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2017 (1) TMI 1139 - AT - Income TaxDenial of loss on account of realization of export proceeds - Held that:- Short realization of export proceeds to the extent of ₹ 49,64,937/-, took place in next year but it related to export receivable for the instant year, and at the time of finalization of accounts for the instant year, the actual figure was available, and therefore, assessee made no mistake in considering it for the purposes of arriving at the taxable income. Even otherwise, it has to be appreciated that income tax is a levy on income and that what is liable to be assessed is real income and while computing such real income, substance of the matter ought to be appreciated. Quite clearly, the assessee was aware while drawing up its accounts for the previous year relevant to the assessment year under consideration that the export receivables, outstanding as at the year- end were short recovered by a sum of ₹ 49,64,937/-and, therefore, the real income for the instant year could only be deduced after deduction of such loss. Therefore, considering the entirety of facts and circumstances, in our view, the CIT(A) made no mistake in allowing the claim of the assessee, which we hereby affirm.- Decided against revenue Disallowance of foreign travel expenses and foreign exchange purchased for use in foreign travel - Held that:- Assessing Officer could not enter into shoes of the assessee while examining the claim of expenses and noted that the partners of the appellant firm had actually visited the countries concerned and in fact, subsequently substantial business was generated from such countries. CIT-A, therefore, correctly deleted the entire addition of foreign travel expenses on the ground that it related to the purposes of business. With regard to the disallowance out of foreign exchange purchased for foreign travel, in the absence of details, the CIT(A) has found it fit to restrict the disallowance to ₹ 50,000/- only. No reason to interfere with above finding of the CIT(A) - Decided against revenue Disallowance of interest expenditure under section 36(1)(iii) - Held that:- Relevant discussion in the assessment order reveals that as per the Assessing Officer assessee is paying interest on capital raised from the partners also and, therefore, even if the methodology laid down by the CIT(A) in assessment year 2008-09 is to be allowed, the funds to the extent of partner’s capital cannot be treated as an interest free fund, as assessee is paying interest on such funds. Be that as it may, the discussion by the CIT(A) is quite sketchy and is bereft of requisite details, therefore, we deem it fit and proper to set-aside the order of the CIT(A) and direct the Assessing Officer to recomputed the amount disallowable under section 36(1)(iii) of the Act bearing in mind the methodology approved by the CIT(A) in his order dated 02/08/2011 for assessment year 2008-09. Needless to say that the Assessing Officer shall carry out the aforesaid exercise after providing the assessee a reasonable opportunity of being heard. Thus, on this aspect Revenue succeeds for statistical purposes.
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