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2014 (1) TMI 1028 - ITAT MUMBAILease rent of boiler Held that:- This boiler was sold by the assessee to the above corporation in the earlier year and was taken on lease by the assessee - Following assessee's own case for the assessment years 1992-93 and 1993-94 - Decided in favour of assessee. Entertainment expenses Held that:- The AO disallowed 70% of the expenses claimed by the assessee on tea, snacks etc. for visitors and the expenses incurred for providing food to employees while on leave at holiday home - Following assessee's own case for the assessment years 1992-93 and 1993-94 Decided against assessee. Taxability of technical know-how fees Held that:- The impugned amount has been taxed in the year 1998-99 and the same cannot be taxed again in the year 1990-91 The issue has been restored to the file of the AO with a view to verify that the impugned technical know how fees has been taxed in the year 1998-99 and if the contention is found correct, then the same cannot be taxed again. Deduction u/s 80HHC Held that:- Following IPCA Laboratory Ltd. vs. DCIT [2004 (3) TMI 9 - SUPREME Court] - As per sub-section (1) of section 80HHC(3) a deduction can be permitted only if there is a positive profit in the exports of both self- manufactured goods as well as trading goods - If there is a loss in either, that loss has to be taken into account for the purpose of computing profits - Section 80AB has been given an overriding effect over all other sections contained in Chapter VIA, including Section 80HHC - If the income has to be computed in accordance with the provisions of the Act, not only profits but also losses have to be taken into account - The term 'profit' means a positive profit - The meaning of the word 'profit' will depend on the context in which it is used - For purposes of computation u/s 80HHC(3), both profits as well as losses have to be taken into account - The word 'profit' in Section 80HHC(3) will mean profit after taking into consideration losses, if any - The term 'profit' in Section 80HHC both in sub-section (1) and sub-section (3) means a positive profit worked out after taking into account the losses, if any - The word 'profit' has the same meaning in Sections 80HHC(1) and (3) Decided against assessee. Taxability of exchange profit on repatriation of GDR funds Held that:- The Ld.CIT(A) was correct in holding that the gain which have arisen on account of conversion of foreign currency into Indian Rupees on repatriation of foreign currency held abroad is on account of capital account and as such the said amount is not taxable as revenue receipt - The gains cannot be brought to tax u/s 45 of the Act as the transaction does not come within the purview of the expression 'transfer' as defined u/s 2(47) of the Act - As regards the direction of CIT(A) to reduce cost of capital asset to the extent of gain arose to assessee company on repatriation of foreign currency and accordingly recalculate the depreciation allowance on the relevant blocks of assets as per law, it is pertinent to mention that section 43 A of the Act is not applicable in the case of the assessee - The GDR issue does not relate to any increase or decrease in the liability of the assessee as expressed in Indian Rupees linked with payment Decided in favour of assessee. Expenditure incurred on issue of the first Global Depository Receipts Held that:- Following Brooke Bond India Ltd Vs CIT [1997 (2) TMI 11 - SUPREME Court] - Though the increase in the capital results in expansion of the capital base of the company and incidentally that would help in the business of the company and may also help in the profit making, the expenses incurred in that connection still retains the character of a capital expenditure since the expenditure is directly related to the expansion of the capital base of the company - The expenditure incurred by the assessee is capital expenditure Decided against assessee. Repayment of foreign currency loan and investing in PSU bonds Held that:- The said expenditure is related to the expenses incurred by the assessee in connection with modernization of the DMT division of the assessee company - Due to the reason that the plant has been shut down over a period of time to complete the major revamping involved in the expansion, the fact that there is no increase in the production cannot be a decisive test to negatively conclude that there has no modernization of the DMT Division The issue has been restored for fresh adjudication so as to examine whether the amounts of Rs.48.05 crores and Rs.16.76 crores incurred by the assessee in connection with re-payment of foreign currency loan and investing in PSU bonds is for the purpose of modernization of the DMT division of the assessee company as claimed. Expenditure incurred on issue of Non Convertible Debenture (NCD)/ Secured Premium Notes (SPN) Held that:- Following Mahindra & Mahindra Ltd. vs. JCIT [2009 (10) TMI 639 - ITAT MUMBAI] - The expenses in relation to the issue of debentures are allowable u/s 37(1) of the Act as revenue expenditure Decided in favour of assessee.
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