TMI Blog2001 (7) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... the plant?" The assessment year involved is 1974-75 and the accounting period is the year ended June 30, 1973. The assessee-company was incorporated to conduct the business of manufacturing glass lined equipment. During the previous year under consideration, the company carried out only fabrication of the factory and it capitalised expenditure to the tune of Rs.10,25,050. It appears that this sum also included the amount of expenditure which was incurred in the preceding year, viz., the year ended June 30, 1972, and, therefore, for the year under consideration a sum of Rs.9,89,924 was sought to be capitalised as being pre-commencement expenditure. The Income-tax Officer, disallowed the sum of Rs.3,45,563 holding that all the expenses can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich no commercial man would misunderstand and for this purpose the normal rules of accountancy prevailing in commerce and industry had to be borne in mind. It was submitted that all expenditure which was incurred for construction and erection of a plant, viz., at the pre-commencement stage, had to be capitalised and added to the cost of the fixed assets which would come into existence as a result of such expenditure. It was submitted that the Tribunal had failed to take into consideration the aforesaid salutary principles and hence the order of the Tribunal should not be permitted to hold the field. In support of the aforesaid submission, the following decisions of various High Courts were relied upon: (1) CIT v. Polychem Ltd. [1975] 98 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing at page 49 of the paper book and it was pointed out that the assessee had on its own described six items of expenditure totalling Rs.38,349 which according to the assessee are not relevant to the setting up of the plant, that this part of the affidavit had been accepted by the Commissioner of Income-tax (Appeals), and the balance portion of the affidavit had been ignored. Our attention was drawn to para. 5 of the affidavit which reads as under: "(5) That all the remaining expenditure is incurred or made for establishment set up and maintained for setting up of the plant at Umreth." It was submitted that this part of the affidavit having remained uncontroverted, it was not open to the Commissioner of Income-tax (Appeals) or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance was based on evidence even though there was an element of guess work in such estimate as is. bound to be, but that should not detract from the position that, the sum ultimately disallowed was just and proper. According to Mr. Qureshi no legal issue was involved and the findings recorded by the Commissioner of Income-tax (Appeals) which have been confirmed by the Tribunal were based on facts and evidence on record and it was not open to this court to take any other view of the matter on the basis of these findings. It is true, as contended on behalf of the Revenue, that the findings recorded by the Commissioner of Income-tax (Appeals) and the Tribunal are based on facts and evidence on record, but on a close reading of the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge the correctness of the statement made by the deponent in the affidavit. In other words, consequently, the assessee was entitled to assume that the authorities were satisfied with the affidavit as sufficient proof on this point. In the present case, we find that the Commissioner of Income-tax (Appeals) while dealing with the affidavit has conveniently chosen to accept only one part of the statement which was in favour of the Revenue and against the assessee while ignoring the rest of the portion wherein specific averments were made in relation to the balance items of expenditure. In view of the settled legal position, it was not open to either the Commissioner of Income-tax (Appeals) or the Tribunal to ignore a part of the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pute as regards the principle laid down by the Tribunal that the assessee cannot claim benefit twice in relation to the item of depredation, once on revenue account and again by seeking capitalisation of the same. However, from the facts available on record it is not possible to state with certainty that the assessee has in fact claimed double benefit as apprehended by the Tribunal. In fact, learned counsel appearing for both the sides are not in a position to inform or state as to whether in fact the assessee had claimed deduction against its revenue receipt on the one hand and again capitalised the said item for the purpose of claiming depredation and development rebate. In view of these circumstances, in so far as the item as regards dep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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