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TMI Blog2019 (8) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019 (4) TMI 1723 - GUJARAT HIGH COURT] . This Court while answering the first question as regards the disallowance of the expenses on consumption and replacement of stores and spares treating the same as revenue expenditure instead of capital expenditure. So far as the second and third questions are concerned, they are with respect to the deletion of loss on sale of fertilizer bond it was held that same is allowable as business loss. So far as the fourth question as regards the disallowence under section 40(a)(ia) is concerned, while answering the same it was hold that there is no service provided by the dealer to the assessee in the course of buying or selling goods, inasmuch as, the assessee directly sells goods to the dealer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure? ( b). Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in in deleting addition on account of loss on sale of fertilizer bonds of ₹ 14,00,30,377/- treating it as business loss instead of capital loss? ( c). Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in deleting the addition on account of loss of sale of fertilizer bond without appreciating that these fertilizer bonds were held by the assessee as investment and were not held as stock in trade of the business carried on by the assessee and consequently the said losses cannot be termed as business loss? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of replacement of worn out parts. There was no capacity addition. The replacement of components of old machinery was made to bring to its original state of efficiency so that the entire integrated manufacturing unit which was considered as a profit making apparatus functions efficiently to its capacity and produces quality products. The CIT (Appeals) after perusing the paper book which contains the details like name of the main plant or machinery to which the replaced component pertains, cost of replaced component, cost of total plant and past history of disallowance and appellate decision in past in respect of similar components and the facts which were explained with the help of diagram/process chart showing that replaced component is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re with respect to the deletion of loss on sale of fertilizer bond. This Court while answering the same in Tax Appeal No.1360 of 2018 held as under :- 8. It emerges from records that on the date of allotment the bonds were received in lieu of subsidy which was the additional sale price receivable from GOI. The assessee had offered to tax the subsidy receivable as part of sale price. The realization of additional sales price by way of subsidy in the form of fertilizer bond does not make bonds an investment because the bonds were never acquired by the assessee as investment or capital but as debt and also shown as current assets. Therefore, the loss suffered on allotment of bonds and actual sale of the bonds cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein similar issue had arisen. Being aggrieved by the same, the revenue preferred Tax Appeal No.900 of 2018 and this court by order dated 31.7.2018 dismissed the appeal by holding that the fertilizer bonds were issued by the Central Government in lieu of the subsidy. It is not disputed that the subsidy income cannot be said to be a business income. Therefore, in the facts of the case, the fertilizer bonds which were given by the Central Government in lieu of the subsidy when the same was sold at a lower price and the assessee suffered loss, the same was required to be allowed as business loss incurred and it cannot be treated as capital. In view of the aforesaid decision of this court dismissing the appeal of the revenue on the very same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of five per cent: Provided that no deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amount of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to, the payee, does not exceed fifteen thousand rupees: .. Explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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