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Income Tax - Case Laws
Showing 81 to 100 of 690 Records
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2014 (7) TMI 1249 - ANDHRA PRADESH HIGH COURT
TPA - Rejection of comparable - Tribunal rejecting Companies on the ground of exceptionally large scale of operations and functional difference and failing the RPT filter being more than 15% - Held that:- Tribunal followed the decision of a Co-ordinate Bench in M/s.Intoto Software India (P) Limited (2013 (10) TMI 599 - ITAT HYDERABAD). Learned Standing Counsel for the Revenue fairly states that the above order of the Tribunal has been confirmed by this Court. The issue therefore needs no further reconsideration
communication expenses should be excluded both from export turnover as well as total turnover for the purpose of computing deduction under Section 10A - Held that:- Tribunal merely followed the decision of the Karnataka High Court in CIT. v. Tata Elxsi Limited (2011 (8) TMI 782 - KARNATAKA HIGH COURT) which was also followed by the Tribunal in ITO v. Sak Soft Limited (2009 (3) TMI 243 - ITAT MADRAS-D). Though the learned Standing Counsel states that an appeal has been preferred against the decision of the Karnataka High Court, it holds good till set aside. We are not persuaded to disagree with the reasoning of the Karnataka High Court in the above decision. Np question of law.
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2014 (7) TMI 1248 - PUNJAB AND HARYANA HIGH COURT
Addition on unexplained sales - Held that:- The Tribunal while adjudicating the issue against the assessee had noticed in its order dated 30.8.2013, Annexure A.3 that the dispute was relating to three sales bills amounting to ₹ 37,30,300/- under which alleged cash sales were made. There was no mention of any quantity sold. The name of the parties to whom the goods were sold was also missing. There was totalling errors in each bill and the mode of transportation of those goods also could not be explained by the assessee. On consideration of entire material on record, it was concluded that the genuineness of the transaction could not be established. The Tribunal was, thus, justified in sustaining the addition of ₹ 37,30,300/- as unexplained sales.
Disallowance of expenditure under Section 40(a)(ia) of the Act and part disallowance out of car expenses, car depreciation and telephone expenses - Held that:- Where the respondent is aggrieved against any disallowance or addition sustained by the CIT(A) which is not under challenge at the behest of the appellant, the only remedy available with the respondent is to either file separate appeal or agitate the issue by way of cross objections in the appeal filed by the appellant impugning the disallowance or the addition sustained. Thus, no error could be pointed out by learned counsel for the respondent-assessee in the approach of the Tribunal which may warrant interference by this Court under Section 260A of the Act. The Tribunal had rightly not allowed the assessee to urge relating to disallowance of expenditure under Section 40(a)(ia) of the Act and part disallowance out of car expenses, car depreciation and telephone expenses.
No substantial question of law arises. - Decided against assessee.
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2014 (7) TMI 1247 - ITAT JAIPUR
Disallowance of payment of commission - Held that:- The assessee is manufacturing of current and potential transformers & electrical control equipments. The appellant had been assisted by M/s Sadem India Ltd., Bhiwadi to execute the tender of various electricity boards. The genuineness of the payments in form of commission has not been doubted by the Revenue. The TDS has been deducted and paid to the government exchequer. The documents filed by the appellant before the lower authority supported that M/s Sadem India Ltd. has rendered service to the appellant by providing information of tender, attending the tender on behalf of the appellant, liaisoning with the various electricity boards, helping in recovering the payments, providing number of tenders, providing experience with the government department etc. The appellant had submitted all the details before the Assessing Officer to prove the services rendered by M/s Sadem India Ltd., which has not been controverted by the Revenue.
The agents have rendered the services like procurement of orders, ascertaining the quality, timely payment etc. The recipient has declared the commission in his return of income and has confirmed to have rendered the services to the assessee. In the circumstances and facts of the case, we find no infirmity in the order of the ld. CIT(A) who has rightly deleted the addition made by the A.O. and has rightly directed to enhance the allowance of deduction u/s 80IB of the Act.
