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TMI Blog2010 (7) TMI 1201X X X X Extracts X X X X X X X X Extracts X X X X ..... ear Appeal No. Amount (Rs.) 2001-02 ITA No.135/V/05 34,74,038/- 2002-03 ITA No.182/v/07 51,09,876/- 2003-04 ITA No. 503/V/06 55,257/- 2004-05 ITA No. 340/V/08 11,67,172/- 2005-06 ITA No. 572/V/08 23,12,653/- 2006-07 ITA No. 638/v/08 31,85,561/- It was brought to our notice by the learned Authorised Representative that an identical issue was adjudicated in the hands of the assessee by this Bench for the assessment year 2000-01 in ITA No.763/v/2004. Learned Authorised Representative also placed a copy of the order dated 19.03.2010 in which this above said issue was adjudicated. We have gone through the order and for the sake of convenience, we extract below the relevant paragraphs: 7. The next issue in the appeal relating to the assessment year 2000-01 relates to the disallowance of liquidated damages. The assessee made a provision of ₹ 2,96,006/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is issue finds place in three years as detailed below: Assessment Year Appeal No. Amount (Rs.) 2001-02 ITA No. 135/V/05 15,79,201/- 2002-03 ITA No. 182/v/07 4,17,183/- 2003-04 ITA No. 503/V/06 4,37,587/- The assessee s claim of bad debt in the above said 3 years was disallowed by the Assessing Officer for the reason that the assessee could not produced any evidence in support of its claim that the above said debts have become irrecoverable. However, there is no dispute with regard to the fact that the assessee has written off these debts as bad in its books of account. This issue has been settled at rest by Hon'ble Supreme Court in the case of TRF Ltd Vs. CIT (2010) 323 ITR 397 (Supreme Court), wherein the Hon'ble Supreme Court has held as under: After the amendment of section36(1)(vii) of the Income Tax Act, 1961, with effect from April 1, 1989, in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of the assessee, as in our view the said legal expenses of ₹ 1,93,000/- and ₹ 2,52,000/- are in the nature of revenue expenditure only. 4.2 With regard to the legal expenses incurred in connection with the land, the said expenses were incurred for clearing unauthorized encroachments on the land belonging to the assessee. Considering the nature of expenditure, we are of the view that the learned CIT(A) has allowed the said expenses treating them as revenue in nature. 5. The next common issue in the appeal of the assessee as well as that of revenue relates to disallowance of claim under the head foreign exchange fluctuations . The assessee has claimed the loss under the head Foreign Exchange Fluctuation in the following years : Assessment Year Appeal No. Amount (Rs.) 2001-02 ITA No.135/V/05 18,88,199/- 2004-05 ITA No. 340/V/08 2,05,41,616/- 2005-06 ITA No. 506/V/08 21,22,296/- 2006-07 ITA No. 636/V/08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Departmental Representative also on this issue. The interest earned on the impugned foreign currency loan advanced by the company has been assessed as the business income of the assessee. The Memorandum of Association of the assessee company states the lending of money as one of the objects of the assessee company. The assessee claims that it has shown that impugned advance as its current asset and not as an investment. The assessee has also accounted for gains due to foreign exchange fluctuations and such gains have been assessed as the business income by the Assessing Officer. In these circumstances, we feel that there is no necessity to disallow the claim of loss due to foreign exchange fluctuations provided for on the foreign currency loan given by the assessee. However, we notice that the assessee has accounted for foreign exchange gain as well as foreign exchange loss in assessment years 2004-05, 2005-06 and 2006-07. If the loss/gain relating to foreign exchange fluctuations pertains to one single item of advance, there can either be foreign exchange loss or foreign exchange gain. Thus there cannot be both foreign exchange loss and gain in respect of one single item of advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer with the following observations : 5.3 Sec.80IA(1) of the Income-Tax Act says that in computing the total income of the assessee, a deduction of an amount equal to 100% of the profits and gains derived from such business will be allowed. The profits and gains of business of the concerned unit has to be calculated after allocating the expenses incurred by the head office also. The head office overseas the business activities of all units. The remuneration paid to Directors inclusive commission is for rendering the services to the company as a whole. The commission paid to Directors has direct nexus with the activities of all the units. The Hon'ble Chennai ITAT in case of Alstom Ltd Vs. Dy.Commissioner of Income Tax (2005) (95 TTJ 139) (Chennai) has held that the common expenses claimed in the head office are also to be allocated to the respective industrial undertakings for the purpose of computing eligible profits u/s 80HH and 80I. While observing so, the ITAT has placed reliance on the decision of the Hon'ble Supreme Court reported in 155 ITR 120. The Hon'ble Allahabad High Court in case of Mentha and Allied Products Pvt Ltd. Vs CIT (302 ITR 144) was held th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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