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2014 (7) TMI 290 - AT - Income TaxProvision for post-retirement medical benefits to employees – Held that:- Post-retirement medical benefit is a provision, which has become a must for all the concerns, specially where there are health hazards - It is because of these reasons, the Government has notified that post-retirement medical benefit be allowed - service contract is worded in such a way that these benefits are integral part of the contracts and the liability gets attached, the moment a service contract is signed, inducting a new employee – Relying upon Bharat Earth Movers Ltd. vs CIT [2000 (8) TMI 4 - SUPREME Court] – post-retirement medical benefit is also a liability which gets attached to the company the moment, the service contract is signed, the revenue authorities erred in disallowing the provision under this head - thus, the matter is remitted back to the AO – Decided in favour of Assessee. Right to use technical know-how - Disallowance of 100% claim u/s 37(1) and allowance of 1/6th u/s 35 AB of the Act - Expenditure on 20 Point Programme - Held that:- The decision in assessee’s own case for the previous year has been followed, AO disallowed the claim regarding right to use technical know-how u/s 37(1) and also denied the claim for 1/6th u/s 35AB – the AO is directed to allow the expenses and also, the AO is directed to allow deduction for entire amount of excise duty and custom duty paid by the assessee irrespective of the excise duty and custom duty included in the valuation of assessee’s closing stock at the end of the accounting year - Decided in favour of Assessee. Disallowance of telephone and telegram expenses on guest house – Held that:- The decision in Britannia Industries Limited Versus Commissioner of Income-Tax And Another [2005 (10) TMI 30 - SUPREME Court] followed - expenditure towards rent, repairs, maintenance of guest house used in connection with business is to be disallowed u/s. 37(4) because this is a special provision overriding the general provision – Decided against Assessee. Entertainment expenses deduction for employees accompanying guest — 25% allowed against the claim of 50% - CIT(A) erred in allowing only 25% as against the Appellants claim of 50% towards Entertainment expenses towards employees accompanying the guests – Held that:- As decided in assessee’s own case for the previous year, it has been held that both the disallowances had been confirmed – Decided against Assessee. Disallowance of provision for write off of stores and spares – Held that:- Nowhere in the order of the revenue authority there is an objection to the fact that the provision had been made to write off old, obsolete, non-usable and non- moving items - the kind of activity that is performed by the giant Corporation like that of the assessee, huge quantity of stores and spares become unusable and because of which periodically they have to keep writing them off – the AO is directed to allow the claim only after verification that no double advantage is taken by the assessee by making the claim in the year of actual write off – Decided in favour of Assessee.
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