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TMI Blog2014 (8) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... promoting sale of the said machinery - It is only on such demonstration, the assessees goods are accepted in the market – Tribunal has rightly recorded that it amounts to revenue expenditure and not capital asset – Decided against Revenue. - ITA Nos.408 of 2011, 409 of 2011, 410 of 2011, 411 of 2011, 412 of 2011, 413 of 2011, 414 of 2011 and 416 of 2011 - - - Dated:- 15-7-2014 - N Kumar and B Manohar, JJ. For the Appellant : Sri K V Aravind, Adv. For the Respondents : Sri T Suryananarayana, Adv. M/s Kind Partridge JUDGEMENT :- In all these eight appeals the assessee is the same and the following substantial questions of law arise for our consideration in these appeals: 1. Whether the Tribunal was correct in directing the Assessing Officer to verify the payment of TDS in subsequent years and allow the expenditure in the year of payment as per Section 40 (a)(i) of the Act when the proviso was introduced w.e.f. 01.04.2004 when the challans produced was for assessment years 2003-04, 2004-05 2005-06? 2. Whether the Tribunal was correct in holding the machinery installed in the premises of the contractors M/s. Nicholas Piramal for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or deducted. Explanation For the purposes of this sub-clause, - (A) royalty shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9; (B) fees for technical services shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9 Substituted by Finance Act 2004, w.e.f. 1/4/2004: Sec. 40. Notwithstanding anything to the contrary in sections 30 to 3, the following amounts shall not be deducted in computing the income chargeable under the head Profits and gains of business or profession , - (a) in the case of any assessee (i) any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technical services or other sum chargeable under this Act, which is payable (A) outside India, (B) or India to a non-resident, not being a company or to a foreign company, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the second machine purchased by it. The Assessing Authority disallowed the depreciation claimed by the assessee on the ground that the assessee company had purchased the second hand machine and that it had not undertaken any manufacturing activity. The CIT(A) confirmed the disallowance. In the second appeal before the Tribunal, the Tribunal held, for allowing the claim of depreciation on any machinery, Sec.32 of the Income Tax Act provides that the machinery should be owned wholly or partly by the assessee and used for the purpose of business or profession of the assessee. There is no dispute that the assessee owns the machinery but the only dispute is, whether it is used for the purpose of assessee s business or profession. The assessee had entered into contract for manufacturing of certain ophthalmic solutions and for the said purpose machinery was purchased and installed in the premises of M/s. Nicholas Piramal during the relevant financial years. The said machinery had been used by M/s. Nicholas Piramal for manufacturing of the said solutions and moulds. He held, when the manufacturing is done as per the specifications of the assessee and the goods are also recognized as manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products made during the calendar year 1998-99. The machine in question is used for manufacture of plastic bottles of sizes 360 ml., 120 ml., etc. These bottles have been used by the assessee for selling the eye drops and other pharmaceutical eye care products in support of which he has enclosed the details. Unfortunately the Assessing Authority seems to think the assessee has to demonstrate before him in the Income Tax office how this machinery is used in manufacturing the products and the same is not produced. He has recorded a finding that the said machinery is not used in his business. In those circumstances, rightly, the Tribunal has set aside the said order on appreciation of the aforesaid material which was on record and has categorically recorded a finding of fact that the said machine was used in the business of the assessee and therefore he is entitled to depreciation as provided under Sec.32 of the Act. We do not see any error committed by the Tribunal in recording the said finding and therefore the said substantial question of law is answered in favour of the assessee and against the Revenue. 8. Reg. substantial question No.3: The contention of the Revenue is, the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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