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TMI Blog2013 (12) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... covered as per the ratio laid down by this Hon'ble Court in the case of the Simbhaoli Sugar Mills Limited vs. The Commissioner of Income Tax, Meerut, ITR No.4 of 1985 dated 20.9.2005 [2005 (9) TMI 590 - ALLAHABAD HIGH COURT] where the expenditure is incurred while the business is being carried on and not for its extension or for the substantial replacement of its equipment, is a revenue expenditure and should have been allowed as an admissible deduction and accordingly answered the question in favour of the assessee. Valuation of closing stock on account of interest - in the valuation of closing stock the assessee has added to the cost the amount of bank interest i.e. after deduction of the interest receipt from the gross amount of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Capital Receipt and the same is not liable to tax ? 2. Whether on the facts and in the circumstances of the case the Hon'ble I.T.A.T. was justified in law in confirming the order of the Ld. Commissioner of Income Tax (appeals) deleting the disallowance of Rs.2,25,904/- made by the Assessing Officer on account of amount transferred to molasses reserve fund without appreciating the facts narrated by the Assessing Officer while making the above disallowance ? 3. Whether on facts and in the circumstances of the case the Hon'ble I.T.A.T. was justified in confirming the order of the Ld. Commissioner of Income Tax (Appeals) deleting the addition of Rs. 5,55,500/- made by the Assessing Officer towards the valuation of closing stock on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing both the parties and on perusal of the record, it appears that the substantial question of law no.1 is pertaining to 'Capital Replenishment Reserve' by way of surplus free sale of sugar quota under the scheme known as 'Sugar Incentive Scheme'. This issue is squarely covered as per the ratio in the case of CIT vs. Ponni Sugars Chemicals LTD. ORS. 2008 306 ITR 392 (SC) where it was held that:- "Four factors exist in the Incentive Schemes, which are as follows: (i) benefit of the incentive subsidy was available only to new units and to substantially expanded units, not to supplement the trade receipts; (ii) the minimum investment specified was Rs.4 crores for new units and Rs.2 crores for expansion units; (iii) increase in the fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sugar Controller. The assessee carrying on business of manufacture and sale of sugar has to set apart amount, as provided in the Act, for the molasses storage maintenance fund and thus, it has statutory requirement. Further, the amount so deposited in the aforesaid fund can only be utilized for provision and maintenance on adequate storage facilities for molasses subject to permission of Molasses Controller. In the case of Lakshmi Sugar Mills Co. P. Ltd. Versus Commissioner of Income Tax, New Delhi reported in ITR 1971 Vol.82 page 376 the Hon'ble Apex Court held that where the expenditure is incurred while the business is being carried on and not for its extension or for the substantial replacement of its equipment, is a revenue expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case, the Income Tax Appellate Tribunal was correct in upholding the action of the Commissioner of Income Tax (Appeals) in allowing a relief of Rs. 3,94,550/- to the assessee in respect of the disallowance made on account of interest paid on borrowed funds, without appreciating the facts of the case? 3. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law upholding the action of the Commissioner of Income Tax (Appeals) in deleting the addition of Rs. 10,425/- made on account of rental charges of Gas Cylinders, without appreciating the facts of the case?" We are informed by Sri Ashish Bansal that the same questions of law inter se between the parties, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier previous Assessment Year, we do not find any need to decide the questions all over again. The Income Tax Appeal is accordingly dismissed." Substantial question of law No.5 is related to the depreciation. The CIT (A) has allowed depreciation on lorry and trucks at the rate of 40% instead of 33.33 per cent as allowed by the Assessing Officer. The Tribunal upholds the order passed by the CIT (A). After hearing both the parties, it may be mentioned that as per the Schedule Applicable for assessment years 1988-89 to 2002-03 in Item No.III depreciation is allowed at the rate of 40% on motors buses, motor lorries and motor taxis used in a business of running them on hire. It appears that vehicle are used to deliver the gas calenders ..... X X X X Extracts X X X X X X X X Extracts X X X X
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