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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 ..... sing 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 manufacturing of goods for the assessee can be said to be used for the purpose of the business of the assessee and depreciation should be allowed to the assessee? 3. Whether the Tribunal was correct in holding that M/s. Nicholas Piramal, the contractor entrusted with the work of manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 outside India, on which tax has not been paid or deducted under chapter XVII-B: Provided that where in respect of any such sum, tax has been paid or deducted under Chapter XVII-B in any subsequent year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid or deducted. Explanation - For the purposes of this sub-clause, - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. Explanation - For the purposes of this subclause, - (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 A careful reading of the aforesaid provisions makes it clear there is no substantial difference in the language employed. The benefit which is now conferred on the assessee was available to him prior to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven to the assessee, the assessee has not produced any material to show that the said machinery was used for the manufacture of their pharmaceutical products and therefore the finding recorded by the Tribunal that it is used for manufacturing activity is without any supporting evidence and therefore he submits, the said finding requires to be set aside. 6. In order to claim depreciation under Sec.32, the condition to be satisfied is, the assessee should own wholly or partly the machinery used for the purpose of business or profession. Therefore how the machinery is acquired, whether acquisition of machinery is contrary to the terms of the contract between the parties, is totally irrelevant. Once the assessee owns wholly or partly any machi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 demonstration equipment in respect of which the assessee had claimed deduction as revenue expenditure, is not proper. According to them, the said machinery is in the nature of capital asset and therefore what the assessee is entitled to, is only depreciation. The assessee is trading in medical equipment particularly relating to cataract operations. The said equipment which is to be traded is treated as stock in trade of the assessee and the said equipments are shown in the inventory. The expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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