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TMI Blog2014 (8) TMI 1156X X X X Extracts X X X X X X X X Extracts X X X X ..... business expenditure and are deductible u/s.37. Therefore, till the introduction of new provisions under section 35 DDA, the assessee can claim such expenditure as revenue expenditure. This proposition is supported by various decisions of the Tribunal and High Courts. We direct the AO to allow the expenditure as revenue expenditure, eligible for deduction u/s 37(1) of the Act, after verification of the details of expenditure claimed by the assessee. Addition of estimated amount on account of valuation of closing stock of finished goods - Held that:- Tribunal in the assessee’s own case for the A.Y. 1994-95, 1995- 96, 1997-98 & 2003-04 has decided an identical and similar ground against the assessee. However, alternate claim for addition to the opening stock has been allowed by the Tribunal. Following the said orders of the Tribunal, we direct the AO to re-compute the value of closing stock in line with the principles laid down by the Tribunal in the said orders. Thus, we set aside this matter to the file of the AO for the limited purpose of following the guidelines given in the earlier years. Bringing to tax a sum as interest on Government Securities - Held that:- It is observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the property has been constructed, repaired, renewed or reconstructed with borrowed capital. Accordingly, an assessee is entitled only to the deductions in respect of the said expenditure in the computation of the income under the head of income. Therefore, it is not legally permissible to allow the deduction on account of maintenance charges incurred on lifts, liftman, sweeper, security etc under the head ‘income from house property’. Deduction as foreign exchange loss on the basis of foreign exchange rate at the end of the accounting year - Held that:- The assessee in all other earlier years kept on claiming the foreign exchange loss on goods traded as expenditure and the same has also been allowed in those years and thereby upheld the action of the AO in including the foreign exchange gain as taxable income. In view of the fact that the loss claimed in the earlier years has been allowed in those years, subsequently in the A.Y. 1999-2000 the gain also has been added to the total taxable income of the assessee as held by the CIT(A). Therefore, it is appropriate that the trading loss is to be allowed as a deduction while computing the income. - ITA No. 4596/Mum/2005, 433 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.1 In the assessment order, the AO treated the expenses on account of retrenchment compensation, retrenchment compensation (ex-gratia), voluntary retirement compensation professional fees for management consultancy as capital in nature and disallowed the same. On appeal, the Ld.CIT(A) was of the opinion that the benefit of the said expenditure could be said to have accrued for more than one year and held that 1/5th of the expenditure should be allowed as deduction in this year and the balance 4/5th shall be allowed in the next four years in accordance with the provisions of section 35DDA of the Income Tax Act. 3.2 Having heard both the sides and perused the material on record it is pertinent to mention that before the introduction of section 35DDA, the legal dictum is very clear that the assessee can claim the expenditure incurred on account payment made for the VRS which are in the nature of business expenditure and are deductible u/s.37. Therefore, till the introduction of new provisions under section 35 DDA, the assessee can claim such expenditure as revenue expenditure. This proposition is supported by various decisions of the Tribunal and High Courts. It is pertinent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Ld.CIT(A) confirming the action of the AO in bringing to tax a sum of ₹ 15,584/- as interest on Government Securities. It is observed that similar additions have been confirmed by the Tribunal in the assessee s own case for the A.Ys. 1991-92, 1993-94, 1994-95, 1995-96 1997-98. In the absence of any distinguishing facts brought by the parties, following the said orders of the Tribunal, the impugned addition confirmed by the Ld.CIT(A) is upheld. Thus, Ground No. 17 is dismissed. 7. In Ground No. 18, the assessee has agitated the decision of the Ld.CIT(A) confirming the inclusion in the income of the estimated import duty benefit of ₹ 394.51 lakhs. It is observed that the Tribunal vide order dated 16.04.2008 for the A.Y. 1997-98 has decided a similar issue in favour of the assessee by following the decision of the Tribunal in the case of Jamshri Ranjitsinghji Spinning and Weaving Mills v. Inspecting Assistant Commissioner [1992] 41 ITD 142 (Mum), wherein it has been held that the import entitlement receivable by the assessee do not constitute the income of the assessee in the year under appeal as neither the income accrued nor arisen during the year of accountin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther submitted the copy of agreement with British Gas Asia pacific Holdings Pvt. Ltd. for the sale of shares of share of Gujarat Gas Company Limited together with the copy of the invoice of J.M. Financial Investment Consultancy Services Ltd. The AO, however, held that the shares of Gujarat Gas Co. Ltd. were sold by the assessee to British Gas Asia Pacific Holding Pvt. Ltd. as a part of takeover strategy pursuant to an agreement and therefore there was no scope for J.M. Financial and Investment Consultancy Services Ltd. to render any service. 10.2 Having heard both the sides and perused the material on record, it is pertinent to mention that the perusal of the records suggests that J.M. Financial and Investment Consultancy Services Ltd. helped the assessee company to identify British Gas Asia Pacific Holding Pvt. Ltd and the assessee has been in a position to bargain for the best price for the sale of the shares. It is further relevant to state that the payment has been legitimate and also the same has been incurred in connection with the sale of the shares which are not disputed. When the facts are being so, the authorities below are not justified in disallowing the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular expenditure may be claimed as permissible deduction, it should come within the ambit of one of the clauses of Section 24(1). It has also been held by the Hon'ble Calcutta High Court that deduction cannot be claimed under any general principle of law or on the considerations of equity. It is pertinent to mention that the Calcutta High Court in the case of CIT Vs Sreelekha Banerjee (1989) 179 ITR 46 (CAL), while deciding the issue whether the salary paid to the caretaker is an admissible deduction from the annual rent to determine the annual value of the property under section 23 of the Act, has held that in determining the annual value, the salary paid to the caretaker cannot be taken into account as there is no specific item for deduction of the salary of a caretaker from the annual value of the property which is let out and it does not, in any way, affect the determination of the annual value. The aforementioned decisions of the High Courts fortifies the legal position that as per the provisions of sections 23 24 of the Act, income chargeable under the head income from house property shall be computed after making the deductions of municipal taxes paid by the owner, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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