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2013 (10) TMI 770 - AT - Income TaxReplacement of machines under Technological Up-gradation Fund (TUF) scheme of Ministry of Textile - Revenue or capital in nature - Held that:- Machine was being used for rewinding yarn from small plastic bobbins produced on pinning ring frame and making a big size bobbin. The Autoconer is a part of a spinning machine and is working together with other machines, it helps in carrying out the process. So, it was a supporting machine used for knotting the yarn from small contents on a plastic bobbin to big cones. This machine does not have independent functioning rather it was a part of the total plant, therefore it cannot be said that the assessee replaced an independent machine by acquiring a new one rather a part of the old machine was replaced for proper functioning. Therefore, expenses incurred by the assessee were revenue in nature and not the capital in nature - it cannot be said that the assessee replaced whole of the DG set rather only a part in the form of Crank Shaft was replaced. So, it was a revenue expenditure and not a capital expenditure – Decided in favor of Assessee. Nature of payment (expenses) made to bank for converting rupee loan into foreign currency loan - Held that:- The assessee was benefited as the interest rate was reduced and those expenses were incurred by the assessee during the year under consideration and related to the business exigency. order of CIT(A) confirmed - Decided against the revenue. Disallowance u/s 40(a)(ia) of the Income Tax Act – Held that:- Amount was paid by the assessee on account of sea freight, to the agents of non-resident ship owners. Therefore no TDS was to be deducted under section 194C or section 195 of the Act as such the disallowance made by the Assessing Officer by invoking the provisions of section 40(a)(ia) of the Act, was not justified and the learned CIT(A) rightly deleted the addition made by the Assessing Officer by considering the circular No. 723 dated 19/12/1995 issued by the CBDT. The present issue is also covered by the decision of this bench of the tribunal in the case of ACIT Vs. Minpro Industries [2012 (5) TMI 232 - ITAT, Jodhpur], wherein it has been held that reimbursement of the payment towards sea freight transport, CCI charges, steamer freight charges and REPO container charges made by the assessee to the C & F agents who have already made the payment on behalf of the assessee was covered by the provisions of section 172 of the Act and not by section 194C or section 195 and that the agent having already deducted TDS from the transportation charges and shipping bill before making these payments to the principal which have been reimbursed by the assessee, the assessee was not liable to deduct tax at source from such payments and consequently, same could not be disallowed by invoking the provisions of section 40(a)(ia) of the Act – Decided in favor of Assessee.
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