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2020 (3) TMI 1463 - AT - Income TaxNature of expenditure - Expenditure incurred on facilities put up but ownership lying with others/statutory authorities - assessee incurred expenses on railway siding which is essential for loading, transportation and unloading of petrol / diesel / LPG wagons which are essential for carrying on the business of the assessee and the ownership vests with the railway authorities - capital expenditure’ v/s revenue expenditure u/s 37(1) - HELD THAT:- The issue is covered by the decision of the coordinate Bench in assessee’s own case for the assessment year 2006-07 [2019 (10) TMI 1584 - ITAT MUMBAI] wherein held that expenditure as incurred on construction of Railway Track and siding is revenue expenditure and not a Capital expenditure. The coordinate Bench has decided the identical issue in favour of the assessee in assessee’s own cases pertaining to the earlier years - Decided in favour of assessee. Expenditure incurred on salary, dearness allowance, postage, travel and other expenses for various modernization and up-gradation of projects in appellants existing line of business - HELD THAT:- The issue is covered by the decision of the coordinate Bench in assessee’s own case for the assessment year 2006-07 [2019 (10) TMI 1584 - ITAT MUMBAI] Accounting Practices cannot be override section 56 or any other provisions of the Act. The assessee incurred expenses on various personnel/ employee in the project for supervision and monitoring the various project and marketing allocation and refineries which is certainly allowable as business expenditure u/s 37(1) of the Act. Expenses were made on account of salary, Dearness Allowance (DA), Conveyance Expenses, postal charges, bank charges, rent for housing accommodation, Motorcar etc. which is certain of revenue expenditure.Decided in favour of assessee. Deduction towards Post-retirement medical benefits and provision for Leave Encashment - HELD THAT:- As decided in assessee’s own case for the assessment year 2006-07 [2019 (10) TMI 1584 - ITAT MUMBAI] aside the matter to the file of AO to verify the Actuarial Valuation Report and allow the claims of the assessee in accordance with the this order. Accordingly, we allow this ground of appeal for statistical purposes. Nature of loss - loss on sale of oil bonds - revenue or capital loss - HELD THAT:- The coordinate Bench has decided the identical issue in assessee’s appeal pertaining to the AY 2006-07 [2019 (10) TMI 1584 - ITAT MUMBAI] applying the ratio of judgement of the Hon’ble Apex Court in Patnaik & Co Ltd [1986 (7) TMI 6 - SUPREME COURT] decide the issue in favour of the assessee as held loss due to foreign exchange fluctuation in foreign currency transactions in derivatives has to be considered on the last date of accounting year and it is deductible u/s 37(1) of the Act. Thus this ground of appeal in favour of the assessee. Disallowance u/s 43 or deduction u/s 37(1) - assessee had amortized an amount in P& L account, which was part of premium on forward exchange contracts booked for the purposes of external commercial borrowings (ECB) taken for the purpose of meeting the cost of various projects under taken by the assessee, which had been amortized over the duration of the forward exchange contracts - HELD THAT:- CIT(A) has partly allowed this ground of appeal by holding that provisions of section 43A are not attracted to the extent of assets acquired by the assessee within India, however, the grievance of the assessee is that the Ld CIT(A) has only allowed the depreciation on the expenditure treating the same as capital. The counsel has further pointed out that since as per the AS 11FEC is booked as revenue expenditure, the same is permissible deduction u/s 37(1) of the Act. Hence, in view of the facts and the circumstances we set aside this issue to the file of AO for deciding the issue afresh in the light of the submissions made before us after affording a reasonable opportunity of being heard to the assessee. Hence, we allow this ground of appeal of the assessee for statistical purposes. Addition of de-capitalized assets and thereby allowing depreciation - HELD THAT:- CIT(A) has decided this ground of appeal in favour of the assessee holding that the A.O. cannot accept that portion, which suits the department in more collection of tax due to lesser claim of depreciation and deny corresponding claim of depreciation in reduction of book depreciation, which necessarily the appellant’s has to do. We do not find any reason to interfere with the findings of the Ld. CIT(A) as the same is based on the settled principles of law and as per the evidence. Hence, we uphold the findings of the Ld. CIT(A) and dismiss this ground of appeal of the revenue. Disallowance u/s 14A r.w.r 8D - CIT(A) restoring the issue of disallowance u/s 14A of the Act for recomputed the disallowance holding that the provisions of Rule 8D cannot be applied retrospectively - HELD THAT:- Since, the findings of the Ld. CIT(A) are in accordance with the settled law, we uphold the order passed by the Ld. CIT(A) and dismiss this ground of appeal of the revenue. Deduction u/s 80IB in respect of VREP –II unit - AO denied the same on the ground that VREP-II is only an extension of the old undertaking - CIT(A) allowed the same - HELD THAT:- We notice that the Coordinate Bench has decided the identical issue in favour of the assessee in appeal filed by the revenue [2019 (10) TMI 1584 - ITAT MUMBAI] in assessee’s case pertaining to the assessment year 2006-07. Since the findings of the Ld. CIT(A) are in accordance with the decision of the coordinate Bench, we do not find any reason to interfere with the order of the Ld. CIT(A). Hence, we uphold the findings of the Ld. CIT(A) and dismiss this ground of appeal of the revenue. Deduction u/s 80IB in respect of Silvasa New Blending Plant - AO denied the claim of the assessee u/s 80 IB(4) for the first time in AY 2006-07 on the ground that the activity at the blending Plant does not come within the ambit of manufacturing - HELD THAT:- As decided in own case 2006-07 [2019 (10) TMI 1584 - ITAT MUMBAI] as noted that the end product manufactured by assessee as explain hereinabove is quite distinct and is a commercially different article than the major input rectified, which is fit for consumption / use for commercial use. That the changes made in input result in a new and different article is recognized in the trade as such. Hence, the assessee, in the instant case, satisfied the requirement, that it manufactured or produced an article or thing for the purpose of section 80-IB - Decided against revenue.
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