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2014 (1) TMI 104 - AT - Income TaxNature of Expenses – Revenue OR Capital Expenditure – Replacement of Machinery – Held that:- The order of the CIT(A) upheld - The expenditure incurred on machinery is revenue in nature and is allowable under section 37 of the Act - The remaining expenditure incurred on replacement of machinery has either resulted in giving enduring benefit or upgradation of the existing machinery or replacement of the worn out machinery which is capital in nature - the assessee has incurred expenditure for the efficient working of the existing machinery - The expenditure incurred on replacement of parts of the existing machinery in order to make the machinery work more efficiently has to be capitalized - The assessee is entitled to claim depreciation on the same in accordance with the provisions of the Act – Following Commissioner of Income-tax, Madurai Versus Madura Coats [2011 (12) TMI 293 - MADRAS HIGH COURT] – decided against Assessee. Levy of Interest u/s 220(2) of the Act – Held that:- where an assessment order is cancelled u/s.146 or cancelled/set aside by an appellate/ revisional authority and the cancellation/setting aside becomes final, no interest under section 220(2) can be charged pursuant to the original demand notice. The necessary corollary of this position will be that even when the assessment is reframed, interest can be charged only after the expiry of 35 days from the date of service of demand notice pursuant to such fresh assessment order - Following The Commissioner of Income Tax-1, Mumbai Versus M/s. Chika Overseas Pvt. Ltd [2011 (11) TMI 118 - BOMBAY HIGH COURT] – Interest u/s 220 of the act could not be sustained – Order of the CIT(A) set aside – Decided in favour of Assessee. Interest u/s 234B and 234C of the Act – Held that:- Levy of interest u/s 234B and 234C in mandatory in nature - the interest is charged for contravening the provisions of the Act i.e. non-payment of advance tax within the stipulated time - The provision is compensatory in nature inasmuch as the Revenue is deprived of such payment which should not have been made on an earlier date – there was no infirmity in the order of the CIT(A) – Decided against Assessee.
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