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Issues:
1. Deduction claim under section 35CC(1) for rural development program. 2. Classification of expenditure as capital or revenue for construction of platform at railway siding. 3. Deletion of addition made by the IAC regarding outstanding payments. 4. Allowance of depreciation under section 35CC(2) and treatment of subsidy received on fixed assets. Analysis: Issue 1: Deduction claim under section 35CC(1) The appeals pertained to the assessment against a company for the years 1982-83 and 1983-84, specifically focusing on a claim for deduction under section 35CC(1) related to a rural development program sponsored by the Haryana Government. The company proposed to renovate a school building in a backward area, with the Gram Panchayat agreeing to provide land for the extension. The company incurred expenses for construction, renovation, and other related activities. The assessing officer initially disallowed the claim under section 35CC(1) but later granted depreciation based on a fixed cost. The CIT(A) allowed the claim, emphasizing that the company did not retain ownership of the asset created, as required by section 35CC(2). The Tribunal upheld the CIT(A)'s decision, stating that the company did not acquire ownership of the asset and, therefore, was entitled to the deduction under section 35CC(1). Issue 2: Classification of expenditure as capital or revenue Another aspect of the judgment involved an expenditure of Rs. 56,570 incurred by the company for constructing a platform at a railway siding. The IAC treated this expenditure as capital, while the CIT(A) considered it a revenue expense. The Tribunal, following a previous decision in a similar case, held that the expenditure was incurred wholly and exclusively for business purposes, providing better facilities for loading and unloading goods. Consequently, the Tribunal upheld the CIT(A)'s decision to treat the expenditure as a revenue expense and deleted the addition made by the IAC. Issue 3: Deletion of addition regarding outstanding payments The Tribunal also addressed the deletion of an addition made by the IAC concerning outstanding payments to three parties. The IAC argued that the company was not legally obligated to pay the amounts due to the outstanding period being over three years. However, the CIT(A) disagreed with this reasoning and deleted the addition. The Tribunal affirmed the CIT(A)'s decision, stating that the limitation period does not wipe out the liability, and the liability remains even if the remedy in a court of law is barred. Issue 4: Allowance of depreciation and treatment of subsidy Regarding depreciation on fixed assets, the Tribunal affirmed the CIT(A)'s decision that depreciation on the written down value of fixed assets should not be reduced by the amount of subsidy received from the government. This decision was in line with previous High Court rulings, and the Tribunal upheld the CIT(A)'s finding in favor of the company. In conclusion, the Tribunal dismissed the revenue's appeals, upholding the decisions made by the CIT(A) in favor of the company on all the issues raised.
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