2010 (3) TMI 1165 - AT - Income Tax

Summary

Issues involved: The judgment involves issues related to disallowance of deduction under section 80HHC, disallowance of payment on account of Provident Fund, disallowance of interest on late payment of TDS, consideration of revised computation of income, reduction of income of GE Capital Debentures, charging of interest, deletion of addition on account of revising the value of closing stock, deletion of disallowance of foreign travel expenses, and disallowance of loss on account of re-statement of foreign exchange assets.

Issue 1: Disallowance of deduction under section 80HHC

The assessee appealed against the disallowance of deduction under section 80HHC in respect of DEPB credit. The ground was not pressed during the hearing, leading to its dismissal for want of prosecution.

Issue 2: Disallowance of payment on account of Provident Fund

The dispute arose regarding the disallowance of a payment on account of Provident Fund contributions. The Assessing Officer contended that the employer's contribution to the Provident Fund Trust was not allowable as the trust was not recognized. The CIT(A) upheld the disallowance, stating that the trust was not recognized by the department. However, the assessee provided evidence to show that the trust was recognized, leading to the deletion of the disallowance.

Issue 3: Consideration of revised computation of income

The issue involved the exclusion of interest on refund in the revised computation of income. The CIT(A) justified the Assessing Officer's decision based on a Supreme Court ruling. However, the Tribunal directed the Assessing Officer to consider the revised computation and compute the income as per law, considering the pending issue before the High Court.

Issue 4: Deletion of addition on account of revising the value of closing stock

The Assessing Officer added an amount due to the revision of the closing stock valuation method. The CIT(A) deleted the addition based on the Tribunal's decision in the assessee's favor in previous years. The Tribunal upheld the deletion, stating that the method of valuation was recognized, and the addition was not sustainable.

Issue 5: Deletion of disallowance of foreign travel expenses

The disallowance of foreign travel expenses was challenged by the revenue. The CIT(A) deleted the disallowance based on previous appellate orders in favor of the assessee. The Tribunal sustained the deletion, as the relief granted to the assessee had been accepted by the department.

Issue 6: Disallowance of loss on account of re-statement of foreign exchange assets

The dispute involved the disallowance of a loss on the re-statement of foreign exchange assets. The CIT(A) allowed the loss as it was on revenue account, following the principles of AS-2. The Tribunal upheld the decision, stating that the loss was allowable and not notional.

In conclusion, the Tribunal partly allowed the appeal of the assessee and dismissed that of the revenue, addressing various issues related to deductions, disallowances, valuations, and losses in the judgment pronounced on 19th March 2010.