9911796707
TMI Blog2014 (2) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... e (DR), was that the said amount stands assessed de hors and without regard to the details of the various loans comprised in the one-time settlement, and for which the ld. Authorized Representative (AR), the assessee's counsel, would advert our attention to pgs.7, 80 and 101 of the assessee's paper-book (PB). Of the nine loans that stood waived, bearing a total liability of Rs.44.66 crores, i.e., including interest and liquidated damages, only two loans were for working capital purposes, while the balance seven were term loans for acquisition of capital assets. In fact, of the two, one of the working capital loans, outstood only at an amount of Rs.0.24 lacs as on 01.04.2002, so that in effect there was only one working capital loan, granted on 29.12.1998 for Rs.840 lacs, in the loans waived. 3. We have heard the parties, and perused the material on record. The Revenue, it is claimed, has proceeded on the basis that none of the loans waived by Industrial Development Bank of India (IDBI) are for acquiring capital assets, while the facts on record reveal otherwise. As we discern, the Revenue cannot be said to be oblivious of the fact that the loans that stood partly waived off by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand, is due to it no longer representing a liability, so that the corresponding capital becomes the assessee's own capital. That is, there is a change in character on waiver. The Revenue has, thus, in proceeding in the manner it has, acted contrary not only to the facts borne out by material on record, but also to the law as explained by the hon'ble jurisdictional high court. The matter would, per force the obtaining facts, have to be restored back to the file of the assessing authority for an adjudication in accordance with the law after allowing the assessee a reasonable opportunity to present its case. The assessee shall be at liberty to plead and substantiate its case on all aspects of the matter. We decide accordingly. 4. The second issue concerns the disallowance u/s.14A. The assessee's case before us, as before the ld. CIT(A), was that no disallowance toward interest shall arise as the investment in shares was made in the f.y. 1994-95, whereat the assessee had sufficient capital. Secondly, the working of the average investment for the purpose of rule 8D, which may apply, is wrongly made, and toward which the assessee has moved the rectification application. The Revenue's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant. This matter shall also, therefore, be adjudicated by the A.O., i.e., along with the assessee's first ground before us and, accordingly, stands remitted to him for the purpose. We decide accordingly. 8. The next ground is in respect of loss on fire, disallowed as capital expenditure. The said loss, on verification of details, was found to be on account of capital work-in- progress (Rs.48.40 lacs); WDV of plant and machinery (Rs.19.50 lacs), besides on sale of a structure (Rs.149.43 lacs), arising on the sale of structure to its sister concern, M/s. Harsh EOU Estates Pvt. Ltd. The same was disallowed as being capital in nature. The ld. CIT(A) confirmed the loss, holding as under: "6.3 I have gone through the assessment order, perused the submissions made by the appellant and also discussed the case with the A.R. of the appellant. During appellate proceedings, the appellant was asked to furnish the details of insurance claim received from Insurance company along with inspection report detailing the assets destroyed and its valuation. In response, the assessee has furnished copy of Survey report which is merely a draft being unsigned. No details from the Insurance company re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's stand of the impugned loss on fire as being not on capital account. Simply put, the capital asset/s is insured against a defined loss, and on the same being sustained, compensated against. The same, rather, being only moneys payable, as defined under Explanation to section 32(iii), would go to reduce the written down value (WDV) of the relevant block of assets u/s.43(6)(c). 9.3 Further, the assessee also claims to have incurred expenditure toward restoring the assets to their normative state, so that the same is in the nature of repairs. It is, firstly, not clear as to if the impugned loss contains such expenditure. Further, if and to the extent so, so that the assessee has incurred expenditure in restoring the asset/s destroyed to its normative working condition, the said expenditure, as reduced by the insurance claim received/receivable in its respect, would be a revenue expenditure arising in the normal course of business, though on account of an abnormal event of a fire. The WDV (of the relevant block of assets) would stand to be increased only where and to the extent there is an up-gradation on account of the expenditure incurred beyond the previously assessed standar ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