Deduction u/s 80IB on interest on Bank FDRs - Held that:- The FDRs were made for providing bank guarantee to the Electricity Board. Apparently, the interest on FDRs directly connected with the industrial undertaking. Even the assessee’s argument of netting of interest income is accepted. It automatically increased the profit of the assessee undertaking and the deduction U/s 80IB of the Act is also increases. We find that FDRs were made for business purposes and for getting the tender from the Electricity Board and income from interest income is directly connected with the industrial undertaking. Therefore, we confirm the order of the learned CIT(A). Accordingly, we dismiss the Revenue’s appeal on this ground.
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2014 (7) TMI 1244 - ITAT PUNE
Waiver of Principal amount of long term loans - revenue receipt OR capital receipt - nature of receipt - Held that:- The waiver of amount represents waiver of the principal amount of loan utilized for acquisition of capital assets and not for the purposes of trading activity and accordingly the issue is covered in favour of the assessee by the judgement of the Hon’ble Bombay High Court in the case of Mahindra and Mahindra Ltd. (2003 (1) TMI 71 - BOMBAY High Court ). Following it has to be held that the waiver of the 10 principal amount of loan granted by the DEG, Germany to the extent of ₹ 29,63,27,000/- in terms of OTS Scheme is in the nature of capital receipt not chargeable to tax. - Decided in favour of assessee.
Suo-motu disallowance by the assessee in the computation of income - assessee had voluntarily offered an amount under the heading ‘other disallowances’ in the computation of income - Held that:- No doubt a claim of deduction or disallowance is to be worked out on the basis of the prevalent legal position and is not dependent on what stand the parties may profess. Therefore, any error or omission made in the return of income or any wrong claim in the return of income can be subject to rectification as per law. So however, in the present case, the CIT(A) has clearly established that assessee has not brought out the details of any discrepancy in anticipation of which the impugned disallowance was made by the assessee. There is no material before us, apart from generalized assertions, that the aforesaid disallowance was under any particular misconception of law or facts. The onus on this aspect is entirely on the assessee which has not been discharged, therefore, we find no reasons to interfere with the order of the authorities below. Thus, on this Ground assessee fails.
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2014 (7) TMI 1241 - PUNJAB AND HARYANA HIGH COURT
Grant of registration under Section 10(23C) - proof of charitable activities - Held that:- The only requirement for granting registration under this Section is the satisfaction of the prescribed authority with regard to the genuineness of the activities of the assessee. It has been categorically recorded by the Tribunal that the assessee is a Trust registered under Section 12AA of the Act which makes it quite clear that the assessee is pursuing the charitable activities. It was further observed that the provisions of the Right to Children to Free and Compulsory Education Act, 2009, are not applicable to the assessee being an unaided Society. Since the Pr. CCIT had not doubted the genuineness of the activities of the Society, the Tribunal correctly directed the Pr. CCIT to grant registration under Section 10(23C) of the Act.
Learned Sr. Standing Counsel for the appellant-Revenue has not been able to point out any error in the order passed by the Tribunal. - Decided against revenue
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2014 (7) TMI 1240 - BOMBAY HIGH COURT
Reopening of assessment - Deduction claim under Section 80 HHC - Held that:- Jurisdictional requirement of having reason to believe that income chargeable to tax has escaped assessment was not satisfied, as the applicable facts were not considered. The order disposing of the objections records that the effect was given to the order dated 29 December 2013 by him on 15 February 2005. This was undisputedly much after the impugned notice. Therefore, admittedly the impugned notice has been issued on the basis of incorrect facts. On this ground also, we find merit in the submissions made on behalf of the petitioner.
