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2016 (11) TMI 121 - HC - Income TaxSubsidy receipt - revenue or capital receipt - nature of income - Held that:- Examining the settled view of this Court in the case of CIT vs Kisan Sahkari Chini Mills Ltd. reported in (2009 (5) TMI 72 - ALLAHABAD HIGH COURT ) this Court is of the opinion that subsidy that was allowed to the assessee and was utilized by the assessee could not be in the nature of revenue but rather the subsidy receipt by the assessee was in the course of incentives as per Sampat scheme. Accordingly, the subsidy receipt by the assessee was not in the course of trade and was of capital nature. - Decided in favour of assessee. Addition u/s 40-A (2) - excessive and unreasonable payment of management service charges to M/s Dhampur Sugar Mills Ltd. - Held that:- The Tribunal has further recorded findings of fact that the AO himself has allowed the deduction of rupees one lac per month paid to M/s Dhampur Sugar Mills Ltd, hence, he has not doubted the fact of service rendered to the assessee. The Tribunal further found that AO has invoked provisions of Section 40A(2) of the Income Tax Act and has not brought any material on record to show that how the expenses claimed by the assessee were unreasonable or excessive. The Tribunal further found that it is for the businessman to decide what expenses are essential in the conduct of his business and the AO cannot enter into the shoes of a businessman and decide what expenses he should incur and what he should not incur for the purpose of business. Accordingly, the Tribunal affirmed the finding of CIT (A). The Tribunal, therefore, vacated the disallowances - Decided in favour of assessee. Disallowance of lease rental paid in respect of plant and machinery taken on hire - Held that:- There was no physical transfer of machinery and it only amounted to rent expenses. Learned Counsel for the assessee has correctly relied on a decision of this Court in the case of Commissioner of Income Tax vs. Modi Xerox reported in ( 2010 (2) TMI 945 - Allahabad High Court ) wherein a similar issue has been considered and the rental paid for various items by the assessee who are allowed - Decided in favour of assessee. Inclusion of excise duty in the closing stock - Held that:- An identical question has been answered by this Court in Income Tax Appeal No.574 of 2007 (The Commissioner of Income Tax and another vs. M/s Jubilant Organosys Ltd.) [2015 (2) TMI 1192 - ALLAHABAD HIGH COURT] wherein this Court has relied on a decision of the Apex Court in the case of Burger Paints India Ltd. vs. Commissioner of Income Tax (2004 (2) TMI 4 - SUPREME Court ) wherein the similar question has been answered against the revenue and infavour of the assessee holding that no addition could be made to the closing stock of the assessee on account of excise duty. - Decided in favour of assessee. Addition on an account of interest payable - Held that:- The assessee was following the mercantile system of accounting and the Auditors have qualified the report on this point as the liability accrued during the year the assessee claimed deduction of the balance amount of ₹ 42,28,650/- which was short provided and evidence for the same had been submitted before the AO. The only reason for not allowing the deduction was because the yearwise breakup was not given but this has not been considered necessary in view of the decision of Hon'ble Apex Court in Kedarnath Jute Manufacturing Co. (1971 (8) TMI 10 - SUPREME Court), which has been recently followed by the Allahabad High Court in the case of Commissioner of Income Tax v. U.P. Electronics Corporation Ltd. reported in (2005 (7) TMI 51 - ALLAHABAD High Court ) wherein held ascertained liability was allowable deduction to the assessee while computing the income, even though the same had not been entered in the books of accounts of the assesse or even if they did not march the entries in the books of account.- Decided in favour of assessee. Allowability of contribution by the assessee to the molasses reserve fund - Held that:- As in the case of The Simbhaoli Sugar Mills Limited vs. The Commissioner of Income Tax, Meerut [2005 (9) TMI 590 - ALLAHABAD HIGH COURT ] wherein this Court has considered the fact that the contributions made by the assessee to the molasses reserve fund are made under the statute itself i.e. under the Molasses Control (Regulation of Fund For Erection of Storage Facilities) Order, 1976 and, therefore, any such amount which is paid against statutory charge would have to be allowed to the assessee. - Decided in favour of assessee.
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