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2014 (12) TMI 1252 - HC - Income TaxDeduction u/s 80HHC - whether Appellate Tribunal is justified in holding that the “total turnover” for the purposes of reduction u/s.80HHC will not include Central Sales Tax, Gujarat Sales Tax and Excise Duty even after insertion of Section 145A - Held that:- This question of law raised for consideration in the present Tax Appeal is now not res integra in view of the decision of this Court in the case of Commissioner of Income-tax vs. Meghmani Organics Ltd [2014 (3) TMI 29 - GUJARAT HIGH COURT] wherein has held that excise duty is required to be excluded from the ‘total turnover’ for the purpose of computation of deduction u/s. 80HHC. Also see Pogagen and Nagarsheth [2014 (3) TMI 934 - GUJARAT HIGH COURT] Allowance of expenditure claimed on repairs of building - Held that:- It is a settled position of law that the expenditure to preserve and maintain an already existing asset would constitute repairs. We are of the opinion that the Tribunal was justified in considering the replacement of flooring amounting to ₹ 1,30,500/- and replacement of wall amounting of ₹ 1,92,920/- as revenue expenditures. However, we find that the Tribunal has committed an error in not considering the expenses incurred for erection of new wall to the tune of ₹ 1,40,000/- and erection of wall to the tune of ₹ 1,68,000/- as capital expenditure. The CIT(A) has proceeded on the footing that the company had erected fencing wall long back with barbed wires with cement poles and was capitalized and that after a long period it was necessary to repair the same by re-erection using old major materials liked barbed wires etc. The CIT(A) observed that in the process the company spent on repairing without bringing out any new asset in existence. The Tribunal has confirmed the said finding. We, however, do not agree with the said findings. The expenditure incurred on erection of wall is required to be termed as capital expenditure. The expenditure incurred in replacement of flooring and replacement of wall will be considered as revenue expenditures whereas expenses incurred for erection of new wall and erection of wall to the tune shall be considered as capital expenditure. Moreover, excise duty is required to be excluded from the ‘total turnover’ for the purpose of computation of deduction u/s. 80HHC of the Act
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