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2011 (10) TMI 495 - AT - Income TaxDepreciation on motor car - disallowance as car purchased in the name of the director of the company - Held that - It is shown as asset in the balance-sheet of the company. If expenditure for running the vehicle was incurred by the assessee the assessee is de facto owner of the vehicle - as decided in CIT vs Mohd. Bux Shokat Ali 2001 (2) TMI 26 - RAJASTHAN HIGH COURT where vehicle was purchased by the firm used by it for the purpose of its business but it was registered in the name of one of the partners then the firm would be entitled to depreciation on vehicle. Also as decided in CIT Versus Basti Sugar Mills Co. Ltd. 2002 (5) TMI 27 - DELHI High Court where vehicle was owned and used by the assessee but no registration was done in its name then the assessee would still be entitled to depreciation on such vehicle - Decided in favor of the assessee. Deduction u/s 80-IB - Held that - The process of crushing grinding and sieving FMA slabs into lumps chips and powder creates three end products which have different physical shapes different chemical composition of iron molybdenum and silicon and have different chemical properties such as different melting points and are used by different industries. Their use is not interchangeable in the place of lumps chips or powder or slabs as such cannot be used. These end products are known by different names in commercial world and therefore the process employed by the assessee would amount to manufacture and therefore the assessee would be entitled to deduction under section 80-IB - Decided in favor of the assessee. Eligibility of Excise Income Interest from various parties Insurance claim received for shortage material Miscellaneous income received from sale of non-excisable waste material for deduction u/s 80IB - Held that - As amount is debited in P/L A/c at time of its payment and get credited at time of refund rendering net effect to be nil. Therefore there is no reason to exclude the excise duty in arriving at profit derived for the purpose of deduction u/s 80-IB. See CIT v. Dharam Pal Prem Chand Ltd (2008 (11) TMI 231 - DELHI HIGH COURT) - Decided in favour of the assessee. Interest from various parties - assessee contended it to be pertaining to the late payment and the credit facility availed of by those parties - Held that - In view of Nirma Industries Ltd. v. DCIT( 2006 (2) TMI 92 - GUJARAT HIGH COURT) the assessee is directed to establish the above fact before the AO if found correct eligible deduction u/s 80-IB should be recomputed. Miscellaneous income received from sale of non-excisable waste material - Held that - As the requisite details were not examined by the Assessing Officer and merely stated that the said income was to be excluded for the purpose of computing the deduction under section 80-IB this part of this ground remitted back to the Assessing Officer considering the case of Deputy CIT v. Harjivandas Juthabhai Zaveri 1999 (12) TMI 5 - GUJARAT HIGH COURT - in favour of assessee by way of remand.
Issues:
1. Disallowance of depreciation on a motor car purchased in the name of the director of the company. 2. Eligibility for deduction under section 80-IB of a significant amount. 3. Treatment of various items as not eligible for deduction under section 80-IB: excise income, interest from parties, insurance claim for shortage material, and miscellaneous income from non-excisable waste material. 4. Levy of interest under sections 234B and 234C, and initiation of penalty under section 271(1)(c). Issue 1: The Revenue challenged the deletion of depreciation on a motor car purchased in the director's name. The Tribunal cited a previous decision where it was held that if the vehicle was purchased for business purposes and used as a business asset, the company could claim depreciation even if not registered in its name. The Tribunal dismissed the Revenue's ground based on the previous decision and upheld the deletion of depreciation. Issue 2: The Revenue disputed the eligibility of a substantial deduction under section 80-IB. The Tribunal referenced a prior decision and concluded that the assessee was engaged in manufacturing activities, making them eligible for the deduction under section 80-IB. Following the previous decision, the Tribunal dismissed the Revenue's ground regarding the deduction. Issue 3: The assessee raised a cross objection regarding the treatment of various items as not eligible for deduction under section 80-IB. The Tribunal ruled in favor of the assessee on different items: excise income was allowed for deduction as it was related to manufacturing activities, interest from parties required further verification, insurance claim for shortage material was allowed, and miscellaneous income from non-excisable waste material needed examination based on precedents. The Tribunal partially allowed the first cross objection of the assessee. Issue 4: The cross objection also raised concerns about the levy of interest under sections 234B and 234C, as well as the initiation of penalty under section 271(1)(c). The Tribunal deemed these grounds either consequential or premature, and did not delve into them extensively. Ultimately, the Revenue's appeal was dismissed, and the cross objection filed by the assessee was partly allowed, concluding the judgment.
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