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M/s Premier Tobacco Packers Pvt Ltd Versus Assistant Commissioner of Income Tax Company Circle-V (2) Chennai

Expenditure incurred on oil solvent extraction plant - whether as the production had not commenced and therefore, it is in the nature of capital expenditure - revenue v/s capital expenditure - Held that:- As evident from the balance sheet of the assessee that the assessee had produced semi finished crude solanesol oil of 11,660 Kgs of low purity. Therefore, on completion of the balance process these semi finished goods will be converted into finished goods and available as stock in trade to the .....

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e will be superficially inflated.

Therefore, the Revenue has erred in treating the semi finished stock of the assessee as capital expenditure. Moreover from the order of the Ld. Assessing Officer it appears that he was under impression that the expenditure is incurred towards "Solvent Extraction Plant" when the fact remains that these expenditure was incurred for the production of semi finished goods viz., crude solanesol oil. Hence we hereby direct the Ld. Assessing Officer to allow .....

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Tax(A)-V, Chennai dated 11.12.2013 in ITA No.611/13-14/A-V passed under Sec.143(3) read with Sec.147 & Sec. 250 of the Act. 2. The Assessee has raised ten elaborate grounds in its appeal; however the crux of the issue is that:- (i) The Ld. CIT (A) had erred in confirming the re-assessment framed u/s.143(3) r.w.s 147 of the Act. (ii) The Ld. CIT (A) had erred in confirming the order of the ld. Assessing Officer in disallowing a sum of ₹ 18,84,633/- being expenditure incurred by the asse .....

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was reopened by issuance of notice U/s.148 of the Act on 29.03.2010 and finally, the assessment was completed on 24.12.2010 wherein the Ld. Assessing Officer disallowed the above stated expenditure. During the course of assessment proceedings, it was observed by the Ld. A.O that the assessee had incurred expenditure on its "Oil Solvent Extraction Plant" amounting to ₹ 18,84,633/-. The Ld. Assessing Officer further observed from the annual report of the company that the company ha .....

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expenditure is of capital in nature because the entire operation of the assessee with respect to the above product was only trial run and commercial production had not yet begun. On appeal the Ld. CIT (A) confirmed the order of the Ld. Assessing Officer agreeing with view of the Ld. A.O. The Ld. CIT (A) further observed from the remand report that the assessee had not claimed depreciation on the plant producing the crude solanesol oil which confirmed the finding of the Ld. Assessing Officer tha .....

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