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M/s Inayati Footwear Ltd. Versus DCIT–6, Kanpur

2015 (9) TMI 746 - ITAT LUCKNOW

Rectification of mistake - assessee had claimed depreciation on Tools, Moulds with Shoe plates, Shoe Lasts @ 30% while depreciation should be allowed @ 15% - Held that:- When the A.O. issued show cause notice to the assessee in this regard, it was submitted by the assessee that the assessee wrongly claimed depreciation on this item but in fact, it is revenue expenditure. The A.O. did not find any merit in this contention and he made disallowance of ₹ 475,063/- being depreciation excess cla .....

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assessee has itself treated this expenditure as capital expenditure and claimed depreciation thereon @ 30%. The correct rate of depreciation can be an issue of apparent mistake and it can be decided in the proceedings u/s 154 but whether the expenditure is capital or revenue is a highly debatable issue and such claim cannot be entertained and decided in 154 proceedings. Therefore, we find no merit in the contentions of the assessee. - Decided against assessee.

Deduction u/s 80IB in re .....

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[2001 (8) TMI 13 - SUPREME Court] and assessee could not show as to what is the infirmity in the order of CIT (A) in following these two judgments or how these judgments are not supporting the case of the revenue. Now, we examine the Clause (v) of the Subsidy Sanction letter stating that if the unit of the assessee becomes non operational within two years, the assessee has to refund the subsidy. Now we are in the year 2015 and this is not the case of the assessee that the assessee has refunded t .....

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als of the assessee for A.Y. 2008 - 09, out of which, one appeal is arising out of proceedings u/s 154 and the second appeal is arising out of assessment proceedings u/s 143 (3). The third appeal is also filed by the assessee for A.Y. 2009 - 10 and this appeal is arising out of assessment proceedings u/s 143 (3). 2. All these three appeals were heard together and are being disposed of by this common order for the sake of convenience. 3. First, we take up the appeal of the assessee for A.Y. 2008 .....

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ing the disallowance of ₹ 4,75,063/- out of depreciation claimed by the assessee. 3. Because the CIT (Appeals) has failed to appreciate that depreciation on moulds with shoe plates was wrongly claimed @30% in the depreciation chart on the total expenditure of ₹ 23,47,550/- as against the entire expenditure being of revenue nature itself should ought to have been allowed as allowable business expenditure. 4. Because the CIT (Appeals) has failed to appreciate and has erred in law in no .....

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amp; H) b) CIT vs. Sunbeam Auto Ltd., ITA No. 351/2012 dated 30.05.2012 (Delhi) Copy on Pages 11 to 13 of the Paper Book. c) CIT vs. Mahalakshmi Textile Mills, 60 ITR 710 (SC) 5. Learned DR of the revenue supported the orders of the lower authorities. 6. We have considered the rival submissions. We find that in the order passed by the A.O. u/s 154 on 15.09.2011, it is noted by the A.O. that the assessment was completed u/s 143 (3) on 03.12.2010. He also observed that I mistake apparent from reco .....

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. Learned CIT (A) upheld the assessment order and the assessee is in further appeal before us. Before us, this is not the claim of the assessee that depreciation on Tools, Moulds with Shoe plates & Shoe Lasts is allowable @ 30%. The claim is this that this expense is revenue expenditure. In our considered opinion, whether expenditure is capital expenditure or revenue expenditure is not an issue of apparent mistake, which can be decided u/s 154. This is admitted position that the assessee has .....

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by the learned AR of the assessee, we find that the same are not applicable in the facts of the present case. The first judgment is of Hon ble Punjab & Haryana High Court rendered in the case of CIT vs. Malerkotla Steels and Alloys P. Ltd. (Supra). In that case, the expenditure in dispute was on account of replacement of Moulds. In the present case, the expenses is not for replacement of moulds because if the existing moulds are being replaced, there will be income on account of sale of scra .....

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at case, the tribunal noted as per Para 5 of that judgment that the moulds and Dies did not have longevity and were replaced frequently. Under these facts, it was held that the expenditure on Moulds and Dies was revenue expenditure. In the present case, we have already noted that the assessee has not shown that any such income on account of sale or closing stock of scrap was accounted for by the assessee. It means, the expenditure in the present case is not for replacement of moulds. Hence, this .....

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of the taxable income although under different section. Hence, as per this judgment, the tribunal can and should consider if the assessee claims that the expenditure is allowable under some different section. But this judgment is not in course of proceedings u/s 154 and therefore, not applicable in the present case. Moreover, we have examined the claim of the assessee that the expenditure is revenue expenditure in the light of two judgments and found that in the present case, the assessee could .....

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I. T. Act in respect of Duty Draw Back income of ₹ 153,25,958/-. 13. Both sides agreed that this issue is covered against the assessee by the judgment of Hon'ble Apex Court rendered in the case of Liberty India, 317 ITR 218. Respectfully following this judgment, we decline to interfere in the order of CIT (A) on this issue. These grounds are rejected. 14. As per Ground No. 5, the grievance of the assessee is about decision of CIT (A) to the effect that subsidy of ₹ 21,53,803/- i .....

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al within two years, the assessee has to refund the subsidy and therefore, the subsidy is conditional. He also submitted that for this reason, it cannot be said that it is part of actual cost. Learned DR of the revenue supported the orders of the lower authorities. 16. We have considered the rival submissions. We find that learned CIT has followed two judgments of Hon ble Apex Court rendered in the case of Sahney Steel, 228 ITR 253 and in the case of Raja ram Maize Products, 251 ITR 427 and lear .....

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lause and hence, in our opinion, this clause has no relevance in the facts of the present case. Hence, on this issue also, we do not find any reason to interfere in the order of CIT (A). 17. In the result, this appeal of the assessee is also dismissed. 18. Not, we take up the appeal of the assessee for A.Y. 2009 - 10 arising out of proceedings u/s 143 (3). 19. As per Grounds No. 1 to 2, the only one grievance of the assessee is about not allowing deduction u/s 80IB of the I. T. Act in respect of .....

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