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2013 (5) TMI 759 - HC - Income TaxDepreciation on Butchlor Plant - Plant was ready for use but was not actually put to use due to adverse market conditions - Held that:- As decided in Commissioner of Income-tax vs. Viswanath Bhaskar Sathe (1937 (3) TMI 11 - BOMBAY HIGH COURT) wherein in the context of section 10 of the Income Tax Act, 1922 held that the word “used” in the said section may be given a wider meaning and embraces passive as well as active user. Machinery which is kept idle may well depreciate, particularly during the monsoon season. As decided in Whittle Anderson Ltd. v. CIT [1968 (12) TMI 27 - BOMBAY High Court], Capital Bus Service Pvt. Ltd. v. CIT [1980 (2) TMI 69 - DELHI High Court] that if plant and machinery are kept in ready condition but production could not be made on account of factors beyond the control of the assessee, depreciation should not be denied on that count as it is presumed that the plant and machinery were put to use for the assessee's business. Thus in in the light of the fact of present case the Butachlor plant had in fact been used for the purpose of manufacturing Butachlor for several years and had continued to be so used till the market conditions became adverse, and thereafter also though the same was kept idle it was kept in readiness for use as and when the market revived, it cannot be said that the said plant was not in use during the assessment years under consideration merely because the same was not put to actual use during the said period. Tribunal was justified in allowing depreciation claim - in favour of assessee. Receipt by way of gain on cancellation of foreign exchange contracts - revenue v/s capital - Held that:- As decided in DCIT(Assessment) vs. Garden Silk Mills Ltd. ( 2009 (2) TMI 95 - GUJARAT HIGH COURT) the surplus received on cancellation of forward foreign exchange contract was a capital receipt not liable to tax and that it did not fall under section 28(iv). Exclusion of excise duty at the time of valuing closing stock at the end of the accounting period - Held that:- As decided in ACIT vs. Narmada Chematur Petrochemicals Ltd., (2010 (8) TMI 263 - Gujarat High Court) wherein held that excise duty is required to be excluded at the time of valuation of the closing stock on finished goods at the end of the accounting period. In favour of assessee. Interest relatable to diversion of interest bearing funds to interest free advances - Held that:- When no interest bearing funds have been diverted to the sister concern by way of interest free advances, the question of going into the commercial expediency of such loans would not arise - there is no diversion of interest bearing funds to interest free advances. In favour of assessee. Donation of Rs.25 lakhs to the Narmada Integrated Rural and Environmental Development Society (NIRDES) - claimed full deduction under section 37(1) - Held that:- As decided in Sri Venkata Satyanarayana Rice Mill Contractors Co. vs. Commissioner of Income- Tax [1996 (10) TMI 2 - SUPREME Court] contribution to the Public Welfare Fund at the instance of the Government authorities was allowed as a deduction on the ground that it was motivated by commercial consideration. Tribunal was justified to hold that the contribution made to the welfare fund was not opposed to public policy and that the same was motivated purely by commercial consideration, and that the deduction was allowable u/s 37(1) - in favour of assessee.
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