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Issues:
1. Addition of sales-tax collected under RST Deferment Scheme disallowed under section 43B. 2. Calculation of deduction under section 80-I of the IT Act, 1961. 3. Disallowance of interest on interest-free advances under section 40A(2)(b). Issue 1: The first issue pertains to the addition of sales-tax collected under the RST Deferment Scheme, disallowed under section 43B. The AO disallowed the claim as the sales-tax was not deposited as per the Government schemes, and the CIT(A) confirmed the addition due to lack of evidence regarding the amendment in the scheme. The appellant argued that the scheme was notified, and relevant evidence was provided. The ITAT analyzed the circulars and notifications, concluding that the assessee was eligible for the Deferment Scheme benefits. Referring to precedents, the ITAT held that the assessee met the requirements of section 43B, allowing the appeal. Issue 2: The second issue involves the calculation of deduction under section 80-I of the IT Act, 1961, after adjusting the deduction under section 80HH. The AO allowed deduction under section 80HH first, then under section 80-I, which was upheld by the CIT(A). The ITAT disagreed, stating that both deductions should be allowed simultaneously as per the legislative provisions. Referring to relevant sections and case laws, the ITAT held that the deduction under sections 80HH and 80-I should not be sequential but simultaneous, allowing the appeal. Issue 3: The final issue concerns the disallowance of interest on interest-free advances under section 40A(2)(b). The AO disallowed interest based on advances made to related parties covered under the section. The CIT(A) affirmed the disallowance, noting advances to sister concerns. The ITAT found a lack of nexus and directed fresh investigation by the AO to ascertain the nature and utilization of the advances. The matter was remanded to the AO for further examination, granting the assessee an opportunity to provide explanations. Consequently, this issue was restored to the AO's file for reconsideration. In conclusion, the ITAT allowed the appeal in part, addressing each issue comprehensively and providing detailed analyses based on legal provisions, circulars, notifications, and precedents. The judgment reflects a thorough examination of the facts and legal arguments presented by both the appellant and the Departmental Representative, ensuring a fair and reasoned decision on each issue raised in the appeal.
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