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2022 (6) TMI 1017 - AT - Income TaxDisallowance of interest - disallowance shows that in the financial statement AO notice that the assessee company has given a deposit for premises which is shown Under short term loans and advances in schedule 16 of the balance sheet - HELD THAT:- The clear-cut finding on reading of the annual accounts of the assessee shows that assessee has interest free funds available with it in the form of share capital and free reserve which is a much more than the interest free advances given by the assessee to its sister concern. Therefore the presumption is always available in favour of the assessee that assessee has utilised non-interest-bearing funds for giving impugned deposit to the sister concern. The contention of the assessee is also supported by several judicial precedents, which have upheld the above proposition - we do not find any reason to uphold the orders of the lower authorities. Accordingly, ground number 1 of the appeal is allowed and the learned AO is directed to delete the disallowance of interest Disallowance on account of Dies written off - DR stated that the Dies are part of plant and machinery and therefore, any loss on account of that is a capital loss and cannot be allowed as deduction as revenue expenditure - CIT-A deleted the addition - HELD THAT:- As raw material consumption has been reduced to the extent of ₹ 21,263,638/–. This is for the reason that every year assessee is making valuation of dies at the end of the year and resultant profit or loss compared to the valuation of earlier year, the same is credited or debited to raw material consumption account the profit and loss account. At the time of preparing the computation of total income, if valuation has gone down, it is debited to the profit and loss account (raw material consumed) and in the computation of total income, it is not claimed as deduction from business income. Similarly, if there is any increase in valuation, such increase is credited to the profit and loss account (raw material consumed) and thereby showing lower amount of raw material consumed, but at the time of computation of total income such credit is removed from the profit and loss account. This is so because the valuation increase/decrease in the dies is not at all revenue expenditure. Similarly, assessee never claims it is a deduction. Lower authorities did not appreciate that difference in valuation in dies is merely rotated through profit and loss account but it did not affect the computation of total income for taxation. The confusion might have arisen because of the nomenclature given by the assessee of the particular item - such nomenclature should not have come into the way of lower authorities in determining the correct nature of treatment to be given while computing the taxable income of the assessee. In view of this, obviously for the above reasons given by us, we do not find any infirmity in the order of the learned CIT – A in deleting the addition - Decided against revenue. Nature of Subsidy receipts - treating the grant received by the assessee as revenue receipt chargeable to tax against the contention of the assessee that same is a subsidy, therefore, it is a capital receipt not chargeable to tax - HELD THAT:- As relying on MSS India Pvt Ltd [2019 (1) TMI 1978 - ITAT PUNE] subsidy received by the assessee in the form of octroi duty refund as a capital receipt not chargeable to tax. Accordingly, we allow ground number 2 of the appeal of the assessee.
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