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2012 (10) TMI 214 - AT - Income TaxLPG Bottling Plant - disallowance of Deduction u/s 80HH,80I/80IA - Held that:- every manufacture characterised as production but every production need not amount to manufacture. Even the activity, which is something which brings the commercially new product into existence, then the activity constitutes production. - the process of bottling of LPG makes the LPG capable of being marketed and used by the individual consumers as a domestic kitchen fuel. The process by which the LPG is filled up in the cylinder makes it possible and viable commercial product - in favour of assessee. Denial of claim for 1/6th under section 35 AB - Held that:- Considering the claim of assessee that if under section 35AB is allowed for 1/6th of the amount, then the assessee does not press the allowance of the claim at 100% under section 37 (1) AO is directed to allow the claim under section 35AB to the extent of 1/6th of the amount for the assessment year 1993-94, 1994-95 and 1995-96 as it was allowed in the first year. Deduction u/s 43B in respect of excise and custom duty paid during the year and included in the value of closing inventory - Held that:- Following the order in Berger Paints India Ltd. Versus CIT [2004 (2) TMI 4 - SUPREME COURT] allow deduction for entire amount of excise duty and custom duty paid by the assessee irrespective of the excise duty and custom duty included in the valuation of assessee’s closing stock at the end of the accounting year. The assessee gets relief accordingly - in favour of assessee. Expenditure on 20-Point Programmes - Disallownce of expenditure u/s 37(1) - Held that:- the expenditure on 20-Point Programmes was incurred in view of specific directions of the Government of India solely for the welfare of the oppressed classes of Society, for which even the Constitution of India sanctions positive discrimination, and for contribution to all around development of villages, which has always been the central theme of Government’s development initiatives. Thus even if an expense is incurred voluntarily, it may still be construed as ‘wholly and exclusively’. Just because the expenses are voluntary in nature and are not forced on the assessee by a statutory obligation, these expenses cannot cease to be a business expenditure which was, beyond dispute or controversy, at the instance of the Government, and was to discharge the assessee’s obligations towards society and as a responsible corporate citizen - in favour of assessee. Entertainment expenses towards employees accompanying the guests - Held that:- In the absence of any material and details regarding the exact number of staff and guest on these occasions, no reason to interfere with the orders of the lower authorities on this issue. Accordingly, confirmed the disallowance made by the authorities below - against assessee. Disallowance of dividend expenditure - Held that:- The distribution and payment of dividend is application of income and not an expenditure laid out for earning the income or incurred wholly and exclusively for the purpose of business of the assessee. Accordingly, we do not find any merit in the additional ground raised by the assessee claiming that dividend paid as the business is business expenditure - against assessee.
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