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2017 (6) TMI 87 - ALLAHABAD HIGH COURTCustom duty paid on purchase of plant and machinery - capital or revenue expenditure - Held that:- ITAT accepted the plea of assessee regarding expenditure on custom duty and returned the finding that assessee is entitled to deduction either by way of depreciation or by way of allowance of entire expenditure, as revenue expenditure as it has been incurred wholly and exclusively for the purpose of business. Since Income Tax Appellate Tribunal has accepted the plea of assessee that the amount of ₹ 8,19,44,049/- can be treated as revenue expenditure, as it has been incurred wholly and exclusively for the purpose of business, as the above mentioned amount was paid as excise duty, as assessee has converted its unit from 100% EOU under EPCG Scheme to DTA Unit and would sell goods in domestic market so this amount was paid for the more profitable business and finding of the tribunal in this regard treating the above amount as revenue expenditure in the alternate cannot be found faulty - Decided in favour of assessee Depreciation on the purchase of plant and machinery - whether claim admissible on the actual cost of the plant and machinery excluding the custom duty, which was paid subsequent? - Held that:- Hon'ble Supreme Court in Saharanpur Electric Supply Co. Ltd. Vs. CIT (1992 (1) TMI 2 - SUPREME Court )has opined that it is incontrovertible that, under Section 43 (1) read with Section 43 (6), the Officer has to determine the actual cost for all assets, new and old, and the definition in Section 43 (1) only requires that, at the time of doing so, he has to examine whether the actual cost has been fully met out by the assessee or has been met by someone else in whole or in part. The words "has been met" squarely fit into this reading of the section and the use of those words does not restrict the definition in Section 43 (1) to assets acquired in the previous year and moreover, in appeal the representative of the department conceded that the judgment of the Hon'ble Supreme Court in Saharanpur Electric Supply Co. Ltd. (Supra) was directly on this issue and was in favour of the assessee. So depreciation will be computed on the cost of plant and machinery and in its cost custom duty will also be added. Deduction permissible on account of revenue expenditure even though no such plea was raised before it - Held that:- In the present case assessee has taken this ground before Commissioner (Appeals) and if he has not further challenged the finding on this ground then as per Rule 27 of the Income Tax Rules assessee can advance his arguments even though he has not filed cross objection against the finding on the assessee against him. So learned ITAT did not commit any mistake in permitting the assessee to support the order of C.I.T. (Appeals) on the ground that have been decided against him. Consequently, this question of law is also decided against the revenue and in favour of the respondent, assessee.
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