In any view of the matter, the stand of the petitioner on merits with regard to interest income being included while computing the claim for deduction under Section 80HHC has been upheld not only by the CIT(A) but also by the Tribunal in its order dated 22 November 2006. Besides the amendment to Section 80HHC (3) of the Act by addition of fifth proviso thereto with retrospective effect will work to the benefit of the petitioner. In the above view of the matter, allowing reassessment proceedings would be a mere academic exercise only because the Assessing officer would bound by the orders of the Tribunal. Moreover, the very basis of the impugned notice dated 10 January 2005 will not be sustainable. In view of all the above reasons, we set aside the impugned notice dated 10 January 2005.
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2014 (7) TMI 1239 - KARNATAKA HIGH COURT
Entitlement to benefit under Section 10A - substantial value addition made before the product is delivered - products manufactured and produced by third parties - assessee is in the business of providing medical transcription facilities - Held that:- Assessee is in the business of transcribing medical transcription. It has outsourced portion of its work as done by the sub contractor is in crude form and cannot be delivered in such form to the overseas customers.
The assessee has to process the said product so as to make it marketable. In other words, as rightly pointed out by the appellate authorities value addition has to be done.
It is only when that value addition is made, the said product is exported, foreign exchange is earned. The manufacture or production done by the assessee, which is eligible for exemption under Section 10A would be applicable because the transaction done by the sub- contractors in the crude form undergoes a change in the process of the assessee. Therefore, as rightly held that the assessee is entitled to the benefit of Section 10A - Decided in favour of assessee.
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2014 (7) TMI 1238 - ANDHRA PRADESH HIGH COURT
Deduction u/s 10A computation - Held that:- Communication expenses should be excluded from both export turnover as well as total turnover for the purpose of computing deduction under Section 10A.
TPA - comparable companies selection - Held that:- On the question of comparable cases, the learned Tribunal in paragraph 15 of the judgment and order has held that the Coordinate Benches have already decided that these companies are not to be selected for comparable cases for various reasons. Similarly, on the question of software segmentation, the learned Tribunal in paragraph 17 has followed various judgments of the Coordinate Benches. No substantial question of law.
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2014 (7) TMI 1237 - ITAT JODHPUR
Trading addition - rejection of books of account - Held that:- After rejection of books of account facts of the earlier years are found to be same and similar, then it would be reasonable to adopt net profit rate of the earlier year without mentioning the words. However, when the assessee further explained the fall in ratio of profit and same is plausible, it is also to be considered as has been held in the case of CIT Vs. Amrapali Jewels P Ltd. [2011 (10) TMI 470 - RAJASTHAN HIGH COURT] in which it has been held that abnormal increase in the turnover definitely compromises its margins and same has to be definitely considered while making fair estimation. It has been found in this case that during the relevant period, the assessee has made heavy investment in plant and machinery which is evident from the closing balance of the fixed assets which were produced before the A.O.
The steep rise in the cost and consumption are also relevant which are found to be correct. The fact that from the table itself it has been noted that in A.Y. 2007-08, net profit ratio was 3.85% and it has been accepted by the A.O. showing that in this assessee’s case, there has been variance in the net profit rate for various reasons applicable to that particular A.Y. The ld. CIT(A) has considered these factors and has given part relief to the assessee. Thus it would be fair and reasonable to sustain a lumpsum addition of ₹ 2.5 lakhs to answer the fall in net profit. Accordingly, we partly allow the assessee’s ground raised in its cross objection and cannot allow revenue.
Treating the interest income arising from compulsory FDRs deposits as income from other sources - Held that:- It is an undeniable fact of this case that the deposits were made for obtaining contracts in question and as per the settled position of law in this regard, this interest income has to be treated as income from assessee’s business and not income from other sources. In this regard, we may refer to the decision of the Hon'ble Delhi High Court in the case of CIT Vs. K & Co. [2013 (4) TMI 284 - DELHI HIGH COURT] for ready reference. Otherwise we have been taking this view consistently in contractor’s cases. Accordingly, we allow this ground of appeal of the assessee.
