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2012 (7) TMI 123 - AT - Income TaxAllowance of expenditure of HRC Plant as revenue expenses - Revenue contested that same was shown in the balance sheet as capital work-in-progress as commercial production had not started - Held that:- for the purpose of excise duty, the whole factory was considered as a one unit in the excise return and therefore the view taken by the AO that HBI and HRC were two different units was not correct - as the new project was a part of existing business as there was complete integration and interlacing of both the units, therefore the expenditure incurred such as interest on borrowed funds and general administrative expense have to be allowed. As regards the debenture issue expenses the debentures are not compulsorily convertible into shares as these were optionally convertible and therefore the conversion would depend upon option if any exercised by the debenture holders. Therefore it could not be said that intention was clearly to issue shares. Obviously the intention was to raise loan which could be converted into shares in future if any option was exercised. Thus,the debenture issue expenses considering the judgments in Ashima Syntex Limited. Versus Assistant Commissioner Of Income-tax Central Circle - 2(3)[2006 (3) TMI 188 (Tri)] have to be allowed - decided in favour of assessee. Deletion of disallowance of interest expenditure on the working capital of HRC Division - shown by the assessee company as Deferred Revenue expenditure - Held that:- As it has already been held that HRC project is part of the existing business of the assessee all revenue expenditure have to be allowed - in favour of assessee. Deletion of disallowance of lease rent - assessee had debited in the P&L account expenses on account of rent paid on leasing transactions less by Rs.25.15,95,039, while filing the return of income the assessee claimed this difference as a deduction - Held that:- The deduction claimed by the assessee was in respect of its actual liability of payment of lease rent to the lessor and the treatment in the books of account will not alter the character of the expenditure when it comes to claiming deduction while computing total income under the Act - no prejudice is caused to revenue - decided in favour of assessee. Deletion of addition of provision made for doubtful debts to the Book Profit u/s115JA - Held that:- By virtue of Finance(No.2) Act, 2009, clause (g) inserted in the Explanation contained in Section 115JA(2)the amount or amounts set aside as provision for diminution in the value of any asset, is specifically mentioned - that provision for doubtful debts and doubtful advances did not fall within clause (c) of the said Explanation in as much as they amounted to provision in respect of diminution in the value of asset - as provision made for doubtful debts which is debited to the P&L Account has to be added for arriving at the book profit, the addition made by the AO has to be restored - decided in favour of revenue. Maintainability of appeals only on ground of low tax effects - Held that:- As the appeals of the revenue have to be dismissed as not maintainable as the tax effect involved in these appeals were only notional as the income ultimately determined in assessment for these years was only a loss and as these appeals were filed prior to 15/5/2008 from which date notional tax effect was also considered as tax effect for filing appeals. Thus these appeals are dismissed - decided against revenue.
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