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2015 (10) TMI 2177 - AT - Income TaxExpenditure incurred on oil solvent extraction plant - whether as the production had not commenced and therefore, it is in the nature of capital expenditure - revenue v/s capital expenditure - Held that:- As evident from the balance sheet of the assessee that the assessee had produced semi finished crude solanesol oil of 11,660 Kgs of low purity. Therefore, on completion of the balance process these semi finished goods will be converted into finished goods and available as stock in trade to the assessee for sale. Hence any expenditure incurred for producing the semi finished goods will be in the nature of revenue expenditure and has to be debited to the Profit And Loss account. Consequently the semi finished goods will also be reflect in the credit side of the Profit And Loss account as "Semi-Finished goods" and as well as in the balance sheet under the head "Current Assets. In such circumstances if this expenditure is not allowed as deduction, then to that extent profit of the assessee will be superficially inflated. Therefore, the Revenue has erred in treating the semi finished stock of the assessee as capital expenditure. Moreover from the order of the Ld. Assessing Officer it appears that he was under impression that the expenditure is incurred towards "Solvent Extraction Plant" when the fact remains that these expenditure was incurred for the production of semi finished goods viz., crude solanesol oil. Hence we hereby direct the Ld. Assessing Officer to allow the claim of the expenditure of ₹ 18,84,633/- incurred by the assessee for producing the semi finished goods viz., crude solanesol oil. - Decided in favour of assessee.
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