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2014 (10) TMI 252 - HC - Income TaxInterest receivable on investment in capital WIP – Explanation 8 to section 43(1) ignored or not – Held that:- Following the decision in Deputy CIT v. Core Health Care Ltd. [2008 (2) TMI 8 - SUPREME COURT OF INDIA] - the provisions of Explanation 8 to section 43(1) of the Act has no relevance in respect of section 36(1)(iii) of the Act - the proviso to section 36(1)(iii) of the Act inserted by the Finance Act, 2003, with effect from April 1, 2004, is only prospective and would not apply to the earlier AYs – Decided against revenue. Interest u/s 36(1)(iii) disallowed - Whether interest-free loan given by the assessee to its sister concern was admissible as deduction u/s 36(1)(iii) - Held that:- The Tribunal rightly was of the view that the assessee had charged interest on loans to its sister concern not below the interest paid on the funds utilized for the said purpose as the plea of the assessee was that it had been charging interest at the rate of 15.5 per cent. from its sister concern and the average cost of borrowings to the assessee was also 15.5 per cent – Decided against revenue. Deduction u/s 80HHC - Whether deduction u/s 80HHC of the Act is to be restricted in view of section 80-IB(13) read with section 80-IA(9) – Held that:- Following the decision in Commissioner of Income-tax (Central), Ludhiana Versus M/s Davinder Exports, Guru Nanak Dev Nagar, Rahon Road, Ludhiana [2011 (4) TMI 96 - PUNJAB AND HARYANA HIGH COURT] - if deduction u/s 80-IA has been taken, deduction u/s 80HHC was not admissible in view of section 80-IB(13) read with section 80-IA(9) of the Act – Decided in favour of revenue. Computation of deduction u/s 80HHC - Exclusion of export turnover – Held that:- The Tribunal rightly held that the plea of the assessee is that it has realised certain portion within the period extended by the competent authority - out of the total outstanding export invoices the assessee realized a sum within the extended period - the competent authority has allowed the assessee to realise the outstanding export invoices - there is no justification for excluding a sum from the export turnover for computing the deduction u/s 80HHC of the Act – th matter is rightly remitted back to the AO – Decided against revenue. Claim of proportionate indirect expenses - Whether the assessee was entitled to claim proportionate indirect expenses only in respect of the unit which was carrying on export activity whereas the assessee was carrying business in two units, i.e., Barnala I and Barnala II – Held that:- The Tribunal was rightly of the view that following the decision in Surendra Engg. Corp. Versus Assistant Commissioner Of Income-Tax [2002 (12) TMI 199 - ITAT BOMBAY-H] - The Tribunal had only remanded the matter to the AO to decide the issue in the light of the aforesaid judgment – Decided against revenue.
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