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2017 (2) TMI 922 - AT - Income TaxAddition of scrap sale - Assessing Officer treated as unaccounted sale - CIT-A allowed clam - Held that:- On appraisal of the said CIT-A order, it came into the notice that it is not in dispute that the generation of scrap was @ 2.91% equivalent to 124.22 metric tons. The CIT(A) has allowed the scrap sale in view of the norms prescribed by the DGFT of foreign trade wherein the normal scrap can be allowed to the extent of 5%. The scrap of the assessee was to the extent of 2.91% which was found within the limit. The scrap record was maintained by the assessee in RG 1 which was verified by the excise department. Moreover, in earlier years also the scrap was sold and accepted by DCIT u/s.143(3) of the Act in view of the order dated 30.12.2010 for A.Y.2008-09. In view of the above said reasons, we are of the view that the CIT(A) has decided this issue judiciously and correctly which is not require to be interfere with at this appellate stage. Allowance of depreciation - Held that:- CIT(A) has considered the assessment of the assessee in which the assessee submitted the details of assets along with tax audit report, the annexure of the addition to the fixed assets. The purchase has also been submitted and the record in connection with put to use in the said assessment order has also been furnished. In fact the assessee made an addition to the existing fixed asset in the building to the tune of ₹ 2,19,990/-, plant and machinery of ₹ 27,16,063/- and electrification of ₹ 65,448/- and accordingly the depreciation was claimed. The Assessing Officer declined the claim of the assessee on the basis of the finding in case M/s. Metcraft Engineering Corporation. No independent views were given for declining the claim of the assessee. In view of the said circumstances when the assessee has demonstrated his case justifiably by proceeding the record as well as working, therefore, in view of the said circumstances, we are of the view that the CIT(A) passed the order on this issue judiciously and correctly which is not require to be interfere with at this appellate stage. Disallowance u/s 36(1)(iii) and disallowance of the interest expenditure incurred towards the acquisition of fixed assets - Held that:- CIT(A) has deleted the disallowance of interest of ₹ 7,21,831/- on investment of ₹ 42,00,000/- in a share of private limited company. In fact the assessee purchased the equity share of ₹ 13,50,000/- of M/s.Metacraft Engineering Pvt. Ltd. which is the subsidiary company of assessee company. The said investment was not made with the intention to not to earn the dividend income which is strategic investment and expended a sum of ₹ 30,01,501/- on account of fixed assets (dies and moulds) which were put to use immediately after acquisition and the said amount was paid out of running business. The CIT(A) allowed the interest in view of the law settled in of CIT Vs. Tulip Star Hotel [2011 (8) TMI 524 - Delhi High Court ] which does not seems wrong against law and facts. So far the expenditure incurred towards the acquisition of the fixed assets is concerned the same is capital in nature. No doubt the expenditure was in the nature of arbitrary and other expenditure but the same is capital in nature which were put to use immediately after acquisition and the amount was paid out of running business. In view of the said circumstances, we are of the view that the CIT(A) has rightly allowed the said interest/expenditure.
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