9911796707
TMI Blog2024 (10) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... partment as well as different assessees are directed against different orders passed by the ld. Commissioner of Income Tax (Appeals), Coimbatore-3, Coimbatore, for the assessment years 2017-18, 2018-19 and 2020-21. 2. Since, the issues raised in these appeals are similar based on the same identical facts, with the consent of both the parties, we proceed to hear all the appeals together and pass consolidated order for the sake of convenience. 3. Both the parties have agreed that the appeal of the Revenue in ITA No. 3326/Chny/2019 for AY 2017-18 can be heard as lead case as the facts and circumstances therein covers all the appeals. Therefore, we proceed to take-up the said appeal as lead case. I.T.A. No. 3326/Chny/2019 for AY 2017-18 4. Ground No. 1 consisting of sub-grounds (i) & (ii) raised by the Revenue and the same are reproduced hereunder: i) Whether on the facts and circumstances of the case and in law the ld. CIT(A) is justified in holding that incentive of Rs..27,28,00,467/- given by the Govt to the assessee for exploring new market is a capital receipt, whereas the object of the incentive was to enable the assessee to carry on the business more profitably and hence i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rips under Market Linked Focus Product Scheme hereafter as [MLFPS in short] as exempt. He submits that MLFPS is an incentive scheme under the Ministry of Commerce intended to promote export trade in certain products and markets. The main objective of this scheme is to incentivize export of such products, which have high employment intensity in rural and semi urban areas so as to offset territorial inefficiencies, infrastructure and other associated costs involved in marketing of these products in the international market. He submits that the assessee claimed before the Assessing Officer the MLFPS does not appear in any of the charging sections and it is not an income as per sections 28 and 56 of the Act, along with the decision of Hon'ble High Court of Madras in the case of CIT v. Eastern Seafoods Exports (P) on 20.10.1994 and the orders of ITAT in assessee's own case for the assessment years 2011-12 & 2012- 13. The Assessing Officer, considering the said explanation, held that the income from sale of MLFPS licences are similar to DEPB, duty drawback, etc. are in revenue filed assessable under the head "profits and gains from business. The ld. DR drew our attention to para 7 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Foreign Trade Policy [FTP] for the period 2015-20. The said MEIS, he submits, was launched as an incentive scheme for the export of goods and replaced various export incentive schemes, which gave different types of duty credit scrips including MLFPS. He vehemently argued MEIS intends to incentives exports of goods manufactured in India or produced in India and placed on record the details of MLFPS, submits the eligibility being exporters of selected products to select countries w.e.f. 01.05.2013 and drew our attention to various products of Market Linked Focus Product Scheme [MLFPS] for export made. 11. The ld. CIT- DR submits the scenario of MLFPS is different prior to AY 2017-18 and now the claim is to be considered in terms of the provisions under section 2(24)(xviii) of the Act and argued that the assistance in the form of "subsidy or grant or cash incentive or duty draw back or waiver or concession or reimbursement", by whatever name called, is an income and is to be treated as income with effect from 01.04.2016. MLFPS is also an incentive directly fall under the cash incentive under section 2(24)(xviii) of the Act. He referred to page 10 of the paper book regarding e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 2(24) of the Act and therefore, the incentive given under MFLPS is an income chargeable to tax, prayed to restore the order of the Assessing Officer. 13. The ld. AR Shri T. Banusekar, Advocate submits that the Hon'ble High Court of Bombay decided only the issue of constitutional validity of insertion of sub-clause (xviii) to section 2(24) of the Act. The Hon'ble Court did not lay down any principle about the applicability of the amendment by inserting sub-clause (xviii) of section 2(24) of the Act. He referred to the order of the Tribunal in the case of Hyundai Motor India Ltd. v. ACIT (supra), as relied on by the ld. DR and submits that the Division Bench of ITAT cannot override another Division Bench as it can only distinguish to hold whether it is applicable or not. He referred to the findings of the Tribunal in para 34 and argued that the Coordinate Bench did not distinguish the facts and