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2014 (7) TMI 1235 - ITAT PUNE
Disallowance of Portfolio Management Services (PMS) fees paid while computing capital gain - Held that:- Portfolio Management Fees is allowable expenditure as held in KRA Holdings & Trading Pvt. Ltd.[2012 (8) TMI 195 - ITAT, Pune]
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2014 (7) TMI 1233 - ANDHRA PRADESH HIGH COURT
TPA - whether Tribunal is wrong in concluding that M/s.Vishal Information Technology Limited cannot be considered as a comparable case? - Held that:- M/s.Vishal Information Technologies cannot be considered as a comparable case as this company was rejected by coordinate Bench while deciding similar issue in the case of M/s.Brigade Global Services Pvt. Ltd [2014 (9) TMI 143 - ITAT HYDERABAD] as held the employee’s cost to total cost ratio is worked out at 2% as compared to the industry average of 30 to 40%. The assessee’s employee’s cost to total cost ratio is worked out at 47%. Since the employee’s cost form major cost base in ITES service industries, the low ratio of comparables implies that it would not be providing services by employing its own sources. Being so, the assessee is not alike to M/s.Vishal Information Technologies Ltd.Tribunal is not wrong in deciding the issue maintaining the rule of consistency.
Consider profit before depreciation and interest (PBDIT) as profit level indicator as directed by ITAT - Held that:- Tribunal on fact found that the depreciation has an impact on the profit margin. Based on the aforesaid findings, we feel that the impugned judgment and order of the learned Tribunal does not appear to be unjust and inappropriate.
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2014 (7) TMI 1231 - ITAT CHENNAI
Addition u/s 14A - Held that:- We find from section 14A(2) that in arriving at such a dissatisfaction over an assessee’s claim of not having incurred any expenditure relatable to its ‘exempt’ income in books of account, the concerned Assessing Officer has to take into account the said books and then only, he can resort to computation of such expenses under Rule 8D. In this case, the Assessing Officer has only drawn an inference that some indirect expenditure is always involved in supervision of such huge investments. And that too, without even specifically stating anything regarding the entries in the assessee’s books. In our view, this approach is nowhere a part of the relevant statutory provision in section 14A(2) of the Act. So, both the lower authorities have wrongly made the disallowance in question u/s 14A r.w. rule 8D. The same stands deleted. - Decided in favour of assessee
Disallowance to provision for insurance settlement - Held that:- Admitted factual position is that the assessee being a bulk drug manufacturer had exported its produce to a Dutch consignee. A part of this consignment has been rejected for quality reasons because the produce was kept in a ‘customs bonded house’ instead of immediate delivery resulting in deterioration of its quality. Before us, there is no cogent evidence produced to conclude that mere rejection of such a produce wholly or in part by whatsoever reasons gives rise to a compensation claim. The fact also remains that till date, the consignee entity is yet to raise its claim. The damages’ amount is yet to be ascertained. In these circumstances, we observe that the assessee has failed to prove the nature of liability claimed as an ascertained one. Therefore, we find no fault with the CIT(A)’s order affirming the impugned disallowance - Decided against assessee
TDS u/s 195 - Disallowance u/s 40(a)(i) - non deduction of TDS on export commission payments made to overseas agents - Held that:-no cogent material has been placed on record to prove rendering of any technical or managerial services u/s 9 of the Act or that the payments are taxable as income in India. The assessee’s overseas agents have procured export orders and rendered marketing services outside India and in lieu thereof payments have been made in foreign countries. hence no TDS liability arises to an assessee. See GE India Technology Centre Private Ltd. Versus Commissioner of Income Tax & Anr. [2010 (9) TMI 7 - SUPREME COURT OF INDIA ] .- Decided in favour of assessee
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2014 (7) TMI 1227 - DELHI HIGH COURT
Model Know How Fee - disallowance by AO as capital expenditure and covered under Section 35AB - Held that:- This issue has been decided against the revenue and in favour of the respondent- assessee, in the earlier years by the Delhi High Court. Special Leave Petition filed before the Supreme Court was dismissed. The aforesaid factual position stated by the Tribunal in the impugned order on the aforesaid question is accepted as correct by the Standing Counsel for the Revenue.
