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Commissioner of Income Tax, Kolkata-III, Kolkata Versus M/s. Britannia Industries Ltd.

2015 (6) TMI 39 - CALCUTTA HIGH COURT

Expenditure on development of machineries - revenue v/s capital - ITAT allowed the claim as revenue expenditure - Held that:- The sale of spare parts were not possible in the market since the assessee company did not want the technology information to its competitors. It is submitted that the A. O. has not disputed the expenses being incurred. He has made the disallowance merely because the details of spare parts used back in the business has not been furnished before him. It is submitted that s .....

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zed dealer of foreign exchange, which is the bank in this case, in order to obtain protection from fluctuation of foreign exchange rates is a revenue expenditure and the view taken by the learned Tribunal is correct. - Decided against revenue. - ITA No. 440 of 2006 - Dated:- 24-4-2015 - Girish Chandra Gupta And Arindam Sinha,JJ. For the Appellant : Mr M P Agarwal, Adv. For the Respondent : Mr B K Murarka, Adv. and Ms Sutapa Roychowdhury, Adv. ORDER The Court: The appeal is directed against a .....

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either used for the business of the assessee nor sold? II. Whether, on the facts and circumstances of the case, the Income Tax Appellate Tribunal has erred in failing to adjudicate upon the question of allowance of provision of ₹ 21,70,93,280/- for advertisement under the erroneous impression that it was covered by the remand report submitted by the Assessing Officer? III. Whether, on the facts and circumstances of the case, the Income Tax Appellate Tribunal has erred in allowing bank char .....

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sessee found that the technology used had already become obsolete. Therefore, the machines were not put to use of manufacturing purposes. The assessee decided not to sell the machine as a scrap because doing so might enable the competitors to know technical knowhow developed by the assessee. Therefore, they decided to use the parts of the machines so developed by way of spare parts in future. This explanation was not acceptable to the assessing officer. He was of the opinion that the claim was n .....

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siness activities of the assessee is also the user of the machineries for the business activities of the assessee did not furnish any details to show what are the spare parts used in the possible way in the business of the assessee, what is the value of such spare parts and what is the actual amount of infructuous capital assets." In an appeal preferred by the assessee, the CIT (Appeals) was, however, of the opinion that the expenses were allowable under section 37. The following reasons we .....

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the business has not been furnished before him. It is submitted that separate charges for the value of these parts has not been made in the accounts and therefore, the original expense is allowable in full as per decision cited above. I have duly considered the submissions made. It is not the claim of the A.O. that the expenses have been doubtfully accounted for or that the expenses have not been incurred." The learned Tribunal has upheld that order of the CIT(Appeals). The question basical .....

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lant/revenue has not pressed this question before us since it is only a question of remand. Therefore, the question need not be answered. The assessing officer is directed to expedite the process considering that the matter has already been delayed. So far as the third question is concerned, Mr. Agarwal, learned advocate for the appellant/revenue submitted that the expenditure should be added to the cost of acquisition of the capital assets under section 43A. He in support of his submission reli .....

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ucted from, the actual cost of the asset or the amount of expenditure of a capital nature or, as the case may be, the cost of acquisition of the capital asset under this section shall, in respect of so much of the sum specified in the contract as is available for discharging the liability aforesaid, be computed with reference to the rate of exchange specified therein." Mr. Agarwal in support of his submission has also relied on a judgement of the Apex Court in the case of Assistant Commissi .....

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s not on account of a guarantee commission. Therefore, the judgement of Andhra Pradesh High Court has no manner of application. The revenue preferred an appeal against the aforesaid judgement of Andhra Pradesh High Court but the SLP was dismissed. We have heard rival contentions and are of the opinion that Explanation 3 relied on by Mr. Agarwal, quoted above, contemplates only the addition or deduction to the actual cost of the asset. The Explanation does not touch the point as regards the fee p .....

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yment of a loan of US $ 10 million. The assessee company took a foreign currency loan of US$ 10 million in the year 1995. The loan was utilized for incurring capital expenditure for acquisition of plant and machinery. The loan was to be repaid in two installments with interest. In order to ensure availability of foreign currency at a pre-determined rate the assessee enter into a forward contract to the bank to obtain the foreign currency on a specific date at a specified rate. For obtaining this .....

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eceived in respect of liabilities relating to the acquisition of fixed assets should be debited/credited to the asset in respect of which liability was incurred. However, roll over charges not relating to fixed assets should be charged to the profit and loss account." We are, in this case, not concerned with the difference arising on account of change in foreign exchange rates. We are, on the contrary, concerned with consideration payable/paid to the authorized dealer for obtaining protecti .....

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