circumstances of the case to hold why it is not considered. The finding of the Coordinate Bench in stating the facts therein are different from the facts in the case of PCIT v. Nitin Spinners Ltd. in ITA No. 31 of 2019 of Hon'ble High Court of Rajasthan, is also not correct. He refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efficiencies and associated costs involved and to provide exporters a level playing field. He referred to all the items provided in sub-clause (xviii) of section 2(24) of the Act and drew our attention to page 5 and submits that the 'grant' is a sum of money given by the Government or public body for a particular purpose. Further, he referred to page 6 of the paper book and submits the definition of 'subsidy' is a sum of money granted from public funds to help an industry or business to keep the price of a commodity or service low. He referred to page 8 of the paper book and submits that the definition of 'assistance' is that the provision of money, resources, or information to help someone and drew our attention to the decision of the Hon'ble Supreme Court in the case of Lokmat Newspaper Pvt. Ltd v Shankar Prasad AIR 1999 SC 2423. He referred to page 36 of the paper book and argued when particular words pertaining to a class, category or genus are followed by general words, the general words are construed as limited to things of the same kind as those specified. In this regard he referred to maxim 'ejusdem generis', which means 'of the same kind or nature'. He submits the said max ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpreting the words subsidy, grant, cash incentive, duty drawback, waiver, concession and reimbursement and prayed to dismiss the ground No. 1(i) & (ii) of appeal raised by the Revenue. 16. in reply, the ld. DR vehemently argued that the export receipt is a revenue in nature, chargeable to tax. He vehemently opposed the submissions of the ld. AR in stating that it is a reward, but there is no reward in the present facts and circumstances of the case. 17. Heard both the parties and perused the materials available on record. The ld. CIT-DR, Shri S. Palanikumar vehemently contended that the Hon'ble High Court of Bombay in the case of Serum Institute of India (P.) Ltd. v. Union of India (supra) clearly held the subsidy and concession are fall under the definition of income as provided in the amendment to section 2(24) by insertion of sub-clause (xviii) by Finance Act, 2015. Therefore, we have to consider as to whether in the present case, the sale of MFLPS scrips granted by the Government of India under Foreign Trade Policy-2015 is revenue receipt or otherwise. In this regard, the ld. DR drew our attention to para 10 and 43 of the decision of the Hon'ble High Court of Bombay (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insertion of the impugned sub-clause that includes various subsidies and concessions only indicates the well established jurisprudential path ensuring that the income tax laws remain attuned to the economic realities and continue to serve as a vital cog in the nation's fiscal machinery. As submitted by ASG, it is the duty of the legislature to ensure that taxation policy reflects a balance between incentivizing economic activity and ensuring the equitable distribution of fiscal resources. 44 In our view, there is no merit in the petition. Petition dismissed. 18. On careful reading of para 10 above, we note that the assessee/ petitioner therein challenged the constitutional validity of impugned subclause (xviii) to section 2(24) of the Act, whereby, contending all incentives given in whichever form by the Government and with whatever purpose of objective are to be treated as income, irrespective of the fact as to whether or not the same is in the nature of capital assistance and or revenue assistance, which clearly establishes that the assessee/petitioner therein challenged constitutional validity of the insertion of sub-clause (xviii) to section 2(24) of the Act. Further, on c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is at page 131 of the paper book. Thus, it is clear the Coordinate Benches held the incentive given by Government for exploring new market area, is a capital receipt, cannot be charged to tax either under section 2(24) or 28 of the Act. 20. Further, the ld. DR placed reliance in the case of Hyundai Motor India Ltd. V. ACIT (supra) and drew our attention to para 34 of the said order and argued that the ITAT Chennai Bench observed that the facts are not appraised in right perspective of law in the case of Eastman Exports Global Clothing Pvt. Ltd. (assessee before us), and held that the said judgement of the Chennai Bench is not considered. Further, it was also held that the facts in the case of PCIT v. Nitin Spinners Ltd. (supra) are different from the facts in the case of Hyundai Motor India Ltd. V. ACIT (supra) and thereby, not considered. 