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2023 (6) TMI 508 - AT - Income TaxDeduction u/s 80IB on Central Excise Duty refund - refund from Central Excise is a “capital receipt” or revenue receipt? - grievance of the revenue is that similar receipts were held to be revenue in nature as the same had been made after the industries had been set up and not for purpose of setting up of the industries - HELD THAT:- We respectfully relied on the observation in the case of CIT vs. Ponni Sugars and Chemicals Ltd. [2008 (9) TMI 14 - SUPREME COURT] assessee was free to use the money in its business entirely as it liked. It was not obliged to spend the money for a particular purpose. In the present case also, receipt of the subsidy was capital in nature as the assessee was obliged to utilize the subsidy only for repayment of term loans undertaken by the assessee for setting up new units/expansion of existing business. We respectfully relied on the judgment of Shree Balaji Alloys [2011 (1) TMI 394 - JAMMU AND KASHMIR HIGH COURT] Hon'ble jurisdictional high court have duly considered and followed the law laid down in the aforesaid Apex Court judgments, which has in turn been followed by ld. CIT(A). But in factual matrix the capital subsidy as capital receipt cannot be the part of the calculation of deduction U/s 80IB of the Act. Claiming Depreciation u/s 32 in Building, Plant and Machinery - assessee had charged depreciation on the building, plant and machinery head @ 25%, which the rate of depreciation will be @ 10%. So the 15% was disallowed by the ld. AO - AO had calculated the depreciation considering the nature of assets. The issue was already covered by the order of assessee’s own case in [2012 (7) TMI 188 - ITAT AMRITSAR]. We relied on the order of coordinate bench & upheld the order of the ld. CIT(A). Bank Charges on Bank Guarantee - AO has not considered the bank charges for bank guarantee which has no nexus of the business accordingly the addition was made - As per CIT expenditure is to be treated as revenue allowable fully in the year in which, it is incurred and no part of the expenditure can be deferred or claimed in the subsequent years - HELD THAT:- CIT(A) has taken a correct view in relation to the bank guarantee charges paid on bank amount - We are not intervening in the order of the ld. CIT(A) and accordingly ground No-4 of the revenue is dismissed. Disallowance on account of depreciation claimed in respect of Capital Subsidy - HELD THAT:- We respectfully relied on the judicial observation on application of depreciation in capital subsidy. In our considered view, this capital subsidy of the assessee is not interfering in the ‘actual cost’ of the assets. The assessee received this capital subsidy from NABARD. Here, we are intervening in the order of the ld. CIT(A).The addition amount of Rs. 23,16,393/- is quashed. Accordingly, the appeal of the assessee are allowed. Disallowance of other expenses - 10% was disallowed of total expenses on Travelling expenses in Foreign & Inland and Vehicle running and maintenance - HELD THAT:- The disallowance was made without finding any specific lacuna. CIT(A) in his order has upheld the addition without mentioning any specific discrepancy. CIT(A) without verifying the same pass the order only on basis of observation of the ld. AO. CIT(A) is equally fallacious since the expenses are extremely useful for furtherance and growth of any business, leave aside the assessee's business. No worthwhile argument has been advanced by the ld. CIT-DR as to why he has treated this expense as bogus. The addition amount is dismissed. Disallowance on account of prior period expenditure - HELD THAT:- Since the genuineness of transaction is not in dispute and as such, the prior period expenditure is accepted. The claim is taken in impugned assessment year. The payment is related to actual payment. CIT-DR has not made any objection in this issue. We find that revenue has wrongly added the prior period expenditure, service tax We dismiss the addition of the assessee. Deduction u/s 80HHC - meat export division - HELD THAT:- As meat export division is engaged in export of meat. It is not disputed that no activity of purchase and sale of meat for the purpose of export is from any of the Units at Jammu. Even the AO in the remand reports has not rebutted written submissions of the appellant. As such, there remains no justification to sustain the disallowance u/s 80HHC of the Act. Therefore, the same is deleted and the ground raised is thus allowed. Applicability of section 40(a)(ia) only on payable amount not in paid amount - HELD THAT:- We relied on the CBDT Circular No-10/DV/2013 dated 15/12/2013. The statutory provision amply clarified that the ‘payable’ include the amount ‘paid during the previous year’.CIT(A) is correct view to upheld the addition u/s 40(a)(ia). The section will be applicable in both paid & payable. We confirmed the addition.
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