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2016 (10) TMI 172 - HC - Income TaxDisallowance of certain advertisement expenses under Section 37 (3A) - whether the limit of ₹ 40,000/provided under Subsection (3A) ought to be increased proportionately.? - Held that:- The amendment introduced by the Finance Act in terms of the tenth schedule indicates two things. Firstly, any increase in the previous year (over twelve months) would result into a hardship or anamoly if the amounts or limits specified in the provisions of the Act were not proportionately increased. Secondly, proportionate increase in the amounts was a legitimate relief in such cases. There is no reason why we should not adopt the same approach in dealing with the hardship or anamoly we are faced with in a case like the present. The hardships or anamolies which we have referred to above in relation to the interpretation of Section 37 (3A) of the Act, would require us to depart from a literal construction and adopt a reasonable and purposive construction requiring alteration of the limit of ₹ 40,000/provided in Subsection (3A) in proportion to the increase in the previous year. Such interpretation accords with the object and purpose of the provision and does away with the anamoly or hardship without really doing any violence to the words of the provision. We hold that there is a clear warrant for proportionately increasing the limit laid down in Section 37 (3A) as a result of increase in the previous year of the Applicant-Assessee from 12 months to 17 months. Question (a) is, accordingly, answered in the negative, i.e. in favour of the Applicant-tAssessee and against the Revenue. Disallowance of the amount deducted from the sale proceeds of alcohol and transferred out of the profit & loss account to storage fund for molasses and alcohol account under the Ethyl Alcohol (Price Control) Amendment Order, 1971. This question is already decided by a Division Bench of our Court in Somaiya Organo Chemicals Ltd. vs. CIT (1993 (12) TMI 3 - BOMBAY High Court) in favour of the Assessee Disallowance of interest paid to the current account of the director under Section 40A(8) - Held that:- This question, it is accepted by the Assessee, is decided by our Court in CIT vs. Jhaveri Bros. & Co. Pvt.Ltd. [1994 (11) TMI 56 - BOMBAY High Court] against the Assessee and in favour of the Revenue Treatment of the insurance claim received from the insurance company on account of loss of stocks-in-trade and other goods due to fire as business income of the Assessee - Held that:- This question has been decided by our Court in CIT vs. Pfizer Ltd. (2010 (6) TMI 433 - Bombay High Court ) wherein our Court has held that an insurance claim is an indemnification and must stand on the same footing as the income that would have been realized by the assessee on the sale of the stock-in-trade. We, accordingly, answer Question in favour of the Revenue and against the Assessee.
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