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2014 (10) TMI 900 - AT - Income TaxDisallowance u/s. 14A r.w.s. Rule 8D - Held that:- Calculation of the assessee was given but CIT(A) has not given any finding whether this calculation is as per law or not. The CIT(A) has not called for remand from the Assessing Officer, therefore, in the interest of justice and fair play, we restore this calculation to the file of CIT (a) is directed to recalculate the disallowance u/s. 14A r. w. Rule 8D of the IT Act, and CIT (A) is directed to pass the speaking order after considering this calculation and pass the order as per law giving opportunity of hearing to the assessee. - Decided in favour of assessee statistical purpose. Contribution to Goa Infrastructure Development Company Limited, a Government undertaking, towards construction of Usgao Bridge - revenue or capital expenditure - Held that:- This bridge allowed only one way traffic at a time and was meant for light general traffic namely buses, cars etc. With increase in exports of iron ore from 16 million in 2005 to 50 million till March 2012, there was a need to build a new bridge without which it would not be possible to continue to export on sustainable basis. Until the new Usgao bridge came into operation there was long line of trucks waiting on either side of existing bridge to transport the iron ore. By this, precious time was lost which in turn trucks made less numbers Of trips per day. This in turn increased cost of transport. After the new bridge was commissioned loaded trucks and empty trucks moved in opposite direction without having to stop or wait for the bridge passage. This establishes clearly that the share of expenses for construction of the new Usgao bridge has resulted in revenue in terms of cost per ton transported as well as increase in the quantity of ore exported/sold. Expenditure incurred by company as share for construction of New Usgao bridge cannot be capital expenditure but is entirely revenue expenditure. Amounts paid as contribution for construction of a bridge for providing easier access for its workmen and movement of goods would be permissible revenue expenditure as had been held in CIT v. Coats Viyella India Ltd. [2000 (11) TMI 24 - MADRAS High Court ] following the decision in L.H. Sugar Factory and Oil Mills (P) Ltd. V. CIT [ 1980 (8) TMI 1 - SUPREME Court ] where a similar contribution for construction of a road to facilitate the business of the assessee was held to be revenue expenditure. The fact that such contribution resulted in capital asset would not make any difference, because the assessee is not the owner of such asset created by the contribution. - Decided in favour of assessee Addition towards Port Development Expenses - revenue expenses v/s capital expenses - Held that:- Such amounts may not be treated as capital expenditure merely because the benefit of such expenditure would overflow the expenditure itself. Such expenditure cannot be treated as capital expenditure. We are of the view the CIT (A) appeal is justified in treating dredging expenses as revenue expenditure - Decided in favour of assessee Addition on account of Salvage Wreck Removal Expenses - revenue expenses v/s capital expenses - Held that:- we find that the M.V. Sanjeevani, a ship was sunk prior to 1996 and as per the Court order the assessee conducted the salvage operation of the ship in this year. The Assessing Officer denied the claim of the assessee. The company ship belong to the assessee and as per the Court order the assessee has incurred this expenditure for business purpose. The assessee offer for taxation of sale value of scrap generated in the year in which it is sold. The assessee has relied upon the decision of CIT vs. Crescent Films (P.) Ltd. (1998 (11) TMI 17 - MADRAS High Court ) wherein it is held that in the case of salvaging asset if the expenditure or nature of transaction is such as to be regarded as one in the revenue field, it cannot be treated as capital, merely because such expenditure is incurred for the purpose of salvaging the capital. We find that the CIT(A) is justified in his treating this expenditure as revenue expenditure - Decided in favour of assessee Ship renovation Expenses - revenue expenses v/s capital expenses - Held that:-ant case Assessee has incurred heavy expenditure on replacement of part of ship but no new assets have been created by the Assessee. We find that new assets has come the character of the ship is not change. In order keep the vessels sea worthy Assessee has incurred the expenditure. The Assessee has not replaced old machine. In the instant case we find that entire hull of the ship was not changed. Every ship has to go for dry docking almost for every year and these annual repairs are essential because there is always lot of were and tear of parts, resting of steel plates of hulls with requires the replacement and repairs we cannot be made without taking into dry rock. We find that by incurring these expenses the sea sip in training condition. The assessee has made renovation and replacement of parts therefore, this is revenue expenditure.We are of the view that the CIT(A) is justified in his action and our interference is not required. Addition on royalty payment - Held that:- Looking to the facts and circumstances of the case, we find that the assessee has submitted before the CIT(A) that assessee has paid the royalty with penal interest on 1,99,152 MT to Mining Department, Goa. It is a regular practice followed in Goa when that as and when the ore is extracted and moved from the mine for the sale, royalty is paid. The ore of 1,99,152 MT was lying on the mine during the financial year 2007-08 and it was moved out of mine in the financial year 2010-11. The royalty has been paid to Director of Mines on 18.10.2010 shows clearly the quantity and year of extraction of ore on which the royalty is paid and assessee has paid royalty of ₹ 25,17,281/-. We find that after considering this evidence the Commissioner of Income Tax was of the view that assessee has paid the royalty on this iron ore, therefore, he has deleted the addition and our interference is not required Disallowance u/s 14A calculation - Held that:- DR could not bring any evidence before us to show that calculation of Commissioner of Income Tax is not as per the rule, therefore, we have no alternative except the endorse the action of CIT(A). We find that the CIT Appeal has held that the Assessee has not paid any interest or acquiring investments therefore, he has restricted these disallowance to ₹ 5,10,283/-. We are the view that CIT (A) is justified in his action in the result department appeal is dismissed - Decided against revenue Expenditure on repairs and maintenance of Ship - Held that:- A.O. is directed to allow these expenses as revenue expenses and deleted the addition made on this account - Decided against revenue
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