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2017 (3) TMI 1383 - AT - Income TaxDisallowing deduction of leave encashment claimed on provision basis - Held that:- The parties before us agreed that in view of the pendency of the constitutional validity of section 43B(f) of the Act before the Hon’ble Supreme Court, it would be just and proper to direct the AO to follow the ultimate decision that might be taken in the said proceedings and decide the grievance projected by the assessee in Gr.No.1. Thus Gr.No.1 is treated as allowed for statistical purposes. Addition u/s 14A - Held that:- The Hon’ble Calcutta High Court in the case of CIT Vs. M/S.R.R.Sen & Brothers Pvt.Ltd. [2013 (7) TMI 260 - Calcutta High Court] held that computation of 1% of exempt income as disallowance u/s.14A of the Act was proper. In view of the aforesaid decisions, we are of the view that the order of CIT(A) does not call for any interference. MAT - Computation of book profit u/s 115JB - assessee excluded excise duty exemption - Held that:- Hon’ble Jammu & Kashmir High Court in the case of Balaji Alloys (2011 (1) TMI 394 - Jammu and Kashmir High Court ) on identical facts held that excise duty subsidy and interest subsidy were capital receipts not chargeable to tax.. The admitted factual and legal position in the present case is that subsidies in question is not in the nature of income. Therefore they cannot be regarded as income even for the purpose of book profits u/s.115JB of the Act though credited in the profit and loss account and have to be excluded for arriving at the book profits u/s.115JB of the Act. We hold accordingly and confirm the order of the CIT(A) in this regard. In light of the aforesaid discussion, we are of the view that the subsidies in question should be excluded for the purpose of determination of book profits u/s.115JB of the Act. Depreciation @ 10% on landscaping & development charges which is capitalized in nature of land: - Assessee has incurred the landscape expenses on the leasehold land situated at Sikkim Unit to level the uneven land for construction of factory building. Since the same has been disallowed as capital in nature, the same should be included in the block of building and the assessee would be entitled for depreciation @10%. The said expenditure has been incurred to level the land and make it suitable of construction of factory. Expenditure incurred on land development is a separate thing as compared to the cost of the land. Reliance is placed in the decision of CIT -vs.- Herdilia Chemicals Ltd. (1983 (6) TMI 1 - BOMBAY High Court ) wherein held that expenditure incurred on levelling and development of land for erection of machinery and building formed part of cost of machinery and building and is therefore entitled for depreciation.
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