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Issues involved: Appeal by Revenue u/s 260 A of Income Tax Act against Tribunal's order allowing deduction under Section 36(1)(vii) for export incentives and liability to M/s. Old Village Industries Ltd.
Deduction of &8377; 3,58,563/- under Section 36(1)(vii): Tribunal allowed deduction for export incentives irrecoverable during the year. Assessee credited sum in Profit and Loss A/c based on mercantile system but received only part. Balance considered irrecoverable and written off. Assessing Officer disallowed claim due to lack of supporting documents. Commissioner of Income Tax (Appeal) allowed the claim. Tribunal upheld decision, stating essentials of Section 36(1)(vii) satisfied. No substantial question of law identified, appeal dismissed. Addition of &8377; 14,35,072/- liability to M/s. Old Village Industries Ltd.: Assessee had to recover sum from associate concern M/s. Ovil for export orders. Requested payment, which was remitted by M/s. Apollo International Enterprises Pvt. Ltd. Assessing Officer doubted genuineness of transaction and added amount as unproved liability. Commissioner of Income Tax (Appeal) deleted the addition. High Court to consider if Tribunal was justified in deleting the addition under Section 68 of the Act for unexplained liability. Paper books to be filed as per High Court Rules.
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