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2016 (5) TMI 716 - AT - Income TaxReduction of written down value of plant and machinery by reduction of subsidy amount - Held that:- The hon'ble apex court in the case of CIT v. P. J. Chemicals Ltd. [1994 (9) TMI 1 - SUPREME Court] have stated that the Government subsidy is intended as an incentive to encourage entrepreneurs to move to backward areas and establish industries, the specified percentage of the fixed capital cost, which is the basis for determining the subsidy, being only a measure adopted under the scheme to quantify the financial aid, is not a payment directly or indirectly, to meet any portion of the "actual cost". After careful consideration, we find that the case of the assessee is squarely covered by the decision of the hon'ble Supreme Court in the case of CIT v. P. J. Chemicals Ltd. [supra]. We, therefore, reverse the order of the learned Commissioner of Income-tax (Appeals) for all the assessment years. - Decided in favour of assessee Disallowance of expenses - Held that:- The Assessing Officer and the learned Commissioner of Income-tax (Appeals) in their orders have disallowed 20 per cent. with regard to advertisement, sales promotion and product development expenses under section 37(1) for the assessment year 2004-05 for the inability of the assessee to provide direct evidence to establish that these expenses wholly and exclusively incurred for the purpose of business. We find that the disallowance has been restricted to 20 per cent. without any rhyme and reason. Therefore, the disallowance of expenses is not apparently clear. Under these circumstances, in the interest of justice and fairness, we feel it deem and proper to restrict the disallowance to 5 per cent. of the above disallowances made by the authorities below. We, accordingly, set aside the order of the learned Commissioner of Income-tax (Appeals) and direct the Assessing Officer to restrict the disallowance to 5 per cent. only - Decided in favour of assessee partly Denial of benefit of MAT under clause (vii) of section 115JB on the ground that the assessee has himself paid MAT - Held that:- This issue squarely covered by the decision of the Income-tax Appellate Tribunal Cuttack Bench in the assessee's own case for the assessment year 2005-06 wherein, it has been held that the assessee is not liable to be taxed under section 115JB. We further appreciate the judicial pronouncements put forth by the assessee which suggest that the assessee is not liable to pay tax even if the tax is paid wrongly or under any mistake of law, then such tax may be refunded. In view of this, we allow this ground in favour of assessee.
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