21. We find that the Coordinate Bench in the case of Hyundai Motor India Ltd. V. ACIT (supra) held the duty credit scrips received from Government of India under Focus Market Scheme ["FMS" in short hereafter] is revenue in nature. Further, we note that the Coordinate Bench held the facts in the case of Hyundai Motor India Ltd. (supra) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed the orders for AY 2011-12 & 2012-13, 2013-14 & 2016-17, held sale of scrips under MLFPS is capital receipt, not chargeable to tax. 24. Further, a contention was raised by the ld. AR that a reference to the applicability of sub-clause (xviii) to section 2(24) of the Act, wherein, he argued that there was no corresponding amendment to section 28 of the Act. We note that the Assessing Officer discussed the provision under section 28 of the Act in his order at page 3 of the assessment order and held sub-clause (iiia), (iiib), (iiic), (iiid) and (iiie) covers the income, nothing, but incentive to promote export trade - similar to the scheme of MLFPS. We note that under Chapter IV of the Income Tax Act "Computation of Income" is provided under main heads i.e., salary, income from house property and profits and gains of profession. If we refer to sub-clause (iiia) of section 28 of the Act, which explains profits on sale of a license granted under the Import (Control) order, in our opinion, is not applicable in the facts and circumstances of the case. Further, subclause (iiib) of section 28 of the Act provides cash assistance (by whatever name called) received or receivable by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndix 3A. (ii) Payment of excise duties on domestic procurement of inputs or goods, including capital goods as per DoR notification. (iii) Payment of service tax on procurement of services as per DoR notification. (iv) Payment of Customs Duty and fee as per paragraphci 3.18 of this Policy. Merchandise Exports from India Scheme (MEIS) 3.03 Objective Objective of Merchandise Exports from India Scheme (MEIS) is to offset infrastructural inefficiencies and associated costs involved in export of goods/products, which are produced/manufactured in India, especially those having high export intensity, employment potential and thereby enhancing India's export competitiveness. 3.04 Entitlement under MEIS Exports of notified goods/products with ITC(HS) code, to notified markets as listed in Appendix 3B, shall be rewarded under MEIS. Appendix 3B also lists the rate(s) of reward on various notified products [ITC(HS) code wise]. The basis of calculation of reward would be on realised FOB value of exports in free foreign exchange, or on FOB value of exports as given in the Shipping Bills in free foreign exchange, whichever is less, unless otherwise specified. 3.05 Export of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided under many sub-clauses to sub-section (24) of section 2 of the act,. The definition of income under sub-clause (xviii) includes assistance in the form of "subsidy" or "grant" or "cash incentives" or "duty drawback" or "waiver" or "concession" or "reimbursement" (by whatever name called) from Central Government or state Government or any authority or body or agency in cash or kind. In the present case, we find no "subsidy" or "grant" or "cash incentives" or "duty drawback" or "waiver" or "concession" or "reimbursement". The assessee got only reward for MEIS scheme under Foreign Trade Policy-2015 for a level playing field. 29. In this regard, the ld. AR placed on record meaning of terms in reference to section 2(24)(xviii) of the Act with examples. On perusal of the said meaning of terms, we note that the Government has launched the Fertilizer Subsidy Scheme, whereby, subsidy is paid on fertilizer sold for direct agriculture uses. The fertilizer subsidy division deals with payment of cost of imported urea of OMIFCO/canalizing agencies, recovery of pool issue price of urea from Handling Agencies, Ocean freight payments to vessel owners, subsidy disbursement in respect of im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Pvt. Ltd. v. Shankar Prasad AIR 1999 SC 2423, Municipal Corporation of Greater Bombay v. Bharat Petroleum Corporation Ltd. [2002] 4 SCC 219 and Grasim Industries Ltd. v. Collector of Customs [2002] 4 SCC 297. The relevant part of 3 above said judgements are reproduced herein below: In Lokmat Newspaper Pvt. Ltd. v. Shankar Prasad AIR 1999 SC 2423 the Hon'ble Supreme Court has stated that the rule of ejusdem generis provides that "When particular words pertaining to a class, category or genus are followed by general words, the general words are construed as limited to things of the same kind as those specified". Further, the Hon'ble Supreme Court in the case of Municipal Corporation of Greater Bombay v. Bharat Petroleum Corporation Ltd. [2002] 4 SCC 219, has observed as under: "............ The principle underlying ejusdem generis is applied when the statutory provisions concerned contain an enumeration of specific words, the subject of enumeration thereby constituting a class or category but which class or category is not exhausted at the same time by the enumeration and the general term follows the enumeration with no specific indication of any different legislative inten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lp, but not in recognition of a service rendered. Therefore, in our opinion, there is a clear difference between the words "reward" and "assistance", thus, we hold the "reward" as in the Foreign Trade Policy - 2015 and the "assistance" as found in the provisions under section 2(24)(xviii) of the Act are different from each other, the "reward" does not fall within the definition of sub-clause (xviii) of sub-section (24) of section 2 of the Act. 32. Further, we find benefit granted under the Foreign Trade Policy - 2015 by way of MEIS scrips do not fall within the meaning of any of the terms cited from Government website and, therefore, does not fall within the meaning of "subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement" as provided under section 2(24)(xviii) of the Act. 33. The ld. DR preferred Income Computation and Disclosure Standard ["ICDS" in short hereinafter] and submits that the CBDT notified ICDS -1 to ICDS-X vide notification No. SO-892(E) dated 31.03.2015 after wide public consultation. The ICDS-VII relating to Government grants provides that all Government grants except relating to depreciable asset shall be recognized as inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grants other than covered by paragraph 5, 6, 7 and 8 shall be recognised as income over the periods necessary to match them with the related costs which they are intended to compensate. 10. The Government grants in the form of non-monetary assets, given at a concessional rate, shall be accounted for on the basis of their acquisition cost. 34. On perusal of the above, we note that the ICDS-VII only refers to a Government grant as seen above. We find the duty credit scrips under MEIS not included within its ambit, therefore, since MEIS is a reward not governed by ICDS-VII. The point 9 above clearly states that the Government grant other than covered by paragraph 5, 6, 7 & 8 shall be recognized as income over the periods necessary to match them with related costs which they are intended to compensate. We find a grant is a sum of money given by the Government or to be paid for a particular purpose, since, we held that benefit by way of MEIS scrips is not an assistance by way of a grant, in our opinion, the MEIS does not fall under ICDS-VII, since MEIS is not a grant. In this regard in support of our view, let us reproduce point No. 3.03 of Foreign Trade Policy - 2015 at page 3 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to collect excise duty on the sale price of the free sale sugar in excess of the normal quota, but pay to the Government only the excise duty payable on the price of levy sugar. In that connection, we quote clause 7 of the Scheme, which reads as under: "The beneficiaries of the incentive scheme shall ensure that the surplus funds generated through sale of the incentive sugar are utilized for the repayment of term loans, if any, outstanding from the Central Financial institutions. The sugar factories should submit utilization certificates annually from Chartered/Cost Accountant, holding certificate of practice. Utilisation certificate in respect of each sugar season during the incentive period should be furnished on or before the 31st December of the succeeding year. Failure to submit utilization certificate within the stipulated time may result not only in the termination of release of incentive free sale quota, but also in the recovery of the incentive free sale releases already made, by resorting to adjustment from the free sale releases of future years." 6. At this stage, we may again note that the 1980 and 1987 Schemes are similar to each other. In the case of Salem Cooper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the point of time at which it is paid or its source or its form was irrelevant. In this connection, learned counsel also places reliance on the same judgment of this Court in the case of Sahney Steel and Press Works Ltd. (supra). 