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TMI Blog2017 (2) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessing authority and upheld the lower appellate proceedings. Shri Soparkar states very fairly at the outset itself that the assessee does not wish to press for this legal ground. We reject the same as not pressed at this stage. 3. The assessee's latter substantive ground challenges correctness of both the lower authorities' action declining its deduction claim of Rs. 37,65,479/- raised u/s.80IB of the Act. There is no issue that it has already been held entitled for the very relief in preceding and succeeding assessment years. The Assessing Officer reopened a regular assessment framed in the instant case solely for the reason that its cost of plant and machinery used in business was certified to be of Rs. 92,92,711/- (WDV) as per form 10CCB/3CD. He thus sought to treat it as a non small scale industrial undertaking on the ground that its corresponding investments exceeded threshold limit of Rs. 60lacs. He proceeded on the same reasoning in the impugned reassessment as well resulting in the disallowance in question. 4. The CIT(A) upholds Assessing Officer's action as follows: "4.2 have carefully considered the rival submissions. I have also perused the submissions made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for deduction u/s. 80IB, one has to fulfill conditions laid down in sub-section 3 to 11, 11(a) and 11(b) of section 80IB. The appellant does not fulfill the conditions laid down in sub-section 3 to section 80IB and accordingly, it is not eligible to claim deduction u/s.80IB. In view of above, disallowance on deduction u/s.80IB of Rs. 37,65,479/- is confirmed. This ground of appeal is dismissed." 5. Heard both sides. The sole dispute between the parties is as to whether or not the assessee is a small industrial undertaking u/s.80IB(3) of the Act in view of the fact that cost of its plant and machinery for the year under consideration comes to Rs. 92,92,711/- in excess of Rs. 60lacs. We find from the paper book that small scale industrial scheme comprised in pages 23 to 28 prescribe such an investment limit to be of Rs. 60lacs in the year 1991 as revised to Rs. 300lacs in December 1997. We also notice at page 14 of the paper book that assessee's concern M/s. Nandeshwari Packaging manufacturing HDPE / P.P. bags at Vatva has already been treated as a small scale industrial undertaking by the District Industries Centre, Ahmedabad Authority. Learned Departmental Representative fails to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alongwith PAN details. He himself accepts the said loan transaction to be a genuine one. We thus conclude that the CIT(A) has rightly deleted the impugned addition of Rs. 25lacs in the nature of unexplained unsecured loans. The Revenue's instant latter substantive ground as well as its main appeal ITA No.1380/Ahd/2011 is declined. 8. We now proceed to deal with assessee's remaining grounds in its cross objection. Its first substantive ground pleads that both the lower authorities have erred in disallowing 10% of miscellaneous expenses coming to Rs. 13,705/-. Learned counsel state herein as well that the CIT(A) has followed his action as in the preceding assessment year to arrive at the impugned disallowance @10% in identical set of circumstances. The same is also stated to have become final in the earlier assessment year. We thus find no reason to adopt a different approach in the impugned assessment year. This ground is accordingly rejected. 9. The assessee's last substantive ground assails correctness of both the lower authorities' action in disallowing deduction claim of Rs. 38,50,685/- raised u/s.80IB of the Act. There is no dispute that ld. CIT(A) has upheld the impugned di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue as per invoice Total price / value including Excises Duty and VAT 1 Gujarat Machinery Grooved Sleeve 191000 217075 2 Gujarat Machinery Screw & Barrel 311000 373544 3 Lohia Starlinger Ltd. Cheese Winder 1840000 2147435 4 Met Lee Engineers M.S. Pipes 360000 420589 2702000 From the above it is clear out of four bills produced three bills are in the nature of plant and machinery. Even if it is a spare part it is embedded to a machinery. Regarding M.S. Pipes they are consumable nature which can be stored for utilization in manufacturing process. Thus, after excluding M.S. Pipes from the above list the other three items are utilized in the manufacturing process where in the part are spare or plant or machinery will give longevity more than one year and with the upkeep and maintenances of the said items of spare will generate and injuring benefit to the assessee in terms of its utilization in the business thus the cost of machinery claimed under consumption of stores/spares amounting to " 27,02,2000/-are to be capitalized and the assessee is entitled to depreciation on the said assets. The assessee has already c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the machinery will continue and prolong the existence of the machinery. The Ld. Assessing Officer has relied on the judgement of Hon'ble Supreme Court in case of Empire Jute Corporation Ltd 124ITR1. (c) The contentions raised by the Ld. Assessing Officer are wholly illogical, unjustifiable and improper to the facts and circumstances of the appellant's case. The appellant incurred Rs. 72,23,025/- towards consumption of stores and spares. The Ld. Assessing officer vide para 5 held purchase of M.S.Pipes Rs. 3,60,000/- to be revenue expenditure. However, while considering disallowance, the same were treated as capital expenditure. (d) Even otherwise, the said stores and spares were consumed for smooth functioning of plant & machinery in ordinary course of business. Neither it has resulted into being a new plant & machinery, nor has its consumption resulted into providing long term enduring benefit to the appellant. These are the normal repairs and replacement of the parts. These are revenue expenditure. The said expenses were incurred in ordinary course of business. In the circumstances, may we humbly request Your Honour to delete the said disallowance of Rs. 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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