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Issues involved:
1. Disallowance of impairment loss on tea estates for A.Yr. 2007-08. 2. Computation of taxable fringe benefit u/s 115WA of the IT Act. Issue 1: Disallowance of Impairment Loss: The AO disallowed a sum of Rs. 1,16,000 as impairment loss related to two tea estates, stating it was a provision and not actual loss, hence not allowable u/s 37 of the Act. The CIT(A) confirmed the disallowance, emphasizing that notional loss on revaluation of assets cannot be part of the P&L account and is not allowable u/s 37. The assessee argued that the loss was due to revaluation of assets by a valuer, and the amount debited to the P&L account should be treated as allowable expenditure. However, the Tribunal upheld the disallowance, stating that under section 37, only expenditures not in the nature of capital expenditure are allowable, and notional losses are not eligible. Issue 2: Computation of Taxable Fringe Benefit: The AO computed the fringe benefit tax at Rs. 27,18,584 u/s 115WA, rejecting the application of Rule-8 for expense apportionment. The CIT(A) upheld this decision, citing a previous ITAT judgment. Both parties agreed that the issue was against the assessee, as per the Apeejay Tea Ltd. case. The Tribunal concurred with the CIT(A) and dismissed the appeal, highlighting that fringe benefit tax is payable on benefits provided to employees, not on income, and thus Rule-8 was not applicable for calculating fringe benefits. In conclusion, both appeals of the assessee were dismissed based on the above reasoning and precedents cited.
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