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TMI Blog2013 (12) TMI 1412X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The Commissioner of Income-tax (Appeals) is not justified in allowing the expenses for shifting of plant and machinery treating the expenditure as revenue in nature. 3. The Commissioner of Income-tax (Appeals) is not justified in holding 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 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r unit including loading and unloading charges, transport charges, etc., was capital in nature. Accordingly, he disallowed the amount of Rs. 1,31,06,000 and added it to the total income. 6. The assessee challenged the disallowance in an appeal preferred before the Commissioner of Income-tax (Appeals). Before the Commissioner of Income-tax (Appeals), the assessee contended that consequent 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 machine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed any comment why he considers the expenditure as capital in nature. From the facts on record, it is clear that 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. Therefore, we fully subscribe to the view of the Commissioner of Income-tax (Appeals) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company became sick industrial company and extends till the year in which the company's net worth becomes positive. It was submitted, the period, as per the said provision, will also include even the first year when the net worth for the first time becomes positive. The Commissioner of Income-tax (Appeals) on examining the provision of clause (vii) of Explanation 1 to section 115JB(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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeded the accumulated losses during the impugned assessment year. Hence, the provision contained in clause (vii) to Explanation 1 of section 115JB is very much applicable to the assessee and as such, the assessee is entitled to claim deduction under the aforesaid provision. In our view the Assessing Officer has not correctly interpreted the provision of the Act. It is further pertinent 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 cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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