TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Court Decision: Business Expenses Upheld, Interest Disallowance Overturned, Deduction Calculations Clarified</h1> The court upheld the allowance of research and development expenditure for multi-speed freewheels as business-related. The disallowance of interest on ... Expenditure on tools and modification of machines are revenue in nature – expenses on gift articles to be distributed to dealers, generated goodwill so they are deductible – interest on borrowed capital which was used for making interest free advance to managing director are also deductible – loss could not be ignored while working out special deduction u/s 80HHC - held that ST and CST etc. should be excluded from total turnover while computation of incentives u/s 80HHC Issues:1. Research and development expenditure for multi-speed freewheel.2. Interest-free advances made to the managing director.3. Expenses treated as business expenditure.4. Deduction under section 80HHC.5. Exclusion of certain items from total turnover for section 80HHC.6. Interpretation of turnover for section 80HHC.7. Relief under section 80HHC resulting in income below the returned income.Issue 1 - Research and Development Expenditure:The case involved the allowance of Rs. 4,81,000 as revenue expenditure for research and development of multi-speed freewheels. The Tribunal accepted the expenditure as business-related, considering it essential for exploring the export market. The court upheld this decision, emphasizing that such expenditure, aimed at improving production machines, was directly linked to the business activities of the assessee.Issue 2 - Interest-Free Advances:The dispute centered on the disallowance of Rs. 2,70,000 interest on an advance made to the managing director for property acquisition. The Tribunal found a business nexus in the advance, as it was related to securing a property for the company's benefit. Relying on the nexus theory, the court ruled in favor of the assessee, highlighting the commercial considerations involved in the transaction.Issue 3 - Business Expenditure:Various expenses, including gifts to dealers and credit card expenditures, were contested as business expenses. The court referred to precedent cases to support the business-related nature of these expenses, emphasizing their contribution to goodwill and commercial activities. The Tribunal's decision to allow a portion of the credit card expenses was upheld based on estimation principles.Issue 4 - Deduction under Section 80HHC:The court referred to a Supreme Court judgment to rule that losses should not be ignored when calculating incentives under section 80HHC. Consequently, the question was decided in favor of the Revenue, emphasizing the importance of considering losses in incentive calculations.Issue 5 - Exclusion from Total Turnover:Sales tax, excise duty, and other items were debated for exclusion from total turnover for section 80HHC computation. Citing a relevant case, the court held that certain items, such as sales tax and central sales tax, should be excluded from turnover calculations for incentive purposes, ruling in favor of the assessee.Issues 6 and 7 - General Matters:The remaining questions were considered general and consequential to the issues discussed earlier. As no specific arguments were presented, these questions were deemed answered through the resolutions provided for the preceding matters. The reference was disposed of accordingly, based on the detailed analysis and decisions made on each issue.
TaxTMI 
TaxTMI 
