TMI Blog2013 (12) TMI 1412X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred towards shifting, the Assessing Officer has not offered any comment why he considers the expenditure as capital in nature - the expenditure incurred was towards shifting existing plant, machinery equipments, records, etc. - The incurring of expenditure did not result in any benefit of enduring nature to the assessee – Thus, the expenditure incurred is revenue expenditure and as such is allowable. Relief on account of Computation of book profit by AO u/s 115JB(2)(vii)of the Act – Held that:- The period for which the assessee becomes entitled for deduction under the aforesaid provision commences from the assessment year in which it becomes a sick industrial company and ends in the assessment year during which the net worth become ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the provisions of section 115JB(2)(vii) are applicable to the facts of the case. 4. The Commissioner of Income-tax (Appeals) ought to have appreciated the fact that the net worth of the company for the assessment year 2007-08 is more than the accumulated losses and the provisions of clause (vii) of Explanation 1 to sub-section (2) of section 115JB is not applicable in this case. 5. Any other ground that may be urged at the time of hearing." Ground Nos. 1 and 5 are general in nature, hence, need no adjudication. 3. In ground No. 2, the Department has challenged the action of the Commissioner of Income-tax (Appeals) in deleting the addition made by the Assessing Officer on account of expenditure claimed towards sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon sale of its land at Kavadiguda, the plant and machinery lying in the premises at Kavadiguda had to be shifted to Balanagar, which is the second location of the assessee's factory. The office files, records, equipment also had to be packed and shifted. It was submitted that the expenditure incurred was completely for the relocation of plant and machinery, shifting of records, equipments, etc. Neither any new plant or machinery was installed nor there was increase in the capacity or capital structure. The Commissioner of Income-tax (Appeals) after considering the submissions of the assessee and the report of the Assessing Officer observed that no new asset has come into existence nor has any value been added to an old asset. He therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) that the expenditure incurred is revenue expenditure and as such is allowable. Thus, the ground raised by the Revenue is dismissed. 8. Ground Nos. 3 and 4 are with regard to relief granted by the Commissioner of Income-tax (Appeals) on account of computation of book profit by the Assessing Officer under section 115JB of the Act. 9. Briefly, the facts are during the assessment proceeding the Assessing Officer noted that the assessee did not declare income under section 115JB of the Act. When the Assessing Officer raised query in this regard the assessee submitted that in view of clause (vii) of Explanation 1 of section 115JB(2) the assessee is not liable to pay any tax under section 115JB. The Assessing Officer did not accept the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B(2) was of the opinion that, deduction is available from the year in which the company first became sick to the year in which its net worth becomes positive for the first time, both years included. The Commissioner of Income-tax (Appeals) further noted that the assessee's net worth became positive for the first time in the financial year 2006-07 relevant to the assessment year under dispute. The Commissioner of Income-tax (Appeals) therefore held that deduction under clause (vii) to Explanation 1 of section 115JB(2) is allowable to the assessee. 11. We have heard rival contentions and perused the materials on record. It is not in dispute that the assessee, a public sector undertaking has been declared as a sick industrial company within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to note that the Assessing Officer while drawing his conclusion has referred to a letter of the Board in letter No. F. N. 2(1750)/DIT(R)/BIFR/ 2006-07/187 dated . . . 04-2008. However, a perusal of the said letter, which is reproduced in the assessment order, reveals the fact that nowhere the Board has made any adverse comment with regard to the assessee's claim of deduction under clause (vii) to Explanation 1 of section 115JB(2) for the impugned assessment year, i.e., the assessment year 2007-08. In the aforesaid view of the matter, we uphold the order of the Commissioner of Income-tax (Appeals) on this issue. The grounds raised by the Department are dismissed. 12. In the result, the appeal filed by the Department is dismissed. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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