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2014 (10) TMI 658 - AT - Income TaxClassification of expenses Capital or revenue expenses - expenses on conversion of WBM Road into Concrete Road Held that:- The road is provided for enduring benefit to assessee Expenditure incurred on repair of roads by appellant is revenue expenditure and allowable u/s 37 following the decision in CIT vs. Pandian Chemicals Ltd. [1997 (4) TMI 38 - MADRAS High Court ] - the road within the factory premises should be treated as a part of the building and the assessee shall accordingly be eligible to depreciation. Expenditure though may be for enduring benefit if incurred for augmenting revenue generating apparatus of the assessee's business is to be allowed as a Revenue expenditure - the assessee's premises is involved with huge and heavy vehicle traffic movement and having the proper road and its maintenance will increase the efficiency of movement of raw materials as well as clearance of finished goods the order of the CIT(A) is upheld Decided against revenue. Enhanced depreciation on guest house Held that:- The harmonious construction of these two sections makes it clear that for the purpose of depreciation, the WDV means actual cost of the asset as reduced by the depreciation actually allowed in the past - even though depreciation was claimed by the assessee during the AYs 1986-87 to AYs 1997-98, it was not allowed in view of provision of Section 37 (4) of the I.T. Act - Since no depreciation was actually allowed to the assessee, the WDV for this year has to be enhanced by an amount of depreciation, which was claimed by the assessee in the past but not allowed by the Department relying upon Smt. Laxmi vs. DCIT [2006 (2) TMI 60 - HIGH COURT, KERALA] Decided against revenue. Non-inclusion of Excise Duty in the closing stock u/s 145A Held that:- Statutory auditors have certified that even though provision for Excise Duty has not been made on closing stock, it has no impact on profit for year - assessee also explained before AO that in any case the entire amount of Excise Duty on closing stock was duly paid before due date of filing of return - assessee valued its closing stock as per consistently followed practice of excluding the Excise Duty element of valuation of closing stock, it has no effect on the profit and loss a/c - Besides closing outstanding Excise Duty amount as on 31-03-2000 has been duly paid before the due date of filing of return of income u/s 139(1) - Copy of the challan evidencing payment of Excise Duty was produced before AO - the corresponding debit of Excise Duty of an identical amount to the profit and loss account shall be deductible in view of the provisions of Section 43B of the Act read with first proviso thereto - the order of CIT(A) is upheld Decided against revenue.
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