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2008 (3) TMI 371 - AT - Income TaxAllowability deduction under s. 80JJA - misconception of the fact - Disallowance on expenses - personal use of proprietor. Allowability deduction under s. 80JJA - misconception of the fact and alleged that subsidy granted by the Agricultural Department against sales of bio-fertilizer manufactured is not an income derived from assessee's business of producing bio-fertilizers and not included in business income - HELD THAT:- The present case also helps achieving the avowed object of maximizing the consumption of bio-fertilizers as against chemical fertilizers. Once the underlying purpose of an enactment is served, there is no reason why the deduction should be restricted on one pretext or other. In CIT v. Krishna Copper & Steel Rolling Mills[1991 (11) TMI 223 - SUPREME COURT], which has held for a liberal and broader interpretation of an incentive provision under s. 80J. On perusal of facts and decisions relied upon by the parties, the realization of the selling price is partly from the cultivator and partly from the Government subsidy as per the schemes of the State Government and therefore subsidy is the part of the selling price and essentially has to be -treated as a trading receipt though the same is given to the cultivator but received by the assessee manufacturer/seller and is derived from the eligible undertaking. The learned CIT(A) is not justified in disallowing the claim of the assessee under s. 80JJA of the Act. Therefore the AO is directed to allow the claim under s. 80JJA of the Act. Thus ground No. 1 of the assessee is allowed. Disallowance on expenses - personal use of proprietor - HELD THAT:- The findings of the AO that there is a personal element in the expenses claimed in the absence of log book of cars, call registers of telephone and vouchers for car repairs, local conveyance, travelling and entertainment are not properly maintained and some vouchers are self-made. Non-business purpose in the expenses claimed in view of the deficiencies pointed out by the AO, cannot be ruled out. The disallowance appears to be on the higher and therefore the AO is directed to restrict the disallowance at 10 per cent of the expenses claimed. The assessee gets the relief accordingly. Thus ground No. 2 of the assessee is partly allowed. In the result, the appeal of the assessee is partly allowed.
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