Provision of warranty - why and for what reason the claim for warrantee can be categorized as exaggerated or untenable in terms of the observations in Rotork Controls India Limited (2009 (5) TMI 16 - SUPREME COURT OF INDIA) - Held that:- The only reason given by the learned Standing Counsel is that in the present case, the data relied upon by the assessee pertains to two years; whereas, in Rotork Controls India Limited (supra) only one year data was considered. The argument fail to notice in that in this case, the warrantee was for two years. Even otherwise, this reason does not appeal to us. Data and figures should truly and correctly reflect and support the claim for provision for warranty. It should not be excessive. The aforesaid decision of the Supreme Court provides for and stipulates adjustment, in case an excessive or higher claim is made by an assessee. It is not the case of the Revenue that in fact, it was found that any excessive or wrong claim was made. Figures for warranty claims actually made would be available with the Revenue but were not pointed out to the Tribunal or before us.
Expenditure incurred on purchasing software - should been treated as capital expense or revenue expenditure - Held that:- The aforesaid expenditure was for purchase of application software and not on customerized or operating software. Tribunal in the impugned judgment has followed decision of the Delhi High Court in CIT Vs. Asahi India Safety Glass, (2011 (11) TMI 2 - DELHI HIGH COURT ). It is not shown to us that the software in question had enduring benefit and why and for what reason, the software purchased should be treated as a capital asset. The third issue therefore does not require consideration of this Court as a substantial question of law.
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2014 (7) TMI 1226 - DELHI HIGH COURT
The following substantial questions of law are framed:
1.Whether the Income Tax Appellate Tribunal was right in dis- allowing the claim under Section 80IA of the Income Tax Act, 1961 for violation of sub section (8).
2. Whether the Income Tax Appellate Tribunal was right in holding that the Transactional Net Marginal Method should not be applied and Comparable Uncontrolled Price Method was the most appropriate method to compute ancillary price for purchase of spare parts and components from the related party.
Filing of the printed paper book is dispensed with. However, parties are given liberty to file documents/papers in terms of the High Court Rules.
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2014 (7) TMI 1224 - ITAT MUMBAI
Deemed divided u/s 2(22) - Held that:- The company in question not a Private Limited Company which is alone is attracted to the provisions of section 2(22)(e) of the Act. The said company is a Public company in which public are substantially interested. Considering the above distinction, the CIT (A) correctly granted relief to the assessee - Decided in favour of assessee
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2014 (7) TMI 1222 - ITAT KOLKATA
Addition on gift received - Held that:- Four of the donors appeared before the Assessing Officer in the remand proceedings and confirmed that they had given the gifts and some of the gifts were by cheque. Further a perusal of the assessment order as also that of the ld. CIT(Appeals) shows that the donors are all income-tax assessees and they have all filed their returns and have accepted giving gifts to the assessee. Admittedly the assessee has proved the identity of the donors as has been accepted by the Assessing Officer in his assessment order. The Assessing Officer is only doubting the creditworthiness of the donors and the genuineness of the gifts. The donors themselves having confirmed that they have given the gifts and having shown that they are income-tax assessees and having filed their returns of income clearly show their creditworthy. Thus we are of the view that the addition as made by the Assessing Officer and confirmed by the ld. CIT(Appeals) representing the gifts received by the assessee is liable to be deleted and we do so. - Decided in favour of assessee
Addition on low drawings - Held that:- As noticed that the assessee is 71 years old person. He is staying with his son. No expenditure has been found in the hands of the assessee, which has remained unexplained. This being so, no ad hoc disallowance under the head “drawings” can be made in the hands of the assessee. In these circumstances, the addition as made by the Assessing Officer and as reduced by the ld. CIT(Appeals) on account of drawings stands deleted.- Decided in favour of assessee
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2014 (7) TMI 1220 - KARNATAKA HIGH COURT
Taxation of undisclosed income - taxation in the hands of HUF - Held that- Once a person files an application under Section 64 in accordance with the provisions of Section 65 in respect of any income chargeable to tax under the Act, which earlier he has not offered it to tax, the Commissioner on consideration of such application can grant a certificate to him setting forth the particulars of voluntary disclosed of income and the amount of income tax paid in respect of the same. Once such a certificate is granted, the amount of the voluntary disclosed income shall not be included in the total income of the declarant for any assessment year under the income tax Act. Once a particular income is included in the income of the person and taxed and such person pays the tax, the same income.
