Issues: 1. Treatment of interest receipts and hire charges as capital receipts. 2. Treatment of work-in-progress as opening capital for section 80J relief. 3. Entitlement to investment allowance on generating station building.
Analysis:
1. The High Court answered three questions in favor of the assessee, with the first two questions being undisputedly in favor of the assessee based on relevant court judgments. The dispute revolves around the third question concerning the entitlement to investment allowance on the generating station building.
2. The assessee claimed investment allowance on the generating station building, arguing that various components like transformer foundation, cable duct system, and outdoor yard structures were integral to the generating plant's operation. The Commissioner and Tribunal agreed with the assessee, considering these components as essential parts of the generating plant justifying investment allowance.
3. The Revenue cited a judgment regarding differentiation between a building and a plant, arguing that the generating station building should not be treated as a plant for investment allowance purposes. However, the Supreme Court distinguished the cited case, emphasizing that the classification as a plant depends on the technical requirements and construction of the building. In this case, the fact-finding authority confirmed the building's integral role in the generating system, leading to the conclusion that it qualifies as a plant for investment allowance.
4. Ultimately, the Supreme Court upheld the finding that the generating station building is a plant and entitled to investment allowance, dismissing the civil appeal without costs. The judgment highlights the importance of factual determinations in classifying structures as plants for tax benefits, emphasizing the specific technical requirements and construction features as decisive factors.
This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Supreme Court's decision regarding the treatment of interest receipts, work-in-progress, and investment allowance on the generating station building.
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