9. The key question which arises for determination is: what is the character of the incentive subsidy under the said Schemes? 10. At the outset, it may be stated that during the relevant year in question, on account of economic factors, namely, high cost, the new sugar factories could not come up as it was not economically viable. Due to high cost, the financial institutions did not come forward to advance loans to the entrepreneurs of new sugar factories. Secondly, the tempo of establishing new sugar factories received a serious set back, therefore, the Government appointed a Committee known as Sampat Committee to examine the question relating to economic viability of new sugar factories. One of the terms of reference suggested was to work out various incentives for making new sugar factories economically viable units. The increase of the cost of the project during the relevant years was on account of the increase in the cost of Plant and Machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rential. According to the Department, price and costs are essential items that are basic to the profit making process and that any price related mechanism would normally be presumed to be revenue in nature. In other words, according to the Department, since incentives were given through price and duty differentials, the character of the impugned incentive in this case was revenue and not capital in nature. On the other hand, according to the assessee, what was relevant to decide the character of the incentive is the purpose test and not the mechanism of payment. 14. In our view, the controversy in hand can be resolved if we apply the test laid down in the judgment of this Court in the case of Sahney Steel and Press Works Ltd. (supra). In that case, on behalf of the assessee, it was contended that the subsidy given was up to 10% of the capital investment calculated on the basis of the quantum of investment in capital and, therefore, receipt of such subsidy was on capital account and not on revenue account. It was also urged in that case that subsidy granted on the basis of refund of sales tax on raw materials, machinery and finished goods were also of capital nature as the object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to set up a new unit or to expand the existing unit then the receipt of the subsidy was on capital account. Therefore, it is the object for which the subsidy/assistance is given which determines the nature of the incentive subsidy. The form of the mechanism through which the subsidy is given is irrelevant." 37. On careful reading of the above, we note that the Hon'ble Supreme Court by referring to facts of the Sahney Steels & Press Works (supra) observed if the object of the subsidy scheme was to enable the assessee to run the business more profitably then the receipt is on revenue account and the basic test to be applied in judging the character of a subsidy, that test is that the character of the receipt in the hands of the assessee has to be determined with respect to the purpose for which the subsidy is given. In other words, in such cases, one has to apply the purpose test. The point of time at which the subsidy is paid is not relevant. The source is immaterial. The form of subsidy is immaterial. Taking into account the same, held if the object of the assistance under the subsidy scheme was to enable the assessee to set up new unit or to expand the existing unit, then the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from making payment of excise duty to the extent of 36% of the total excise duty collected. It is not subsidy given to meet cost of project. In our view, the exemption from excise duty do not fall in the definition of income as envisaged u/s 2(24)(xviii) of the Act. Meaning thereby, the amount of Rs. 1,85,49,324/- is not an income but a capital receipt not taxable under the provisions of the Act. 18. The Hon'ble Supreme Court in "Commissioner of Custom Vs. Dilip Kumar & Co.", (Supra) by considering the decision of judgment of State of West Bengal Vs. Kesoram Industries Ltd. 10 SCC 201 decided by the bench of 5 judges, has laid down the principles applicable for interpretation of taxing statute that in interpreting a taxing statute, equitable considerations are entirely out of place. A taxing statute cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any deficiency; that before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be interpreted what is clearly expressed, it cannot employ anything which is not expressed, it cannot import provision to statute so as to supply any deficiency, that before taxing any person, it must be shown that he falls within the ambit of section 2(24)(xviii) of the Act and in the absence of inclusion of words under the said clause, the scope of section cannot be enlarged to include exemption by interpreting with its subsidy. We find the facts of the present case are identical to the facts before ITAT Amritsar Benches. In the present case, the word "reward" is absent in the provisions of section 2(24)(xviii) of the Act, in the absence of said word in section 2(24)(xviii) of the Act, the scope of the section cannot be enlarged to include "reward". 