Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (6) TMI 202 - AT - Income TaxTreatment to repairs - revenue or capital expenditure - Held that:- There is nothing on the record, baring some general remarks, to demonstrate that any part of the repairs and maintenance expenses incurred by the assessee are capital expenditure in nature. Just because tiles, cement or iron is used in the civil work carried out by the assessee, in respect of those premises, such civil work need not necessarily result in capital expenditure. In a sophisticated technical and scientific work as vaccine development, it is only natural that highest precautions are taken to ensure that the manufacturing or other scientific process does not get vitiated by unwelcome elements. The exercise of such precautions necessitates expenditure on civil and maintenance work but then such work does not result in a capital asset. Thus as there is nothing to show that expenditure incurred by the assessee resulted in a new asset, or such enduring advantage so as to result in the very character of expenditure being rendered capital, we are of the considered view that impugned disallowances were wholly unwarranted and unsustainable in law - Decided in favour of assesse. Disallowance of interest u/s 40A - CIT(A) deleted addition - Held that:- The unsecured borrowings by a commercial organisation like the assessee, on these facts, @ 16% interest seems to be reasonable. The benchmark @ 14% adopted by the ld. CIT(A), by taking fixed deposit interest rates of companies like MGF Limited and Rama Vision Ltd., cannot be applied in a rigid way. There is no material whatsoever to suggest that a 2% higher interest than interest paid to such well reputed companies, and that too on fixed period deposits, will render the interest paid by the assessee to it's unsecured lenders as excessive and unreasonable having regard to fair market interest rate. In view of these discussions, as also bearing in mind entirety of the case, we hold that entire interest payment to the specified persons, at the rate of 16%, should be allowed as deduction. Accordingly, inmpugned disallowances deserve to be deleted - Decided in favour of assesse. Disallowance of the claim u/s 80IA/IB - CIT(A) deleted the disallowance with the direction to re-compute the deduction u/s 80IB by apportioning the expenditure on research and development by 1/3rd to each unit - Held that:- In granting the impugned relief, learned CIT(A) has merely followed his order, in assessee's own case for the assessment year 2005-06 and when Assessing Officer does not challenge findings of an appellate authority, against him, for one assessment year, it is not open to him to challenge the same findings in a subsequent assessment year. In any case, once a co-ordinate bench taken a particular view of the matter, it is amorally not open to us to take any other view of the matter. In view of these discussions, we uphold the grievance of the assessee and dismiss the grievance raised before us by the Assessing Officer. - Decided in favour of assesse. Disallowance of packing expenses - CIT(A) deleted the addition - Held that:- We are not inclined to disturb well reasoned findings of the learned CIT(A) as he rightly observed, it is not always practicable to maintain item wise day to day consumption of packing material, and the Assessing Officer cannot disregard the books of account without rejecting the same. The observations of the Assessing Officer proceed on mere suspicion and once all the defects and doubts of the Assessing Officer were satisfied in the first appellate proceedings, there was no legally sustainable basis for the impugned disallowance. Learned CIT(A) rightly deleted the same. - Decided in favour of assesse. Disallowance of sales expenses - CIT(A) deleted the addition - Held that:- the fact of expenditure was well established by evidences but the Assessing Officer wanted details like the end results by way of improvement of sales and details of persons contacted during visit etc. On these facts, and satisfied by the evidences produced by the assessee about fact of expenditure and broad purpose of expenditure, learned CIT(A) has deleted the disallowance. In any case, the disallowance is purely on adhoc basis. We see no reasons to disturb the conclusion so arrived at by the ld. CIT(A), which are also in harmony with accepted past history of the case.- Decided in favour of assesse.
|