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2014 (3) TMI 1169 - AT - Income TaxAllowance of advertisement expenditure - CIT(A) directing to allow advertisement expenditure in this year and balance in equal installments in 9 years - HELD THAT:- There was no basis on which the Ld. CIT(A) could have held that the benefit of payment in question will be available for 10 years only and consequential deduction is to be allowed over a period of 10 years. It is observed that the benefit was not for any fixed period. We agree with the Ld. CIT(A) that the expenditure in question is revenue in nature and no capital asset of enduring nature was acquired by the assessee by making the payment in question and therefore, the entire payment is allowable as deduction to the assessee in the year on incurring of the expenditure. We, therefore, modify the order of the CIT(A) and direct the Assessing Officer to allow deduction for entire during the year under consideration. Thus, relevant ground of appeal of the Revenue is dismissed and relevant ground of cross-objection of the assessee is allowed. Depreciation on trucks at the rate of 40% - HELD THAT:- Assessee was the owner of the vehicles. As the owner, it used the assets in the course of its business, satisfying both requirements of section 32 and, hence, was entitled to claim depreciation in respect of additions made to the trucks, which were leased out. That for purposes of the assessee's claim to the higher rate of depreciation, the interpretation of the term "purposes of business", used in the second proviso to section 32(1) of the Act would not be any different from that ascribed to it under section 32(1) - Therefore, the assessee fulfilled even the requirements for a claim of a higher rate of depreciation and was entitled thereto. We find that the order of the CIT(A) is supported by the order of the Hon'ble Supreme Court in the case of ICDS Ltd. [2013 (1) TMI 344 - SUPREME COURT]. We, therefore, do not find any good reason to interfere with the order of the CIT(A) on this issue. Deduction u/s 80HHC for marine division - HELD THAT:- It is not in dispute that the assessee has incurred loss from export of trading goods in marine division and received export incentive, 90%. AO is disallowed deduction u/s. 80HHC in its entirety on the ground that there is no profit from marine export and only profit was in the form of increment of 90% of export incentive provided under the section - CIT(A) following his order passed in the assessment year 1994-95 and 1995-96 allowed the claim of the assessee for deduction under section 80HHC which is equal to 90% of export incentives subject to the gross total income of the assessee. In view of our decision in the assessment year 1994-95 and 1995-96, the assessee is entitled for deduction under section 80HHC, after netting of loss from the export incentive which works out to ₹ 1,32,07,423/-. Thus, this ground of the appeal of the Revenue is allowed. Net interest as against gross interest in indirect cost while working out deduction u/s 80HHC from general division - HELD THAT:- We find that the decision of the learned CIT(A) is supported by the decision in the case of ACG Associates Capsules [2012 (2) TMI 101 - SUPREME COURT] wherein it has been held that not the gross interest but only the net interest, which has been included in the profits of business of the assessee as computed under the head 'Profits and Gains of Business or Profession', is to be deducted under clause (1) of Explanation (baa) to section 80HHC for determining the profits of the business. In the instant case, the interest income was treated by the as part of income from profits and gains of business or profession. Therefore, we do not find any infirmity in the order of the CIT(A), which is confirmed and the ground of the appeal of the Revenue is dismissed. Disallowance being fees for the increase in the authorized capital - HELD THAT:- This ground of the appeal is to be decided against the assessee in view of the decision in the case of Punjab State Industrial Development Ltd. Vs. CIT, [1996 (12) TMI 6 - SUPREME COURT] wherein it was held that the fees paid to Registrar of Companies for expansion of capital basis of a company is directly related to the capital expenditure incurred by the company and although incidentally that would certainly help in the business of the company and may also help in profit making, is still retains the character of capital expenditure, since the expenditure is directly related to the expansion of the capital base of the company. We, therefore, dismiss this ground of the appeal of the assessee. Unexplained payment to Aditya Cargo Group - HELD THAT:- We find force in the argument of the learned AR that amendment in section 69C to the effect that deduction in respect of unexplained business expenditure will not be allowed, has been brought into force by the Finance (No. 2) Act, 1998 w.e.f. 1.4.1999. In the instant case the assessment year involved is 1995-96. In the instant case, it is not in dispute that ₹ 26,50,744/- relates to payment of service charges for import of goods. Therefore, the assessee is entitled for deduction of ₹ 26,50,744/- when the said amount is treated as unexplained business expenditure of the assessee - Decided in favour of assessee. Levy of interest under section 234A & 234B of the IT Act is consequential. Business loss could be adjusted against 90% export incentives for working out the deduction u/s. 80HHC
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