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Issues Involved:
1. Depreciation on expenses for acquiring the right to use land for laying pipelines. 2. Depreciation on legal and professional expenses. 3. Set-off of interest income against pre-operative expenses. 4. Allowance of donation capitalized in the development account. 5. Deduction under section 35D for preliminary and share issue expenses. Issue-wise Detailed Analysis: 1. Depreciation on Expenses for Acquiring the Right to Use Land for Laying Pipelines: The primary issue was whether the expenses of Rs. 50,60,433 incurred by the assessee for acquiring the right to use land for laying pipelines should be capitalized as part of the plant and machinery and thus eligible for depreciation. The tribunal held that such expenditure cannot be capitalized as part of the plant and machinery since it pertains to acquiring a right in the land, which is not subject to depreciation. The tribunal emphasized that the right in the land acquired by the assessee is a capital asset, and no depreciation can be allowed on it. The tribunal also noted that the expenditure is capital in nature as it provides an enduring benefit to the assessee, and it was treated as capital in the assessee's accounts. 2. Depreciation on Legal and Professional Expenses: The assessee did not press for the amount of Rs. 15,000 being legal fees paid for obtaining an opinion on the capital issue. For the remaining amount of Rs. 50,000 paid for services related to land acquisition, the tribunal held that this expenditure was incurred for acquiring rights for the use of land and cannot be clubbed with plant and machinery for claiming depreciation. The tribunal reiterated that expenditure related to land use does not qualify for depreciation. 3. Set-off of Interest Income Against Pre-Operative Expenses: The assessee did not press for this ground, and hence it was treated as rejected. 4. Allowance of Donation Capitalized in the Development Account: The assessee did not press for this ground, and hence it was treated as rejected. 5. Deduction Under Section 35D for Preliminary and Share Issue Expenses: For the assessment year 1993-94, the tribunal addressed the issue of restricting the deduction under section 35D. The assessee claimed preliminary expenses of Rs. 33,983 and share issue expenses of Rs. 7,00,315. The CIT(A) had upheld the Assessing Officer's decision to restrict the claim, but the tribunal noted a possible mistake in the appellate order and directed the CIT(A) to re-examine the issue in light of his findings for the assessment year 1992-93. The tribunal allowed this ground for statistical purposes only. Conclusion: The tribunal dismissed the appeal for the assessment year 1992-93, upholding the disallowance of depreciation on expenses related to acquiring the right to use land for laying pipelines and legal and professional expenses. For the assessment year 1993-94, the tribunal partly allowed the appeal for statistical purposes, directing the CIT(A) to re-examine the deduction under section 35D.
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