Excise duty and sales tax being indirect taxes cannot form part of the “turnover” – ITAT – Yesterday's order with you today – the TIOL way
We are breaking our own records – today we bring you a classic order of the ITAT – delivered yesterday! And this is a 112 page order with more than 40,000 words – and today we bring you the order with our analysis – another first in the field of law reporting! Until we came into the scene, the ITAT cases used to be reported a couple of years after they were delivered.
Highlights of this classic ITAT decision:-
Deduction claimed by the taxpayer on account for provision for warranty holding the same to be an ascertained liability upheld.
Excise duty and sales tax being indirect taxes cannot form part of the “turnover” and the same therefore have to be excluded from “total turnover” for the purpose of computing deduction u/s 80HHC.
The miscellaneous income of the taxpayer was eligible for inclusion in the profits of the business for the purpose of computing deduction u/s 80HHC.
The liability arising out of contracts had already accrued the minute the contract was entered into and the mere postponement of the payment of such liability to a future date would not extinguish the same so as to render it notional or contingent.
In a case where a taxpayer has acquired any capital asset from abroad for the purpose of his business or profession on credit or on deferred payment terms or against a loan in foreign currency and the whole or part of the cost of such asset or of the loan in foreign currency is outstanding as on the date on which there was a change in the rate of exchange of currency, the original actual cost to the taxpayer of such asset is required to be increased or as the case may be reduced correspondingly, inter alia , for the purposes of depreciation.
Provision for doubtful debts is not an unascertained liability but the same is the provision created for diminution in the value of assets and the same, therefore, cannot be added/disallowed while computing the book profit u/s 115JB.
The notice pay received by the taxpayer company from its employees was not eligible for deduction u/s 10A.
Deduction on account of the expenditure incurred by the taxpayer on account of retrospective price revision, allowed.
Deduction at 20% for various differences on account of intangibles, research and development, risk factors, working capital, etc allowed.
Benefit of the second limb of the proviso of Sec 92C(2) is available to all taxpayers irrespective of the fact that price of international transaction disclosed by them exceeds the margin provided in the provision
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