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of <h1>Appeal outcome: Rent-free accommodation disallowance upheld, sales tax debited amounts allowed. Loss on spares dismissed.</h1> <h3>COSMO FILMS LTD. Versus INSPECTING ASSISTANT COMMISSIONER.</h3> The appeal was rejected concerning the disallowance under section 40A(5) for rent-free accommodation provided to the General Manager, as per the IT Act. ... - Issues:1. Disallowance under section 40A(5)2. Disallowance under section 43B3. Disallowance of loss on sale of spares/raw materialsDetailed Analysis:1. The first issue pertains to disallowance under section 40A(5) concerning the treatment of rent-free accommodation provided to the General Manager. The company adopted the perquisite value as per section 17 of the IT Act, 1961, instead of the actual rent paid for calculating perquisites under section 40A(5). The authorities rejected the claim based on the specific proviso in section 40A(5). The counsel for the assessee acknowledged that the issue aligns with a previous decision of the Hon'ble Delhi High Court, leading to the rejection of the appeal.2. The second issue involves disallowance under section 43B, specifically concerning Maharashtra Sales-tax and Central Sales-tax amounts not debited to the Profit and Loss account. The company argued that under a deferred payment scheme, the taxes were to be converted into a loan, as per relevant Circulars issued by the CBDT. The Tribunal considered the Circulars and the agreement between the assessee and the State Government, concluding that the taxes were deemed to have been paid. Consequently, the addition was deleted, and the appeal was partly allowed.3. The third issue relates to the disallowance of a loss on the sale of spares/raw materials. This ground was not pressed by the appellant and was thus dismissed. The Tribunal's decision was based on a comprehensive analysis of the relevant legal provisions, Circulars issued by the CBDT, and the specific facts and circumstances of the case. The judgment highlights the importance of adhering to statutory provisions and established legal interpretations in determining tax liabilities and permissible deductions.
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