TMI Blog1989 (8) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... nal was right in holding that only a part of the expenses during construction, namely, 1,65,707 out of Rs. 2,79,847, was eligible for capitalisation and formed part of the actual cost of the assets eligible for depreciation, development rebate, etc., and that the full amount as allowed by the Appellate Assistant Commissioner was not available for capitalisation ? (2) Whether, on the facts and in the circumstances of the case, and on a true interpretation of the provisions and the scope of the relevant rule and the retrospective amendment made to section 80J by the Finance (No. 2) Act, 1980, the Tribunal was right in restoring the assessment to the Income-tax Officer for recomputing the capital in accordance with the provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng expenditure and car-running expenditure. In the third period, he excluded one-fourth of the salary to special officers, travelling expenditure and car-running expenditure and amount paid to Technic Chemia. He also excluded in full the expenditure on printing and stationery, postage and bank charges. On appeal by the assessee, the Appellate Assistant Commissioner considered that, except for the amount of Rs. 10,000 paid, to CFTRI and Rs. 20,000 to I. S. Rao, Technic Chemia, all other expenses were incurred on the site or directly for the project and, therefore, he directed the Income-tax Officer to capitalise them as part of the actual cost and allow development rebate and depreciation, etc., on it. The Department went up in further a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed to be capitalised. He has excluded the salary up to two months before the first period, namely, June 30, 1972, from consideration. In this period, the expenditure incurred, namely, the salary to the special officers, travelling and car expenditure, the Tribunal found, was for the purpose of locating the sites where the distillery could be set up. Even if this amount is to be capitalised, it could only be capitalised with the land which would not be entitled to any depreciation. Therefore, the Tribunal rightly found that the expenditure incurred after the location of the site alone should be taken into account for the purpose of capital cost of the plant and during this period, namely, the period ended June 30, 1972, after consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost. The actual cost of a particular asset is a question of fact. On a consideration of the entire facts, the Tribunal came to the conclusion that only an amount of Rs. 1,65,707 out of Rs. 2,79,847 was eligible for capitalisation and formed part of the actual cost of the assets eligible for depreciation, development rebate, etc. We cannot say that this finding is erroneous or otherwise infirm. Regarding the claim of relief under section 80J, the Tribunal had only directed the Income-tax Officer to recompute the capital in accordance with the provisions of section 80J (1A) of the Act which he has to do in the light of the decision reported in Lohia Machines Ltd. v. Union of India [1985] 152 ITR 308 (SC). The Income-tax Officer will work o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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