9911796707
TMI Blog2016 (7) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... anons of law. 2. The learned Commissioner of Income Tax has seriously erred in holding that, expenses. incurred towards Capacity Builder is Capital in nature. 3. Presumably, the Commissioner & others have assumed the expenditure incurred towards acquisition of Capacity Builder is an item of Plant, Machinery & Building. 4. The CIT ought to have considered the fact that the definition of Capacity Builder is to equip and facilitate the MSPCS to commence their operations in terms of the working model submitted by the Capacity Builder and after completion of two years, the company builder has to install further back-up machineries as well as equip the members of the MSPCS to manufacture and supply all the SNP Food items issued on indivi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llness of the President of the assessee society, the appeal could not be filed in time. Medical certificate is also enclosed alongwih the affidavit. Under these facts, we condone the delay in filing of this appeal. 4. The ld. AR of the assessee reiterated the submissions made before the ld. CIT although rejected by him. 5. The ld. DR of the revenue supported the order of the ld. CIT. 6. We have considered the rival submissions. On page no.5 of the order of the ld. CIT's order para 7(1) of the agreement which defines the responsibility of M/s Christy Fried Gram Industries to establish 137 MSPCs and the duties of the capacity builder are reproduced. Hence, various paras from page no.5 to 7 of the order of the ld.CIT are reproduced herein b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstalled in the MSPCs, the raw materials will be procured by the MSPCs who will start the production of the energy food items themselves. Till 5 years the Capacity builder will continue to be responsible for the viability and quality of the supplies by the MSPCs. For these services, M/s Christy Fried Gram Industries is to be paid a consideration at the rate of Re.1 per kg of food supplied for a period of 5years against the supplies made by the respective MSPCs to ICDS projects as stated in the Agreement. 4. Accordingly, the assessee and MSPC, has debited Rs. 10,84,967/- during the A.Y. 2010-11 which is the first year of Capacity Building as per the agreement with M/s Christy Fried Grain Industries. M/s Christy Fried Gram Industries has p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of preoperative expenses for the MSPC as a production unit. The expenses are thus capital in nature and cannot be allowed as revenue expenditure. The AO is directed to disallow the expenses of Rs. 10,84,967 debited to the P&L account towards consideration to capacity builder since it is not a revenue expenditure. Accordingly, the assessment is enhanced by Rs. 10,84,967/-. 6. In view of the above, the order of the ITO, Ward-1, Nipani passed u/s 143(3) for the AY: 2010-11 on 31-03-2013 is held to be erroneous as well as prejudicial to the interests of the revenue and is therefore, enhanced on the points discussed above. Therefore, the AO is directed to give effect to this order at the earliest". 7. As per para-7(1) of the agre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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