of interest on borrowed amount - Held that:- interest expenditure was incurred in relation to the expansion of the existing business. The learned CIT(A) has observed in his order that it is not clear from the details submitted by the assessee whether for expansion of the existing business or new business - t is necessary to arrive at a decision that the expenditure is in relation to expansion of the existing business or altogether for new business - Therefore, matter is remitted back - Decided against Revenue. Disallowance of leasehold land written off - Held that:- It is not clear that amount written off as lease land included the rent of plot no.RL 17 and 18 also or not.It appears that agreement for these plots were for constructing housing society.In our opinion this points needs further investigation. If no amount has been paid under the head lease rent for these plots,it has to disallowed.If portion of it was paid for the plots mentioned at serial no.ii),AO should allow after verification.For this limited purpose matter is restored back to the file of the AO. Disallowance of telephone expenditure - Held that:- FAA has not mentioned the issue of proportionate disallowance of telephone expenditure at all while confirming the order of the AO.Thus,his order is a non-speaking order. In the case of a company making a disallowance on account of personal nature of expenditure is not proper. In the case under consideration neither AO nor FAA has given any reason for the ad hoc disallowance - Following decision of Sayaji Iron And Engg. Co. Versus Commissioner of Income Tax [2001 (7) TMI 70 - GUJARAT High Court] - Decided against Revenue. Deduction u/s 80IB - Foreign exchange fluctuation - Held that:- exchange rate difference arises out of and is directly related to sale transaction involving export of goods of the industrial undertaking and, therefore, the difference on account of exchange rate fluctuation is entitled to deduction u/s 8O-IB - There could not be any two opinions that manufacturing activity of the type of material being undertaken by the assessee would also generate scrap in the process of manufacturing. The receipts from sale of scrap being part and parcel of the activity and being proximate thereto would also be within the ambit of gains derived from the industrial undertaking for the purpose of computing deduction under section 80-IB - Following deision of CIT Vs Rachna Udhyog, [2010 (1) TMI 38 - BOMBAY HIGH COURT] - Decided against Revenue. Deduction u/s 80HHC - Foreign exchange gain - Held that:- credit balance written back and miscellaneous receipt should not be excluded while computing 80HHC deduction - Following decision of EXTRUSION PROCESS PVT. LTD. Versus INCOME-TAX OFFICER CIRCLE 9(1)(4) [2006 (6) TMI 261 - ITAT MUMBAI] - Decided against Revenue.
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