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TMI Blog1983 (11) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... stances of the case, the Tribunal was right in holding that the assessee had a right of appeal against the levy of interest under s. 217 of the IT Act, 1961 ?" 2. The assessee in this case carries on the business of publication of newspapers. In the course of that business, types are purchased by the assessee and after composing the printing of newspaper is done by another outside agency. The assessee had incurred an expenditure of ₹ 79,261 being the cost of types used by it for composing the newspaper published by it. The assessee claimed before the ITO that the expenditure of ₹ 79,261 incurred for the purchase of types should be allowed as a deduction. However, the ITO treating the types as constituting part of the machi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong as a single day requirement of types for carrying on the business of the assessee does not cost more than ₹ 750. As an alternative, the Tribunal held that the life of type is very short and as a consumable material used for the purpose of business, the entire cost is allowable as a revenue expenditure. The Tribunal also dealt with the question of levy of interest under s. 217 of the Act and held that an appeal lies against the order levying interest under s. 217 and that the AAC was in error in rejecting the appeal on the ground that an appeal against the order levying interest under s. 217 is not maintainable. 3. Thus the first question referred to us involves the determination of the true scope and ambit of the first proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 750, the value of all such purchases throughout the year should be allowed as a deduction. The question is, whether in respect of all purchase of machinery of a value not exceeding ₹ 750 the cost should be allowed as a deduction irrespective of the number of such purchases during the year. 5. As already stated, the Tribunal in this case has found that for composing the matter for the publication of newspaper, the assessee purchased 30 kgms. of types per day at a cost of less than ₹ 750 and since the actual cost of the machinery purchased and used each day does not exceed ₹ 750, the actual cost of such purchases should be allowed as deduction under the first proviso to s. 32(1)(ii) of the Act, though a bulk purchase h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure. Once the types are treated as coming within the expression, 'machinery', the cost of purchase of machinery can normally be taken as capital expenditure. The assessee's claim based on the first proviso to s. 32(1)(ii) is also on the basis that the cost of machinery is a capital expenditure. Therefore, when the claim is based on the first proviso to s. 32(1)(ii) it is not possible to treat the cost of purchase of machinery as a revenue expenditure merely because the machinery can be used only for a short duration. Therefore, the Tribunal is not correct in holding that the purchase of machinery, that is, printing types will fall within the revenue expenditure so as to enable the assessee to claim deduction of the entire c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it said that the assessee could claim the benefit of this provision. According the ld. counsel for the assessee, as the first proviso does not specifically say that the purchase of machinery for the whole year should be taken as the basis, the proviso should be understood as relating to each and every porches of machinery and therefore the limitation of ₹ 750 provided therein should be taken to apply for each purchase. It is no doubt true that the proviso does not introduce any time limit during which purchases have to be made. It appeal to refer only to purchase of a machinery for a value not exceeding ₹ 750, in respect of which the actual cost has to be allowed as a deduction. It is not the assessee's case that it made pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot able to see how the assessee in this case could say that its daily purchase of machinery should be taken as the basis and the limitation of ₹ 750 provided in the first proviso to s. 32(1)(ii) should be applied to it. Even though we are not inclined to take the view that all the purchases of machinery in a year should be taken as the basis for applying the proviso, still we are not in a position to accept the case of the assessee that the daily requirement should be taken as the basis. In this view of the matter, we hold that the Tribunal not properly construed the provision of the first proviso to s. 32(1)(ii) of the Act. Accordingly we answer the first question in the negative and against the assessee. 7. On the second question a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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