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2013 (11) TMI 1275 - AT - Income TaxExpenses for Replacement of Machinery - Expenditure incurred for replacement of Ring Frames Revenue OR Capital expenditure - Held that:- Following CIT v. Ramaraju Surgical Cotton Mills Ltd. 2007 (8) TMI 39 - SUPREME COURT OF INDIA and CIT v. Sri Mangayarkarasi Mills P. Ltd. 2009 (7) TMI 17 - SUPREME COURT - the expenditure incurred by the assessee is capital expenditure - AO held that the expenditure are capital in Nature and depreciation can be claimed - CIT(A), ITAT and High Court held that the expenditure revenue in nature and allowed the deduction - it is clear on record that the assessee has sought to treat the said expenditure differently for the purposes of computing its profit and for the purpose of payment of income tax - The expenditure has been treated as an addition to the existing assets in the former and as revenue expenditure in the latter - Though accounting practices may not be the best guide in determining the nature of expenditure here they are indicative of what the assessee itself thought of the expenditure it made on replacement of machinery - the claim for deduction was made merely to diminish the tax burden. Interest under Sections 234A and 234B of Income Tax Act - Whether interest can be charged in an order of rectification under Section 154 for the first time - Held that:- If the return is not filed within time or if advance tax is not paid within time then the assessee is liable to pay interest and the payment of interest is mandatory Following - CIT v. M/s. Ruchira Papers Ltd. [2012 (10) TMI 60 - HIMACHAL PRADESH, HIGH COURT] - if the AO or the appellate authority does not order the payment of interest, the assessee cannot be directed to pay interest by the demand notice - levy of interest u/s 234B and 234C of the Act for all the years sustained. Deduction u/s 80HHC - Exclusion of 90% of insurance receipts and miscellaneous income from the profits - Held that:- There was no reason to interfere with the order of Commissioner of Income Tax (Appeals) in holding that 90% of the insurance receipts and miscellaneous income are to be excluded for the purpose of computing relief under sec.80HHC of the Act Following CIT vs. Ravindranathan Nair [2007 (11) TMI 10 - Supreme Court of India] - it is clear that packing charges are received on waste cotton sales and are incidental to the sale of waste cotton - The waste cotton arises as a result of the manufacturing operation of the assessee. It cannot be said that it is directly related to the export activity of the assessee Decided against Assessee.
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