Cannot be taxed in the hands of another person. In the instant case the amount has been taxed in the hands of HUF. Once the tax is paid for that undisclosed income, again the same income cannot be taxed in the hands of the member of the HUF, that is the assessee.
Therefore, in the light of the provisions of VDIS scheme as well as the provisions of the Act, the Appellate Authorities were justified in holding that as long as the certificate is in force, the income which was the subject matter of the certificate cannot be taxed not only in the hands of the declarant but also in the hands of any other person. If such a certificate is obtained by misrepresentation misleading the Commissioner, the proper course would be to recall the said certificate. No such steps are taken. The certificate is still in force. When that being the case, the same income cannot be assessed over and a gain in the hands of the individuals who are the members of the HUF.
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2014 (7) TMI 1219 - ITAT CHENNAI
Income of assessee trust - Assessee indulging in the business carried on by the beneficiary unit - heavy expenditure incurred in connection with setting up of various functional units - Held that:- As rightly held by the Commissioner of Income-tax(Appeals), the entire income was earned by the assessee by way of interest and other incidental charges. Those interest income did not arise to the assessee trust, as a partner of the subsidiary units or as an investor in the subsidiary units. It is neither a partner nor an investor with reference to the newly set up micro units. It is already mentioned above that it is a provider, a facilitator and an organizer.
Therefore, the heavy expenditure incurred in connection with setting up of various functional units cannot be claimed as expenditure of the assessee trust. Those expenses could be, perhaps, if law permits, claimed as deductions in the hands of those respective units. In view of the matter, we agree with the Commissioner of Income-tax(Appeals) that various items of expenditure incurred by the assessee and claimed as deductions are in fact not allowable. We also agree with the Commissioner of Income-tax(Appeals) that the income of the assessee has to be necessarily assessed under the head “income from other sources”. At the maximum, the assessee may be characterized as a “private charity”. It is not possible to hold that the assessee is carrying on any business and the income reported by the assessee is income from business.
As it is necessary for every institution to incur expenditure for its sustenance and operation. For that purpose, the Commissioner of Income-tax(Appeals) has allowed an over-all deduction of expenditure at 2% of the gross collection of income reported by the assessee trust. We find that the said amount of expenditure is reasonable. Accordingly, we uphold the order of the Commissioner of Income-tax(Appeals). - Decided against assessee.
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2014 (7) TMI 1218 - ITAT DELHI
Penalty imposed u/s 271(1)(C) - undisclosed income in response to the notice issued u/s 153A - Held that:- CIT(A) was not justified in upholding the penalty levied by the AO in the present case wherein returned undisclosed income in response to the notice issued u/s 153A was accepted by the AO in the assessment framed u/s 153A / 143(3) of the Act. We thus while setting aside orders of the authorities below direct the AO to delete the penalty in question levied in the years in appeals. The ground is accordingly allowed in favour of the assessee.
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2014 (7) TMI 1216 - ITAT MUMBAI
Depreciation on 'vehicles given on finance lease’ - Held that:- The assessments in the instant case are accordingly directed to be completed by the A.O., i.e., qua the issue of sale and lease back of the assets under reference, in light of and following the decision by the apex court in the case of ICDS Ltd. (2013 (1) TMI 344 - SUPREME COURT) which represents the law of the land stating assessee entitled to claim depreciation in respect of additions made to assets which were leased out. Further, the A.O. shall also, make the consequential adjustments, so that, while allowing due relief, double benefit is not extended to the assessee, even as cautioned by the tribunal in its own case for the earlier years, cited supra.
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