TMI Blog2017 (4) TMI 1290X X X X Extracts X X X X X X X X Extracts X X X X ..... that:- This issue in question was covered in favour of the assessee by the decision in the case of Alembic Ltd [2016 (7) TMI 1239 - GUJARAT HIGH COURT] wherein the issue in question that the assessee is eligible for computation of deduction u/s 80IA(4) on the rates charged by it at selling price is no more res integra. - Decided in favour of assessee Expenditure on dies and tools - revenue or capital - Held that:- We noticed that in the business of manufacturing aluminum there is a requirement of using dies of different sizes. We further noticed that the similar issue was raised in the Department proceedings u/s. 263 for assessment year 1996-97 which was dropped and for the assessment year 1997-98 the ld. CIT(A) had deleted the similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequently the case was selected under scheduling by issuing of a notice under section 143(2) of the act on 19th August 2010. During the course of assessment proceedings the assessing officer observed that tools and spares to machineries are part of machineries. He also noticed that these items cannot become obsolete after use. Therefore, the assessing officer disallowed the claim of the asssessee by considering the expenditure of ₹ 19,72,210/- as capital expenditure in respect of spares to machinery after allowing depreciation. 4. Aggrieved against the order of the assessing officer on this issue, the assesse preferred appeal before the ld. ld. CIT(A). The ld. CIT(A) had restricted the disallowance to the amount of ₹ 13,49,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture. Assessing Officer is directed to modify the addition made accordingly. 5. During the course of appellate proceedings, ld. counsel contended that these are the parts/spares and not a capital items. On the other hand, the ld. Departmental representative supported the order of the ld. CIT(A). 6. After hearing both the sides and perusal of material on record, we have gone through the details pertaining to the specific nature of machine parts as per available on record. We could not find any concrete specification indicating that all these parts/spares are not a capital items. We find that the ld. CIT(A) has provided complete analysis of functioning of these items and he has restricted the addition to the amount of ₹ 13,49 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Gujarat State Electricity Board and other distributing companies from its captive power plant. Against the order of the Tribunal, the Revenue preferred the appeal before the Hon ble Gujarat High Court and the above question of law was framed. The Hon ble Gujarat High Court while holding in favour of assessee, relied on a host of judgments including ACIT, Bharuch Circle, Bharuch vs. Pragati Glass Works Pvt Ltd decided on 25.09.2012 and CIT vs. Shah Alloys Ltd, decided on 22.11.2011 in Tax Appeal No.2092 of 2010. The Hon ble Gujarat High Court further relied on the judgment of Calcutta High Court in the case of CIT vs. Kanoria Chemicals Industreis Ltd, [2013] 35 taxmann.com 566 (Calcutta), wherein the Court has held as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computation of deduction u/s 80IA(4) on the rates charged by it at selling price is no more res integra. Respectfully following the Hon ble Gujarat High Court judgment in assessee s own case (supra), this ground of the assessee is allowed. 8. We have already decided the similar matter in favour of assessee in the A.Y.2008-09 in the case of Banco Aluminium Ltd.. In view of the above stated facts and legal findings, respectfully following the Hon ble Gujarat High Court in the case of Alembic Ltd. as supra we allow this ground of the assessee . 9. The grounds number 3 to 4 are connected to the ground number 2 as adjudicated above and grounds of appeal 5 to 6 are of general nature. 10. In the result, the appeal of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... life of dies tools under consideration was very short. Appellant had all along claimed consumption of dies as revenue expenditure and there was no major change in the cost of dies tools as a proportion of turnover in the year under appeal vis-a-vis preceding year, where no such disallowance was made in the assessment. As pointed out by appellant, proceedings u/s. 263 on this issue were dropped by CIT for A.Y. 1996-97 and disallowance on this issue in A.Y.1997-98, made by the A.O. was cancelled by CIT(Appeals). Thereafter, appellant's treatment of consumption of dies tools as revenue expenditure has been accepted by the Revenue in succeeding assessment years. Considering the fact that dies tools were of consumable nature due to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
