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2012 (8) TMI 493 - AT - Income TaxCapital expenditure vs Revenue expenditure - expenditure on payment of lease rent and maintenance of the pipeline as per Build, Own, Operate, Transfer (BOOT) contract with M/s Dodsal - Held that:- In present case, assessee company, by making lump sum payment to Dodsal has not acquired any capital asset but has acquired only the right to operate and maintain the said pipeline for its business purpose and got rid of making monthly payment. The assessee company has stated that even when the BOOT agreement was in operation, the assessee was neither the owner of the pipeline nor after making the lump sum payment to Dodsal on terminating the BOOT agreement the assessee became the owner of the pipeline. Since, assessee has not acquired any capital asset but has only got the right to use the said pipeline for its business purposes and has not acquired any capital right in the said pipeline, therefore, the same is to be considered as revenue in nature. See Madras Auto Service (P.) Ltd (1998 (8) TMI 1 - SUPREME COURT ) - Decided in favor of assessee Further, claim of the assessee which is otherwise allowable as revenue expenditure, cannot be denied merely on the ground that the assessee has capitalized the said expenditure by making entries in its books of account. Sales tax incentive being exemption granted by the State Government of Gujarat on ground of industry being situated in the backward area - capital receipt or revenue receipt - assessee contended that incentive available is based on the capital invested in the aforesaid project, hence capital receipt - Held that:- Sales tax incentive to be constituted capital receipt. See DCIT v/s Reliance Industries Ltd [2003 (10) TMI 255 (Tri)] - Decided in favor of assessee Business Expenditure - Donation/contribution to various organisations/ Community Welfare Expenses - dis-allowance - Held that:- Tribunal in assessee' case in earlier year allowed such expenditure by holding that just because the expenses are voluntary in nature and are not forced in the assessee by a statutory obligation, these expenses cannot cease to be a business expenditure. Dis-allowance deleted - Decided in favor of assessee Expenditure on registration fee, stamp duty of lease transactions - Held that:- By incurring the said expenditure, the assessee has not acquired any assets of enduring nature and the said expenditure could not be disallowed as of capital nature. Same is held revenue in nature. See Hoechst Pharmaceuticals Ltd (1977 (11) TMI 55 - BOMBAY HIGH COURT) - Decided in favor of assessee Expenditure incurred on account of repairs - designing and re–location of the reactor purchased in year 1999 - Held that:- Incurring the expenditure to relocate the reactor from its existing place to a new place to make use of it does not create any new asset to the assessee. Same is held revenue in nature. See Abbott Laboratories (I) Pvt. Ltd. (1993 (2) TMI 83 - BOMBAY HIGH COURT) - Decided in favor of assessee Rejection of claim of deduction u/s 80HHC for the purpose of computing book profit u/s 115JB on ground that deduction u/s 80HHC is NIL under normal provisions of law - Held that:- Issue is now covered in favour of assessee by judgment in case of Bhari Information Tech. Sys. P. Ltd.(2011 (10) TMI 19 - SUPREME COURT OF INDIA , wherein it was held that deduction u/s 80HHE is required to be worked out on the basis of adjusted book profits u/s 115JA and not on the basis of profit computed under regular provisions of law applicable to the computation of profits and gains of business. Section 80HHC as well as section 80HHE falls in the same Chapter and provisions u/s 115JA are also in pari material with the provisions of section 115JB. Consequently, decided in favor of assessee by reversing the orders of the authorities below. Lease rent paid on boilers - dis-allowance of amount attributable to re–payment of principal amount - Held that:- Same is allowed in view of order of Tribunal in favor of assessee in respect of earlier years Dis-allowance u/s 40A(9) of contribution to various clubs run by and meant for the staff and their families - Dis-allowance of prior-period expenditure - Held that:- Issue on identical fact is covered in favour of the assessee by the earlier decision of the Tribunal Adjustment for provision of bad and doubtful debts while computation of book profits u/s 115JB - Held that:- In view of the amendment made by the Finance (no.2) Act, 2009, by inserting clause (i) to Explanation (1) of section 115JB(2), with retrospective effect from 1st April 2001, the provisions made for bad and doubtful debt is to be disallowed. Dis-allowance confirmed - Decided in favor of Revenue Depreciation in respect of jetties constructed by the assessee and used for the purpose of its business - dis-allowance - assessee constructed jetty for and on behalf of Gujarat Maritime Board (GMB) - exclusive ownership being vested in GMB - assessee being afforded the facility for preferential use of jetty over other users and licence to use jetty - depreciation being allowed since AY 1997–98 - assessee contended the same to be acquisition of commercial right or license and intangible asset within the meaning of section 32(1) - Held that:- Tribunal considered similar issue in the case of Reliance Ports and Terminals Ltd., and allowed the claim for depreciation on the cost incurred by the assessee on construction of jetties. Since aforesaid case squarely applies to this case, depreciation at the rate as applicable on the cost incurred for construction of jetty at Dahej is directed - Decided in favor of assessee Addition on account of unavailed CENVAT credit u/s 145A - Held that:- If the closing stock to be increased on account of unutilised MODVAT credit, the corresponding opening stock of that year is also to be increased, as the Department has not disputed the fact that the purchases have been debited exclusive of the excise duty element i.e., by adopting net method of purchases. If the value of closing stock is increased by the MODVAT, the purchases should also be increased by a similar amount. Whenever there is change in the valuation at one end, there must necessarily be a corresponding change at the other end otherwise the true picture would not be reflected. Addition is deleted - Decided in favor of assessee.
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