41. This Tribunal, in assessee's own case for AY 2011-12 & 2012-13 as per page 112-119 of the paper book, discussed the said issue in detail and the relevant part at para 9 is reproduced herein below for ready reference: "9. We have considered the rival submissions on either side and also perused the relevant material available on record. The Market Linked Product Scheme is a scheme promoted by the Director General of Foreign T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) or 28 of the Act. As discussed above, the same finding has been followed by this Tribunal in assessee's own case for AY 2014-15 & 15-16, thereby, we summarise our finding in answering the grounds of appeal with reference to the arguments of the ld. DR and ld. AR, that we hold that the decision of Hon'ble High Court of Bombay in the case of Serum Institute of India (P.) Ltd. v. Union of India (supra) is not applicable to the facts on hand as Hon'ble High Court was pleased to decide the question the constitutional validity of insertion of sub-clause (xviii) to sub-section (24) of section 2 of the Act only, but not its applicability. 43. We hold that as per the Foreign Trade Policy-2015, the benefit given by way of MEIS scrips are rewards, the meaning of which is completely different from the meaning of the term "assistance" under the provisions of section 2(24)(xviii) of the Act. We hold that the benefit by way of MEIS scrips could not fall within the meaning of the terms "subsidy or grant or cash incentive or duty draw back or waiver or concession or reimbursement provided under section 2(24)(xviii) of the Act. We hold the ICDS-VII is not applicable as it deals with Government gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the distinction between both the decisions of the Hon'ble High Court of Madras are that in the case of CIT v. K.V. Nellaiappan (supra), the assessee therein taken a building on lease, but, not the land and in the case of CIT v. TVS Lean Logistics Ltd. (supra), the assessee therein taken land on lease and constructed building thereon. The Hon'ble High Court of Madras, in the case of CIT v. Nellaiappan (supra), held that the said expenditure as capital expenditure as the assessee has taken the building on lease and in the case of CIT v. TVS Lean Logistics Ltd. (supra), the Hon'ble High Court of Madras was pleased to hold the said expenditure as revenue expenditure as the assessee constructed its building on leasehold land. Similar issue came up for adjudication before this Tribunal for AY 2014-15 and 2015-16, wherein, by following the order of the Coordinate Bench for the AY 2016-17, the Tribunal held the same as revenue expenditure. The relevant part at page 143 to 145 is reproduced for better understanding: Our findings and Adjudication 15. At the outset, we find that this issue has been decided by Tribunal in ITA No.1677/Chny/2019 for AY 2016-17 as under: - 5. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lia, agreed to pay an annual sum during the whole period of the lease as a protection fee and in consideration of that payment, the lessor undertook not to grant to any person any lease, permit or prospecting licence for limestone. This court examined tests laid down in various cases for distinguishing between capital expenditure and revenue expenditure. One of the standard tests now in use was laid down in the case of Atherton v. British Insulated and Helsby Cables Ltd. [1925] 10 TC 155. It said (page 40 of 27 ITR) : "When an expenditure is made, not only once and for all but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital." Whether by spending the money any advantage of an enduring nature has been obtained or not will depend upon the facts of each case. Moreover, as the above passage itself provides, this test would not apply if there are special circumstances pointing to the contrary. This court in the above case summarised the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws:- "7. Similarly, there should be a literal rule of interpretation of a statute, which is the first and foremost principle of interpretation and where the words of a statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule and even if the literal interpretation results in hardship or inconvenience, it has to be followed. The language employed in a statute is the determinative factor of the legislative event and even assuming there is a defect or any omission in the words used in the legislation, the court cannot correct or make up the deficiency, especially when a literal reading thereof produces an intelligible result and any departure from the literal rule would really be amending the law in the garb of interpretation, which is not permissible and which would be destructive of judicial discipline, vide Raghunath Rai Bareja v. Punjab National Bank [2007] 135 Comp Cas 163 (SC) ; [2007] 2 SCC 230. 