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2016 (10) TMI 1329 - AT - Income TaxDisallowance of deduction claimed under the head “provision of leave encashment” u/s 43B(f) - HELD THAT:- As identical issue was considered by the Coordinate Bench of the Tribunal in assessee’s own case relating to A.Y. 2007- 08 [2016 (2) TMI 889 - ITAT MUMBAI], restored this matter to the file of the Assessing Officer with the direction to decide the issue in the light of the decision rendered by Hon'ble Supreme Court in the case of M/s. Exide Industries Ltd. & Another [2009 (5) TMI 894 - SC ORDER] Even though the assessing officer did make a reference to the above said order of Hon’ble Supreme Court, the Ld A.R submitted that the assessee should be given benefits as observed by the Hon’ble Apex Court in the matter of interest and penalty. Accordingly, consistent with the view taken by the Coordinate Bench in assessee’s own case relating to A.Y. 2007-08, we restore this matter to the file of the Assessing Officer with the direction to examine this issue afresh Disallowance of employees contribution to ESIC and Labour welfare fund - HELD THAT:- We are of the view that the claim of the assessee is required to be allowed in view of the binding decision GHATGE PATIL TRANSPORTS LTD. [2014 (10) TMI 402 - BOMBAY HIGH COURT] since the assessee has paid the employees contribution before the due date for filing return of income. Accordingly, we set aside the order passed by learned CIT(A) on this issue and direct the Assessing Officer to allow claim of the assessee. Characterization of income - Excise duty refund” received by the assessee - revenue or capital receipt - HELD THAT:- According to Ld A.R, this issue is squarely covered by the decision rendered by Hon’ble J & K High Court in the case of Shree Balaji Alloys [2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT]. However, the Ld D.R submitted that there is some confusion about the quantum of deduction and also the parity of facts between the assessee’s case and the case of Shree Balaji Alloys (supra) need to be examined. We find merit in the submissions of Ld D.R. Accordingly, in our view, this issue requires fresh consideration at the end of the Assessing Officer in order to find out parity of the facts between the assessee’s case and the case of the Shree Balaji Alloys that was decided by Hon'ble J&K High Court. Accordingly, we set aside the order passed by learned CIT(A) on this issue and restore the matter to the file of the Assessing Officer with the direction to examine the parity of the facts Disallowance Relating to mark to market loss - assessee provided for loss arising on the outstanding derivative contracts on foreign exchange on account of valuation done as at the year end - in respect of provision made for loss on account of valuation, the AO took the view the same is not allowable in view of the Instruction No.3/2010 dated 23/3/2010 and accordingly rejected the claim of the assessee - HELD THAT:- Having heard rival submissions, we are of the view that there is merit in the submissions made by the Ld A.R. The forward contract in foreign exchange has been held to be the business activity and the assessee has entered into the forward contracts upon receipt of orders from its foreign clients. Since the export bills have not been raised as on the date of Balance Sheet, the assessee was required to value the outstanding forward contracts, which is in accordance with the requirements of accounting standards and accounting principles. Accordingly, we are of the view that the loss claimed on valuation of outstanding forward contracts is allowable as deduction. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to allow the claim of the assessee.
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