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2015 (9) TMI 1615 - AT - Income TaxAddition of interest attributable to capital work in progress - Whether the interest attributable to capital work in progress are hundi discount charges for material purchases? - Held that:- Assessee had generated ₹ 229.51 crores from its operating activities - against this, investments in fixed assets, and capital work-in-progress was only ₹ 122.81 crores which means that assessee had more than sufficient own funds for financing the capital work-in-progress - also there were no loans raised by the assessee during the relevant previous year - interest disallowance was only presumptive without any basis. - thus appeal by revenue is dismissed. Disallowance of provision of warranty - Held that:- Provisioning should be for the present obligation arising from past events which is expected to result in out-flow of resources in respect of which reliable estimate is possible for the amount of obligation - assessee could not furnish evidence for the actual warranty expenditure debited in P/L account and could not give historical data for showing that the warranty provisioning was done on a scientific basis - Issue requires a fresh look by the AO - thus allowed for statistical purpose. Nature of royalty paid on sales - revenue out go or a capital out-go? - Held that:- Just because the consideration was calculated as a percentage applied on net ex-factory selling price, we cannot say that it was a revenue outgo - assessee was free to use the technical knowhow obtained by it from HCCL even after the period of agreement - the agreement between the parties resulted in an enduring benefit to the assessee and thus the consideration paid by the assessee to HCCL was a percentage of the sale value, still it retained all qualities of a capital out go - addition made by the AO is reinstated.
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