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2017 (7) TMI 917 - AT - Income TaxAddition of amount transferred from deferred income [reserves] to profit and loss account - Held that:- Since the concession was linked to the import of capital goods, though conditional on fulfilling export obligation, it was a concession on the capital account. The assessee is also not allowed to use the import entitlement in any manner other than for import of capital goods. We agree with the argument of the ld. AR that there is no benefit or perquisite that accrued to the assessee on account of this transaction and it does not have any component of revenue nature and hence, the provisions of sec.28(iv) of the Act does not apply. For invoking sec.28(iv) of the Act, the pre-requisite conditions are that the benefit / pre-requisite must arise from the business of an assessee and that there must be a nexus or connection between the business of an assessee and the benefit / perquisite sought to be taxed. In this case, both the conditions are absent. Therefore, we find that the CIT(Appeals) is justified in giving direction the AO to delete the disallowance made. Further, in our opinion, it is a notional entry in its books of account and not effecting the real profit and loss account of the assessee and the provisions of sec.28(iv) have no application. This ground is dismissed. Disallowance of deduction u/s.43B - Held that:- As gone through the findings of the CIT(Appeals), we do not find the basis for disallowance computed by the CIT(Appeals) as above. Hence, we remit the issue to the file of the AO to decide the issue afresh. Accordingly, this ground of appeal is allowed for statistical purposes. Disallowance of debenture issue expenses - Held that:- We find that this issue is covered by the judgment of the jurisdictional High Court in the case of South India Agency Ltd. (2006 (8) TMI 153 - MADRAS High Court ) wherein it was held that the expenditure towards issuance of partly convertible debentures are allowable expenditure. Allowance of deemed interest on loans to subsidiaries - Held that:- As decided for the asst. years 2003-04 and 2004- 05 there cannot be any addition of notional interest since it is not the case of the Revenue that the subsidiary companies had misused the funds for any other purpose. In other words, since the subsidiary companies used the funds for their business this Tribunal is of the considered opinion there cannot be any addition in the hands of the assessee.
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