ITAT Rules on Notional Interest, Import Purchase Disallowance, and Tax Treatment of Subsidies and ESOP Expenses.

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....ITAT dealt with the addition of notional interest on interest-free advances and disallowance of inflated import purchases. Assessee's advances to brokers were assigned to another company and were NIL as of 01.04.2009, so no notional interest was warranted. CIT(A)'s deletion of the addition was upheld. Import purchases were genuine, resulting in profits, not losses. CIT(A) rightly deleted the inflated purchase disallowance. Assessee's new claims for deductions in abated assessments u/s 153A were allowed. Subsidies under FPS & VKGUY were capital receipts, not taxable. Disallowance u/s 14A limited to exempt income and not added to book profit u/s 115JB. ESOP expenses allowed u/s 37(1). Foreign exchange loss treated as revenue expenditure. Penalty u/s 271(1)(c) was deleted following the deletion of the related additions.....