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M/s Budge Budge Company Ltd. Versus The Commissioner of Income Tax

Depreciation claim denied - cession of work/suspension of work in the factory premises of the petitioner - Held that:- Applying the decisions of M/s. Norplex Oak India [2011 (3) TMI 620 - CALCUTTA HIGH COURT] to the facts in this case wherein held that as the assessee was ready for doing his business. But for the adverse law and order situation, he could not actually run the factory although all the machineries were ready for use and the valuation of such machinery also depreciated notwithstandi .....

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ation in favour of the assessee - the question in the present case too has to be and is answered in the affirmative - Decided against the revenue.

Expenditure on filling up the pond, leveling of the low land - revenue v/s capital expenditure - Held that:- In this case the expenditure was made for bringing into existence an advantage for the enduring benefit of the business of the assessee, and therefore, the same was capital in nature. In the circumstances the view taken by the learne .....

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ibunal dismissed both grounds of appeal of the assessee in upholding the order of the Assessing Officer as confirmed by the CIT(A). The appeal before us was admitted on the following questions:- "i) Whether on the facts and in the circumstances of the case in spite of the relevant facts and evidences being on record the Hon'ble Tribunal erred in law in coming to a finding that the machinery was not used for the purpose of business and, therefore, the claim of depreciation under Section .....

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ve user but passive user, the confirmation of the orders of the Assessing Officer as well as the Commissioner of Income Tax (Appeals) by the Tribunal being the last fact finding authority by ignoring relevant facts and on the contrary taking irrelevant facts into consideration is perverse? ii) Whether on the facts and in the circumstances of the case the Hon'ble Tribunal erred in law in not granting the petitioner's claim of ₹ 15.69 lacs incurred for filling up the pond, leveling o .....

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till it was lifted in a phased manner on and from 26th December, 1994. Mr. Sen, learned Advocate appearing on behalf of the assessee/appellant relied on two decisions of this High Court in the cases of Hindusthan Gas & Industries Ltd. Vs. CIT reported in (1995) 79 Taxman -Tax Reports 151 and CIT Vs. M/s. Norplex Oak India in ITA 17 of 2001 disposed of by judgment dated 31st March, 2011. He submitted that in Hindusthan Gas & Industries Ltd. this court in considering the claim of an asses .....

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he learned Tribunal found the decision of this court in the case of CIT Vs. Oriental Coal Co. Ltd. reported in (1994) 206 ITR 682 was squarely applicable to this case in rejecting the contention of the appellant that there was passive use of the plant and machinery of the mills for depreciation to be allowed in the lock-out period. In our view the decisions relied upon by Mr. Sen support his contention. In Hindusthan Gas & Industries Ltd. this court in allowing the claim of depreciation of d .....

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the business. The fact that the lockout was not in the assessee's own business does not make any difference to the position. The assessee had leased out a generating set in course of its business. It could not get back the set even after the lease period because of the lockout in the lessee's factory. This is a happening which was incidental to the assessee's business of leasing out generating sets. The assessee itself was not actually running the generating sets. The assessee's .....

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n in the Kashmir Valley, this court had said:- "In the case before us, the assessee was ready for doing his business. But for the adverse law and order situation, he could not actually run the factory although all the machineries were ready for use and the valuation of such machinery also depreciated notwithstanding its non-user. Notwithstanding such adverse law and order situation, the assessee did not abandon its business but suffered loss for such a state of affairs prevailing in that St .....

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ate that the suspension of work was actuated by any malice. The plant was lying ready for use. Applying the aforesaid decisions to the facts in this case the first question has to be and is answered in the affirmative and against the revenue. The second question is with regard to disallowance of the sum of ₹ 15.69 lakhs as revenue expenditure. The appellant/assessee had claimed such expenditure as of revenue nature on the ground that by filling up the pond the assessee did not acquire/crea .....

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assessee that by filling up the pond, no new asset has been created by the assessee, rather it was yielding rental income for the assessee and hence the expenditure incurred on such filling up should be treated as revenue expenditure. In our considered view, the opinion expressed by the revenue does not call for any interference in the facts and circumstances of the case. After filling up the pond, it has become land and it automatically raises the value of such land. In this view of the matter, .....

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Court with regard to the relevant provisions in the Act of 1922, which is as follows:- "In order to claim deduction under s. 10(2)(xv) of the Act, an assessee has to show that the expenditure in question, (i) was not an allowance of the nature described in any of the cls. (i) to (xiv) of s. 10(2), (ii) was not in the nature of a capital expenditure or personal expenses of the assessee, and (iii) had been laid out or expended wholly and exclusively for the purposes of his business, professio .....

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