8. What constitutes a capital expenditure and what does not, to attract Explanation 1 to section 32(1) of the Act depends upon the construction of any structure or doing any work or in relation to and by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g and the expenditure on construction is incurred by the assessee, the assessee would be eligible to claim depreciation. The Hon'ble Supreme Court has denied the claim of depreciation for the reason that where construction was not carried out by assessee himself, said explanation to section 32 would not come to the aid of assessee for claiming depreciation. However, in the present case, the assessee has already been found eligible to claim depreciation @10% by invoking Explanation-1 to Section 32(1). Therefore, the aforesaid decision of Hon'ble Supreme Court which held that the expenditure so incurred is not in the capital field, would mean that the expenditure is in the revenue field and therefore, the same, in fact, would support the case of the assessee. 17. Proceeding further, upon perusal of Clause-11 of lease deed dated 02.05.2010, it could be seen that the assessee-lessee, upon termination of the lease, was to deliver the possession of the demised land to the lessor with or without removing the super structure, electrical and other installation thereon as may be mutually agreed upon by both the parties. The expenses in respect of the same would be borne by the less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17-18, wherein, we have taken a view in confirming the order of the ld. CIT(A) and dismissed the grounds raised by the Revenue and the same view taken by us is equally applicable to the year under consideration. Thus, the ground Nos. 11 to 15 raised by the Revenue are dismissed. 54. In the result, the appeal of the Revenue is dismissed. ITA No. 706/Chny/2022 in the case of Victus Dyeings v. ACIT for AY 2017-18 [assessee's appeal] 55. Ground Nos. 1 & 2 are general in nature and requires no adjudication. 56. We find ground Nos. 3 & 4 raised by the assessee are similar to ground Nos. 1(i) & (ii) as raised by the Revenue on same identical facts in ITA No. 3326/Chny/2019 for AY 2017-18, wherein, we have taken a view in confirming the order of the ld. CIT(A) and dismissed the grounds raised by the Revenue and the same view taken by us is equally applicable to the present case on hand. Thus, the ground Nos. 3 to 4 raised by the assessee are allowed. 57. In the result, the appeal of the assessee is allowed ITA No. 768/Chny/2022 in the case of ACIT v. M/s. KM Knit Wears for AY 2017-18 [Revenue's appeal] 58. This appeal of the Revenue was filed with a delay of 206 days. Upon hearing b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2023 in the case of San Tex Inc v. ACIT for AY 2017- 18 [assessee's appeal] 67. Ground Nos. 1 & 2 are general in nature and requires no adjudication. 68. We find ground Nos. 3 to 5 and additional ground Nos. 6 & 7 raised by the assessee are similar to ground Nos. 1(i) & (ii) as raised by the Revenue in ITA No. 3326/Chny/2019 for AY 2017-18, wherein, on similar issue on same identical facts and circumstances, we have taken a view in confirming the order of the ld. CIT(A) and dismissed the grounds raised by the Revenue and the same view taken by us is equally applicable to the present case on hand. Thus, we set aside the order of the ld. CIT(A) on this issue and the ground Nos. 3 to 5 and additional ground Nos. 6 & 7 raised by the assessee are allowed. 69. In the result, the appeal of the assessee is allowed. ITA No. 1348/Chny/2023 in the case of Geena Garments v. ACIT for AY 2017-18 [assessee's appeal] 70. Ground Nos. 1 & 2 are general in nature and requires no adjudication. 71. We find ground Nos. 3 to 6 raised by the assessee are similar to ground Nos. 1(i) & (ii) as raised by the Revenue in ITA No. 3326/Chny/2019 for AY 2017-18, wherein, on similar issue on same identical f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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