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TMI Blog2015 (3) TMI 1393X X X X Extracts X X X X X X X X Extracts X X X X ..... e has raised elaborate grounds in these two appeals and they are concised herein below assessments year-wise as under:- For A.Y. 2003-04 I.T.A. No. 1609/2014 1. The Ld.CIT(A) had erred in confirming the disallowance of miscellaneous income arising out of scrap sale as deduction from pre-production capital expenditure of Rs. 22,78,191/-. For A.Y. 2007-08 I.T.A. No. 1610/2014 1. The Ld. CIT(A) had erred in confirming the disallowance of prior period expenses amounting to Rs. 12,38,489/-. 2. The Ld. CIT(A) had erred in disallowing the expenditure amounting to Rs. 4,08,22,374/- incurred towards pre-payment premium and interest compensate. 3. The brief facts of the case are that the assessee-company is engaged in the business of ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Apex Court would not be applicable to the case of the assessee, because in that case interest earned from borrowed funds was held to be assessable as income and therefore, the facts are not identical. The Ld. A.R. further submitted that the assessee has sold certain scrap which was generated while relocating and erection of the machinery and therefore, such income has to be reduced from the expenditure incurred for erecting the machinery. The Ld. D.R on the other hand relied on the orders of the Revenue and pleaded that the same may be sustained. 4.5. We have heard both the parties and carefully perused the materials available on record. On examining the facts of the case, we do not find the decision of the Hon'ble Apex Court cited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 86,407/-, and tank calibration arrears for the same period amounting to Rs. 9,58,800/- was paid during the year. Further, an amount of Rs. 93,282/- was denied to be paid being the claim on Government subsidy for earlier years, which was treated as income. Thus, the Ld. Assessing Officer disallowed the aggregate of the above said amount of Rs. 12,38,489/- as allowable expenditure for the relevant assessment year. On appeal, the Ld. CIT (A) endorsed the view of the Ld. Assessing Officer and confirmed Ld. A.O.'s order. 5.2 Before us, the Ld. A.R. submitted that the assessee had paid Rs. 10 lakhs to Indian Institute of Technology (IIT) to conduct R&D activity in order to benefit the assessee's revenue; however during the relevant assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the course of assessment proceedings, Ld. Assessing Officer observed that the assessee had claimed an expenditure of Rs. 4,08,22,374/- towards interest recompense under the head "extraordinary expenditure". It was explained that this amount is paid to the financial institutions from whom the assessee had borrowed funds as compensation for the sacrifices made by the financial institution under restructuring package. Precisely recompense fee is nothing but bank charges in order to compensate the banks for the loss of earnings on account of interest. From these facts, the Ld. Assessing Officer opined that the assessee is deriving benefit on a continuous basis year after year by paying lesser interest to financial institutions. Thus t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CDR expenses to tune of Rs. 2.57 crore have been rightly held by both the Ld. CIT (A) and Tribunal as revenue in nature. For waiver of loan, payment has been made to financial consultants. Same was for purpose of business and same was held to be allowable U/s. 37(1). Having held the said amount to be revenue in nature applying the decision of the Supreme Court in the case of Madras Industrial Investment Corporation Ltd., when amount has been spread over a period of six years, no error is committed by both authorities. Once expenditure is held to be revenue in nature incurred wholly and exclusively for purpose of business, it can be allowed in its entirety in year in which it is incurred. When spreading is done for over a period for six ..... X X X X Extracts X X X X X X X X Extracts X X X X
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